x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
June 30, 2016 | |
Or | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Page No. | |||
PART I. | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II. | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 5. | |||
Item 6. | |||
1 |
• | our ability to successfully implement our business strategy during “soft” as well as “hard” markets; |
• | acceptance of our business strategy, security and financial condition by rating agencies and regulators, as well as by brokers and our insureds and reinsureds; |
• | our ability to maintain or improve our ratings, which may be affected by our ability to raise additional equity or debt financings, by ratings agencies’ existing or new policies and practices, as well as other factors described herein; |
• | general economic and market conditions (including inflation, interest rates, foreign currency exchange rates, prevailing credit terms and the depth and duration of a recession) and conditions specific to the reinsurance and insurance markets (including the length and magnitude of the current “soft” market) in which we operate; |
• | competition, including increased competition, on the basis of pricing, capacity (including alternative forms of capital), coverage terms or other factors; |
• | developments in the world’s financial and capital markets and our access to such markets; |
• | our ability to successfully enhance, integrate and maintain operating procedures (including information technology) to effectively support our current and new business; |
• | the loss of key personnel; |
• | the integration of businesses we have acquired or may acquire into our existing operations; |
• | accuracy of those estimates and judgments utilized in the preparation of our financial statements, including those related to revenue recognition, insurance and other reserves, reinsurance recoverables, investment valuations, intangible assets, bad debts, income taxes, contingencies and litigation, and any determination to use the deposit method of accounting, which for a relatively new insurance and reinsurance company, like our company, are even more difficult to make than those made in a mature company since relatively limited historical information has been reported to us through June 30, 2016; |
• | greater than expected loss ratios on business written by us and adverse development on claim and/or claim expense liabilities related to business written by our insurance and reinsurance subsidiaries; |
• | severity and/or frequency of losses; |
• | claims for natural or man-made catastrophic events in our insurance or reinsurance business could cause large losses and substantial volatility in our results of operations; |
• | acts of terrorism, political unrest and other hostilities or other unforecasted and unpredictable events; |
• | availability to us of reinsurance to manage our gross and net exposures and the cost of such reinsurance; |
• | the failure of reinsurers, managing general agents, third party administrators or others to meet their obligations to us; |
• | the timing of loss payments being faster or the receipt of reinsurance recoverables being slower than anticipated by us; |
• | our investment performance, including legislative or regulatory developments that may adversely affect the fair value of our investments; |
2 |
• | changes in general economic conditions, including new or continued sovereign debt concerns in Eurozone countries or downgrades of U.S. securities by credit rating agencies, which could affect our business, financial condition and results of operations; |
• | the volatility of our shareholders’ equity from foreign currency fluctuations, which could increase due to us not matching portions of our projected liabilities in foreign currencies with investments in the same currencies; |
• | losses relating to aviation business and business produced by a certain managing underwriting agency for which we may be liable to the purchaser of our prior reinsurance business or to others in connection with the May 5, 2000 asset sale described in our periodic reports filed with the SEC; |
• | changes in accounting principles or policies or in our application of such accounting principles or policies; |
• | changes in the political environment of certain countries in which we operate or underwrite business; |
• | statutory or regulatory developments, including as to tax policy and matters and insurance and other regulatory matters such as the adoption of proposed legislation that would affect Bermuda-headquartered companies and/or Bermuda-based insurers or reinsurers and/or changes in regulations or tax laws applicable to us, our subsidiaries, brokers or customers; and |
• | the other matters set forth under Item 1A “Risk Factors”, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of our Annual Report on Form 10-K, as well as the other factors set forth in our other documents on file with the SEC, and management’s response to any of the aforementioned factors. |
3 |
Page No. | ||
June 30, 2016 (unaudited) and December 31, 2015 | ||
For the three and six month periods ended June 30, 2016 and 2015 (unaudited) | ||
For the six month periods ended June 30, 2016 and 2015 (unaudited) | ||
For the six month periods ended June 30, 2016 and 2015 (unaudited) | ||
For the six month periods ended June 30, 2016 and 2015 (unaudited) | ||
4 |
5 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands, except share data) | |||||||
(Unaudited) | |||||||
June 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Investments: | |||||||
Fixed maturities available for sale, at fair value (amortized cost: $10,879,863 and $10,515,440) | $ | 11,050,464 | $ | 10,459,353 | |||
Short-term investments available for sale, at fair value (amortized cost: $855,764 and $591,141) | 853,531 | 587,904 | |||||
Collateral received under securities lending, at fair value (amortized cost: $338,318 and $385,984) | 338,326 | 389,336 | |||||
Equity securities available for sale, at fair value (cost: $414,537 and $543,767) | 490,815 | 618,405 | |||||
Other investments available for sale, at fair value (cost: $167,914 and $261,343) | 182,957 | 300,476 | |||||
Investments accounted for using the fair value option | 3,066,029 | 2,894,494 | |||||
Investments accounted for using the equity method | 685,766 | 592,973 | |||||
Total investments | 16,667,888 | 15,842,941 | |||||
Cash | 516,591 | 553,326 | |||||
Accrued investment income | 85,317 | 87,206 | |||||
Securities pledged under securities lending, at fair value (amortized cost: $328,274 and $386,411) | 330,773 | 384,081 | |||||
Premiums receivable | 1,260,607 | 983,443 | |||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 2,034,970 | 1,867,373 | |||||
Contractholder receivables | 1,600,426 | 1,486,296 | |||||
Prepaid reinsurance premiums | 540,954 | 427,609 | |||||
Deferred acquisition costs, net | 462,906 | 433,477 | |||||
Receivable for securities sold | 142,315 | 45,505 | |||||
Goodwill and intangible assets | 88,327 | 97,531 | |||||
Other assets | 680,843 | 968,482 | |||||
Total assets | $ | 24,411,917 | $ | 23,177,270 | |||
Liabilities | |||||||
Reserve for losses and loss adjustment expenses | $ | 9,471,647 | $ | 9,125,250 | |||
Unearned premiums | 2,618,359 | 2,333,932 | |||||
Reinsurance balances payable | 295,987 | 224,120 | |||||
Contractholder payables | 1,600,426 | 1,486,296 | |||||
Collateral held for insured obligations | 261,228 | 248,982 | |||||
Deposit accounting liabilities | 22,325 | 260,364 | |||||
Senior notes | 791,392 | 791,306 | |||||
Revolving credit agreement borrowings | 397,830 | 530,434 | |||||
Securities lending payable | 338,318 | 393,844 | |||||
Payable for securities purchased | 382,834 | 64,996 | |||||
Other liabilities | 533,694 | 568,852 | |||||
Total liabilities | 16,714,040 | 16,028,376 | |||||
Commitments and Contingencies | |||||||
Redeemable noncontrolling interests | 205,366 | 205,182 | |||||
Shareholders' Equity | |||||||
Non-cumulative preferred shares | 325,000 | 325,000 | |||||
Common shares ($0.0033 par, shares issued: 174,355,513 and 173,107,849) | 581 | 577 | |||||
Additional paid-in capital | 517,942 | 467,339 | |||||
Retained earnings | 7,725,255 | 7,370,371 | |||||
Accumulated other comprehensive income (loss), net of deferred income tax | 163,834 | (16,502 | ) | ||||
Common shares held in treasury, at cost (shares: 51,783,253 and 50,480,066) | (2,028,690 | ) | (1,941,904 | ) | |||
Total shareholders' equity available to Arch | 6,703,922 | 6,204,881 | |||||
Non-redeemable noncontrolling interests | 788,589 | 738,831 | |||||
Total shareholders' equity | 7,492,511 | 6,943,712 | |||||
Total liabilities, noncontrolling interests and shareholders' equity | $ | 24,411,917 | $ | 23,177,270 |
See Notes to Consolidated Financial Statements | 6 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (U.S. dollars in thousands, except share data) | |||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | |||||||||||||||
Net premiums written | $ | 1,023,563 | $ | 943,580 | $ | 2,144,798 | $ | 2,010,575 | |||||||
Change in unearned premiums | (17,578 | ) | (142 | ) | (187,234 | ) | (156,873 | ) | |||||||
Net premiums earned | 1,005,985 | 943,438 | 1,957,564 | 1,853,702 | |||||||||||
Net investment income | 88,338 | 86,963 | 182,073 | 165,957 | |||||||||||
Net realized gains (losses) | 68,218 | (35,725 | ) | 105,542 | 47,623 | ||||||||||
Other-than-temporary impairment losses | (5,395 | ) | (1,126 | ) | (13,132 | ) | (8,373 | ) | |||||||
Less investment impairments recognized in other comprehensive income, before taxes | 52 | 13 | 150 | 1,461 | |||||||||||
Net impairment losses recognized in earnings | (5,343 | ) | (1,113 | ) | (12,982 | ) | (6,912 | ) | |||||||
Other underwriting income | 25,224 | 7,717 | 30,271 | 19,253 | |||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 8,737 | 16,167 | 15,392 | 22,056 | |||||||||||
Other income (loss) | (7 | ) | 2,205 | (32 | ) | 317 | |||||||||
Total revenues | 1,191,152 | 1,019,652 | 2,277,828 | 2,101,996 | |||||||||||
Expenses | |||||||||||||||
Losses and loss adjustment expenses | 584,592 | 519,426 | 1,107,541 | 1,013,142 | |||||||||||
Acquisition expenses | 175,281 | 175,425 | 345,746 | 338,501 | |||||||||||
Other operating expenses | 159,590 | 151,190 | 311,859 | 299,727 | |||||||||||
Corporate expenses | 17,200 | 17,418 | 26,583 | 26,763 | |||||||||||
Interest expense | 15,663 | 4,011 | 31,770 | 16,747 | |||||||||||
Net foreign exchange (gains) losses | (24,662 | ) | 19,583 | (1,096 | ) | (46,918 | ) | ||||||||
Total expenses | 927,664 | 887,053 | 1,822,403 | 1,647,962 | |||||||||||
Income before income taxes | 263,488 | 132,599 | 455,425 | 454,034 | |||||||||||
Income tax expense | (14,131 | ) | (6,780 | ) | (30,441 | ) | (19,458 | ) | |||||||
Net income | $ | 249,357 | $ | 125,819 | $ | 424,984 | $ | 434,576 | |||||||
Net (income) loss attributable to noncontrolling interests | (38,302 | ) | (10,029 | ) | (59,131 | ) | (35,450 | ) | |||||||
Net income available to Arch | 211,055 | 115,790 | 365,853 | 399,126 | |||||||||||
Preferred dividends | (5,485 | ) | (5,485 | ) | (10,969 | ) | (10,969 | ) | |||||||
Net income available to Arch common shareholders | $ | 205,570 | $ | 110,305 | $ | 354,884 | $ | 388,157 | |||||||
Net income per common share | |||||||||||||||
Basic | $ | 1.70 | $ | 0.91 | $ | 2.94 | $ | 3.16 | |||||||
Diluted | $ | 1.65 | $ | 0.88 | $ | 2.85 | $ | 3.05 | |||||||
Weighted average common shares and common share equivalents outstanding | |||||||||||||||
Basic | 120,599,060 | 121,719,214 | 120,513,620 | 122,957,384 | |||||||||||
Diluted | 124,365,596 | 125,885,420 | 124,425,126 | 127,156,713 |
See Notes to Consolidated Financial Statements | 7 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (U.S. dollars in thousands) | |||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Comprehensive Income | |||||||||||||||
Net income | $ | 249,357 | $ | 125,819 | $ | 424,984 | $ | 434,576 | |||||||
Other comprehensive income (loss), net of deferred income tax | |||||||||||||||
Unrealized appreciation (decline) in value of available-for-sale investments: | |||||||||||||||
Unrealized holding gains (losses) arising during period | 102,460 | (81,935 | ) | 235,441 | 2,369 | ||||||||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income, net of deferred income tax | (52 | ) | (13 | ) | (150 | ) | (1,461 | ) | |||||||
Reclassification of net realized (gains) losses, net of income taxes, included in net income | (22,094 | ) | (21,214 | ) | (54,317 | ) | (52,146 | ) | |||||||
Foreign currency translation adjustments | (18,151 | ) | 11,580 | (838 | ) | (11,177 | ) | ||||||||
Comprehensive income | 311,520 | 34,237 | 605,120 | 372,161 | |||||||||||
Net (income) loss attributable to noncontrolling interests | (38,302 | ) | (10,029 | ) | (59,131 | ) | (35,450 | ) | |||||||
Foreign currency translation adjustments attributable to noncontrolling interests | 42 | — | 200 | — | |||||||||||
Comprehensive income available to Arch | $ | 273,260 | $ | 24,208 | $ | 546,189 | $ | 336,711 |
See Notes to Consolidated Financial Statements | 8 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (U.S. dollars in thousands) | |||||||
(Unaudited) | |||||||
Six Months Ended | |||||||
June 30, | |||||||
2016 | 2015 | ||||||
Non-cumulative preferred shares | |||||||
Balance at beginning and end of period | $ | 325,000 | $ | 325,000 | |||
Common shares | |||||||
Balance at beginning of year | 577 | 572 | |||||
Common shares issued, net | 4 | 4 | |||||
Balance at end of period | 581 | 576 | |||||
Additional paid-in capital | |||||||
Balance at beginning of year | 467,339 | 383,073 | |||||
Common shares issued, net | 8,265 | 7,378 | |||||
Exercise of stock options | 5,143 | 9,624 | |||||
Amortization of share-based compensation | 35,769 | 36,044 | |||||
Other | 1,426 | 1,414 | |||||
Balance at end of period | 517,942 | 437,533 | |||||
Retained earnings | |||||||
Balance at beginning of year | 7,370,371 | 6,854,571 | |||||
Net income | 424,984 | 434,576 | |||||
Net (income) loss attributable to noncontrolling interests | (59,131 | ) | (35,450 | ) | |||
Preferred share dividends | (10,969 | ) | (10,969 | ) | |||
Balance at end of period | 7,725,255 | 7,242,728 | |||||
Accumulated other comprehensive income (loss), net of deferred income tax | |||||||
Balance at beginning of year | (16,502 | ) | 128,856 | ||||
Unrealized appreciation (decline) in value of available-for-sale investments, net of deferred income tax: | |||||||
Balance at beginning of year | 50,085 | 161,598 | |||||
Unrealized holding gains (losses) arising during period, net of reclassification adjustment | 181,124 | (49,777 | ) | ||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income, net of deferred income tax | (150 | ) | (1,461 | ) | |||
Balance at end of period | 231,059 | 110,360 | |||||
Foreign currency translation adjustments: | |||||||
Balance at beginning of year | (66,587 | ) | (32,742 | ) | |||
Foreign currency translation adjustments | (838 | ) | (11,177 | ) | |||
Foreign currency translation adjustments attributable to noncontrolling interests | 200 | — | |||||
Balance at end of period | (67,225 | ) | (43,919 | ) | |||
Balance at end of period | 163,834 | 66,441 | |||||
Common shares held in treasury, at cost | |||||||
Balance at beginning of year | (1,941,904 | ) | (1,562,019 | ) | |||
Shares repurchased for treasury | (86,786 | ) | (372,744 | ) | |||
Balance at end of period | (2,028,690 | ) | (1,934,763 | ) | |||
Total shareholders’ equity available to Arch | 6,703,922 | 6,137,515 | |||||
Non-redeemable noncontrolling interests | 788,589 | 794,880 | |||||
Total shareholders’ equity | $ | 7,492,511 | $ | 6,932,395 |
See Notes to Consolidated Financial Statements | 9 |
ARCH CAPITAL GROUP LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands) | |||||||
(Unaudited) | |||||||
Six Months Ended | |||||||
June 30, | |||||||
2016 | 2015 | ||||||
Operating Activities | |||||||
Net income | $ | 424,984 | $ | 434,576 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Net realized (gains) losses | (126,337 | ) | (60,818 | ) | |||
Net impairment losses recognized in earnings | 12,982 | 6,912 | |||||
Equity in net income or loss of investment funds accounted for using the equity method and other income or loss | 11,161 | (10,349 | ) | ||||
Share-based compensation | 35,769 | 36,044 | |||||
Changes in: | |||||||
Reserve for losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable | 186,199 | 91,616 | |||||
Unearned premiums, net of prepaid reinsurance premiums | 187,234 | 156,873 | |||||
Premiums receivable | (278,814 | ) | (206,642 | ) | |||
Deferred acquisition costs, net | (33,450 | ) | (39,009 | ) | |||
Reinsurance balances payable | 73,712 | 19,657 | |||||
Other liabilities | 56,314 | (94,841 | ) | ||||
Other items | (8,530 | ) | 51,180 | ||||
Net Cash Provided By Operating Activities | 541,224 | 385,199 | |||||
Investing Activities | |||||||
Purchases of fixed maturity investments | (17,541,731 | ) | (14,641,391 | ) | |||
Purchases of equity securities | (212,678 | ) | (288,535 | ) | |||
Purchases of other investments | (650,613 | ) | (779,678 | ) | |||
Proceeds from sales of fixed maturity investments | 16,978,549 | 14,333,436 | |||||
Proceeds from sales of equity securities | 337,619 | 272,343 | |||||
Proceeds from sales, redemptions and maturities of other investments | 636,535 | 587,650 | |||||
Proceeds from redemptions and maturities of fixed maturity investments | 370,980 | 474,984 | |||||
Net settlements of derivative instruments | 45,174 | 19,006 | |||||
Proceeds from investment in joint venture | — | 40,000 | |||||
Net (purchases) sales of short-term investments | (304,460 | ) | 3,707 | ||||
Change in cash collateral related to securities lending | (18,715 | ) | (18,329 | ) | |||
Purchase of business, net of cash acquired | (1,460 | ) | 818 | ||||
Purchases of fixed assets | (8,284 | ) | (6,396 | ) | |||
Change in other assets | 13,416 | (36,769 | ) | ||||
Net Cash Provided By (Used For) Investing Activities | (355,668 | ) | (39,154 | ) | |||
Financing Activities | |||||||
Purchases of common shares under share repurchase program | (75,256 | ) | (361,877 | ) | |||
Proceeds from common shares issued, net | (1,487 | ) | 2,178 | ||||
Proceeds from borrowings | 46,000 | — | |||||
Repayments of borrowings | (179,171 | ) | — | ||||
Change in cash collateral related to securities lending | 18,715 | 18,329 | |||||
Dividends paid to redeemable noncontrolling interests | (8,994 | ) | (9,313 | ) | |||
Other | (2,223 | ) | 55,018 | ||||
Preferred dividends paid | (10,969 | ) | (10,969 | ) | |||
Net Cash Provided By (Used For) Financing Activities | (213,385 | ) | (306,634 | ) | |||
Effects of exchange rate changes on foreign currency cash | (8,906 | ) | (39 | ) | |||
Increase (decrease) in cash | (36,735 | ) | 39,372 | ||||
Cash beginning of year | 553,326 | 485,702 | |||||
Cash end of period | $ | 516,591 | $ | 525,074 | |||
Income taxes paid | $ | 26,619 | $ | 25,992 | |||
Interest paid | $ | 31,524 | $ | 25,076 |
See Notes to Consolidated Financial Statements | 10 |
11 |
3. | Variable Interest Entities and Noncontrolling Interests |
June 30, | December 31, | ||||||
2016 | 2015 | ||||||
Assets | |||||||
Investments accounted for using the fair value option | $ | 1,677,836 | $ | 1,617,107 | |||
Cash | 74,525 | 108,550 | |||||
Accrued investment income | 16,329 | 19,249 | |||||
Premiums receivable | 197,062 | 162,263 | |||||
Reinsurance recoverable on unpaid and paid losses | 16,675 | 14,135 | |||||
Prepaid reinsurance premiums | 10,602 | 11,129 | |||||
Deferred acquisition costs, net | 80,304 | 75,443 | |||||
Receivable for securities sold | 40,467 | 34,095 | |||||
Other assets | 92,935 | 80,361 | |||||
Total assets of consolidated VIE | $ | 2,206,735 | $ | 2,122,332 | |||
Liabilities | |||||||
Reserves for losses and loss adjustment expenses | $ | 404,653 | $ | 290,997 | |||
Unearned premiums | 260,721 | 249,980 | |||||
Reinsurance balances payable | 12,872 | 14,005 | |||||
Revolving credit agreement borrowings | 297,830 | 430,434 | |||||
Payable for securities purchased | 34,729 | 33,062 | |||||
Other liabilities | 89,593 | 53,624 | |||||
Total liabilities of consolidated VIE | $ | 1,100,398 | $ | 1,072,102 | |||
Redeemable noncontrolling interests | $ | 220,066 | $ | 219,882 |
12 |
June 30, | |||||||
2016 | 2015 | ||||||
Three Months Ended | |||||||
Balance, beginning of period | $ | 754,915 | $ | 789,594 | |||
Amounts attributable to noncontrolling interests | 33,716 | 5,286 | |||||
Foreign currency translation adjustments attributable to noncontrolling interests | (42 | ) | — | ||||
Balance, end of period | $ | 788,589 | $ | 794,880 | |||
Six Months Ended | |||||||
Balance, beginning of year | $ | 738,831 | $ | 769,081 | |||
Amounts attributable to noncontrolling interests | 49,958 | 25,799 | |||||
Foreign currency translation adjustments attributable to noncontrolling interests | (200 | ) | — | ||||
Balance, end of period | $ | 788,589 | $ | 794,880 |
June 30, | |||||||
2016 | 2015 | ||||||
Three Months Ended | |||||||
Balance, beginning of period | $ | 205,274 | $ | 219,604 | |||
Shares acquired by the Company | — | (14,700 | ) | ||||
Accretion of preference share issuance costs | 92 | 92 | |||||
Balance, end of period | $ | 205,366 | $ | 204,996 | |||
Six Months Ended | |||||||
Balance, beginning of year | $ | 205,182 | $ | 219,512 | |||
Shares acquired by the Company | — | (14,700 | ) | ||||
Accretion of preference share issuance costs | 184 | 184 | |||||
Balance, end of period | $ | 205,366 | $ | 204,996 |
June 30, | |||||||
2016 | 2015 | ||||||
Three Months Ended | |||||||
Amounts attributable to non-redeemable noncontrolling interests | $ | (33,716 | ) | $ | (5,286 | ) | |
Dividends attributable to redeemable noncontrolling interests | (4,586 | ) | (4,743 | ) | |||
Net (income) loss attributable to noncontrolling interests | $ | (38,302 | ) | $ | (10,029 | ) | |
Six Months Ended | |||||||
Amounts attributable to non-redeemable noncontrolling interests | $ | (49,958 | ) | $ | (25,799 | ) | |
Dividends attributable to redeemable noncontrolling interests | (9,173 | ) | (9,651 | ) | |||
Net (income) loss attributable to noncontrolling interests | $ | (59,131 | ) | $ | (35,450 | ) |
13 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 249,357 | $ | 125,819 | $ | 424,984 | $ | 434,576 | |||||||
Net (income) loss attributable to noncontrolling interests | (38,302 | ) | (10,029 | ) | (59,131 | ) | (35,450 | ) | |||||||
Net income available to Arch | 211,055 | 115,790 | 365,853 | 399,126 | |||||||||||
Preferred dividends | (5,485 | ) | (5,485 | ) | (10,969 | ) | (10,969 | ) | |||||||
Net income available to Arch common shareholders | $ | 205,570 | $ | 110,305 | $ | 354,884 | $ | 388,157 | |||||||
Denominator: | |||||||||||||||
Weighted average common shares outstanding — basic | 120,599,060 | 121,719,214 | 120,513,620 | 122,957,384 | |||||||||||
Effect of dilutive common share equivalents: | |||||||||||||||
Nonvested restricted shares | 1,295,342 | 1,258,741 | 1,374,272 | 1,334,633 | |||||||||||
Stock options (1) | 2,471,194 | 2,907,465 | 2,537,234 | 2,864,696 | |||||||||||
Weighted average common shares and common share equivalents outstanding — diluted | 124,365,596 | 125,885,420 | 124,425,126 | 127,156,713 | |||||||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 1.70 | $ | 0.91 | $ | 2.94 | $ | 3.16 | |||||||
Diluted | $ | 1.65 | $ | 0.88 | $ | 2.85 | $ | 3.05 |
(1) | Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2016 second quarter and 2015 second quarter, the number of stock options excluded were 575,931 and 1,009,113, respectively. For the six months ended June 30, 2016 and 2015, the number of stock options excluded were 1,027,784 and 1,187,162, respectively. |
14 |
15 |
Three Months Ended | |||||||||||||||||||||||
June 30, 2016 | |||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||
Gross premiums written (1) | $ | 762,043 | $ | 412,053 | $ | 118,434 | $ | 1,292,199 | $ | 109,285 | $ | 1,329,936 | |||||||||||
Premiums ceded | (246,875 | ) | (119,951 | ) | (6,969 | ) | (373,464 | ) | (4,457 | ) | (306,373 | ) | |||||||||||
Net premiums written | 515,168 | 292,102 | 111,465 | 918,735 | 104,828 | 1,023,563 | |||||||||||||||||
Change in unearned premiums | 12,482 | (846 | ) | (44,953 | ) | (33,317 | ) | 15,739 | (17,578 | ) | |||||||||||||
Net premiums earned | 527,650 | 291,256 | 66,512 | 885,418 | 120,567 | 1,005,985 | |||||||||||||||||
Other underwriting income | — | 20,118 | 4,137 | 24,255 | 969 | 25,224 | |||||||||||||||||
Losses and loss adjustment expenses | (354,633 | ) | (146,091 | ) | (366 | ) | (501,090 | ) | (83,502 | ) | (584,592 | ) | |||||||||||
Acquisition expenses, net | (77,317 | ) | (55,796 | ) | (8,523 | ) | (141,636 | ) | (33,645 | ) | (175,281 | ) | |||||||||||
Other operating expenses | (92,371 | ) | (37,115 | ) | (23,991 | ) | (153,477 | ) | (6,113 | ) | (159,590 | ) | |||||||||||
Underwriting income (loss) | $ | 3,329 | $ | 72,372 | $ | 37,769 | 113,470 | (1,724 | ) | 111,746 | |||||||||||||
Net investment income | 70,397 | 17,941 | 88,338 | ||||||||||||||||||||
Net realized gains (losses) | 40,927 | 27,291 | 68,218 | ||||||||||||||||||||
Net impairment losses recognized in earnings | (5,343 | ) | — | (5,343 | ) | ||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 8,737 | — | 8,737 | ||||||||||||||||||||
Other income (loss) | (7 | ) | — | (7 | ) | ||||||||||||||||||
Corporate expenses | (17,200 | ) | — | (17,200 | ) | ||||||||||||||||||
Interest expense | (12,432 | ) | (3,231 | ) | (15,663 | ) | |||||||||||||||||
Net foreign exchange gains (losses) | 22,461 | 2,201 | 24,662 | ||||||||||||||||||||
Income (loss) before income taxes | 221,010 | 42,478 | 263,488 | ||||||||||||||||||||
Income tax expense | (14,131 | ) | — | (14,131 | ) | ||||||||||||||||||
Net income (loss) | 206,879 | 42,478 | 249,357 | ||||||||||||||||||||
Dividends attributable to redeemable noncontrolling interests | — | (4,586 | ) | (4,586 | ) | ||||||||||||||||||
Amounts attributable to noncontrolling interests | — | (33,716 | ) | (33,716 | ) | ||||||||||||||||||
Net income (loss) available to Arch | 206,879 | 4,176 | 211,055 | ||||||||||||||||||||
Preferred dividends | (5,485 | ) | — | (5,485 | ) | ||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 201,394 | $ | 4,176 | $ | 205,570 | |||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||
Loss ratio | 67.2 | % | 50.2 | % | 0.6 | % | 56.6 | % | 69.3 | % | 58.1 | % | |||||||||||
Acquisition expense ratio | 14.7 | % | 19.2 | % | 12.8 | % | 16.0 | % | 27.9 | % | 17.4 | % | |||||||||||
Other operating expense ratio | 17.5 | % | 12.7 | % | 36.1 | % | 17.3 | % | 5.1 | % | 15.9 | % | |||||||||||
Combined ratio | 99.4 | % | 82.1 | % | 49.5 | % | 89.9 | % | 102.3 | % | 91.4 | % | |||||||||||
Goodwill and intangible assets | $ | 27,457 | $ | 1,440 | $ | 59,430 | $ | 88,327 | $ | — | $ | 88,327 |
(1) | Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
16 |
Three Months Ended | |||||||||||||||||||||||
June 30, 2015 | |||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||
Gross premiums written (1) | $ | 744,810 | $ | 342,101 | $ | 68,572 | $ | 1,155,253 | $ | 127,954 | $ | 1,199,209 | |||||||||||
Premiums ceded | (235,743 | ) | (89,446 | ) | (6,902 | ) | (331,861 | ) | (7,766 | ) | (255,629 | ) | |||||||||||
Net premiums written | 509,067 | 252,655 | 61,670 | 823,392 | 120,188 | 943,580 | |||||||||||||||||
Change in unearned premiums | 758 | 21,310 | (9,211 | ) | 12,857 | (12,999 | ) | (142 | ) | ||||||||||||||
Net premiums earned | 509,825 | 273,965 | 52,459 | 836,249 | 107,189 | 943,438 | |||||||||||||||||
Other underwriting income | 521 | 2,658 | 3,686 | 6,865 | 852 | 7,717 | |||||||||||||||||
Losses and loss adjustment expenses | (320,926 | ) | (111,183 | ) | (9,639 | ) | (441,748 | ) | (77,678 | ) | (519,426 | ) | |||||||||||
Acquisition expenses, net | (76,723 | ) | (58,360 | ) | (10,200 | ) | (145,283 | ) | (30,142 | ) | (175,425 | ) | |||||||||||
Other operating expenses | (89,054 | ) | (39,007 | ) | (19,679 | ) | (147,740 | ) | (3,450 | ) | (151,190 | ) | |||||||||||
Underwriting income (loss) | $ | 23,643 | $ | 68,073 | $ | 16,627 | 108,343 | (3,229 | ) | 105,114 | |||||||||||||
Net investment income | 67,171 | 19,792 | 86,963 | ||||||||||||||||||||
Net realized gains (losses) | (26,860 | ) | (8,865 | ) | (35,725 | ) | |||||||||||||||||
Net impairment losses recognized in earnings | (1,113 | ) | — | (1,113 | ) | ||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 16,167 | — | 16,167 | ||||||||||||||||||||
Other income (loss) | 2,205 | — | 2,205 | ||||||||||||||||||||
Corporate expenses | (17,418 | ) | — | (17,418 | ) | ||||||||||||||||||
Interest expense | (4,011 | ) | — | (4,011 | ) | ||||||||||||||||||
Net foreign exchange gains (losses) | (22,571 | ) | 2,988 | (19,583 | ) | ||||||||||||||||||
Income (loss) before income taxes | 121,913 | 10,686 | 132,599 | ||||||||||||||||||||
Income tax expense | (6,780 | ) | — | (6,780 | ) | ||||||||||||||||||
Net income (loss) | 115,133 | 10,686 | 125,819 | ||||||||||||||||||||
Dividends attributable to redeemable noncontrolling interests | — | (4,743 | ) | (4,743 | ) | ||||||||||||||||||
Amounts attributable to noncontrolling interests | — | (5,286 | ) | (5,286 | ) | ||||||||||||||||||
Net income (loss) available to Arch | 115,133 | 657 | 115,790 | ||||||||||||||||||||
Preferred dividends | (5,485 | ) | — | (5,485 | ) | ||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 109,648 | $ | 657 | $ | 110,305 | |||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||
Loss ratio | 62.9 | % | 40.6 | % | 18.4 | % | 52.8 | % | 72.5 | % | 55.1 | % | |||||||||||
Acquisition expense ratio | 15.0 | % | 21.3 | % | 19.4 | % | 17.4 | % | 28.1 | % | 18.6 | % | |||||||||||
Other operating expense ratio | 17.5 | % | 14.2 | % | 37.5 | % | 17.7 | % | 3.2 | % | 16.0 | % | |||||||||||
Combined ratio | 95.4 | % | 76.1 | % | 75.3 | % | 87.9 | % | 103.8 | % | 89.7 | % | |||||||||||
Goodwill and intangible assets | $ | 30,968 | $ | 2,420 | $ | 69,130 | $ | 102,518 | $ | — | $ | 102,518 |
(1) | Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
17 |
Six Months Ended | |||||||||||||||||||||||
June 30, 2016 | |||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||
Gross premiums written (1) | $ | 1,560,596 | $ | 893,443 | $ | 229,714 | $ | 2,683,260 | $ | 257,891 | $ | 2,767,902 | |||||||||||
Premiums ceded | (495,664 | ) | (280,517 | ) | (11,736 | ) | (787,424 | ) | (8,929 | ) | (623,104 | ) | |||||||||||
Net premiums written | 1,064,932 | 612,926 | 217,978 | 1,895,836 | 248,962 | 2,144,798 | |||||||||||||||||
Change in unearned premiums | (24,193 | ) | (60,462 | ) | (89,701 | ) | (174,356 | ) | (12,878 | ) | (187,234 | ) | |||||||||||
Net premiums earned | 1,040,739 | 552,464 | 128,277 | 1,721,480 | 236,084 | 1,957,564 | |||||||||||||||||
Other underwriting income | — | 20,443 | 7,930 | 28,373 | 1,898 | 30,271 | |||||||||||||||||
Losses and loss adjustment expenses | (678,242 | ) | (257,689 | ) | (8,995 | ) | (944,926 | ) | (162,615 | ) | (1,107,541 | ) | |||||||||||
Acquisition expenses, net | (151,671 | ) | (110,583 | ) | (16,908 | ) | (279,162 | ) | (66,584 | ) | (345,746 | ) | |||||||||||
Other operating expenses | (178,232 | ) | (73,570 | ) | (48,606 | ) | (300,408 | ) | (11,451 | ) | (311,859 | ) | |||||||||||
Underwriting income (loss) | $ | 32,594 | $ | 131,065 | $ | 61,698 | 225,357 | (2,668 | ) | 222,689 | |||||||||||||
Net investment income | 140,806 | 41,267 | 182,073 | ||||||||||||||||||||
Net realized gains (losses) | 72,789 | 32,753 | 105,542 | ||||||||||||||||||||
Net impairment losses recognized in earnings | (12,982 | ) | — | (12,982 | ) | ||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 15,392 | — | 15,392 | ||||||||||||||||||||
Other income (loss) | (32 | ) | — | (32 | ) | ||||||||||||||||||
Corporate expenses | (26,583 | ) | — | (26,583 | ) | ||||||||||||||||||
Interest expense | (25,059 | ) | (6,711 | ) | (31,770 | ) | |||||||||||||||||
Net foreign exchange gains (losses) | 420 | 676 | 1,096 | ||||||||||||||||||||
Income (loss) before income taxes | 390,108 | 65,317 | 455,425 | ||||||||||||||||||||
Income tax expense | (30,441 | ) | — | (30,441 | ) | ||||||||||||||||||
Net income (loss) | 359,667 | 65,317 | 424,984 | ||||||||||||||||||||
Dividends attributable to redeemable noncontrolling interests | — | (9,173 | ) | (9,173 | ) | ||||||||||||||||||
Amounts attributable to noncontrolling interests | — | (49,958 | ) | (49,958 | ) | ||||||||||||||||||
Net income (loss) available to Arch | 359,667 | 6,186 | 365,853 | ||||||||||||||||||||
Preferred dividends | (10,969 | ) | — | (10,969 | ) | ||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 348,698 | $ | 6,186 | $ | 354,884 | |||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||
Loss ratio | 65.2 | % | 46.6 | % | 7.0 | % | 54.9 | % | 68.9 | % | 56.6 | % | |||||||||||
Acquisition expense ratio | 14.6 | % | 20.0 | % | 13.2 | % | 16.2 | % | 28.2 | % | 17.7 | % | |||||||||||
Other operating expense ratio | 17.1 | % | 13.3 | % | 37.9 | % | 17.5 | % | 4.9 | % | 15.9 | % | |||||||||||
Combined ratio | 96.9 | % | 79.9 | % | 58.1 | % | 88.6 | % | 102.0 | % | 90.2 | % |
(1) | Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
18 |
Six Months Ended | |||||||||||||||||||||||
June 30, 2015 | |||||||||||||||||||||||
Insurance | Reinsurance | Mortgage | Sub-Total | Other | Total | ||||||||||||||||||
Gross premiums written (1) | $ | 1,510,963 | $ | 827,213 | $ | 129,113 | $ | 2,466,931 | $ | 256,587 | $ | 2,541,231 | |||||||||||
Premiums ceded | (459,893 | ) | (226,015 | ) | (15,572 | ) | (701,122 | ) | (11,821 | ) | (530,656 | ) | |||||||||||
Net premiums written | 1,051,070 | 601,198 | 113,541 | 1,765,809 | 244,766 | 2,010,575 | |||||||||||||||||
Change in unearned premiums | (33,331 | ) | (47,516 | ) | (10,715 | ) | (91,562 | ) | (65,311 | ) | (156,873 | ) | |||||||||||
Net premiums earned | 1,017,739 | 553,682 | 102,826 | 1,674,247 | 179,455 | 1,853,702 | |||||||||||||||||
Other underwriting income | 948 | 4,087 | 11,404 | 16,439 | 2,814 | 19,253 | |||||||||||||||||
Losses and loss adjustment expenses | (638,822 | ) | (223,715 | ) | (23,448 | ) | (885,985 | ) | (127,157 | ) | (1,013,142 | ) | |||||||||||
Acquisition expenses, net | (151,801 | ) | (114,964 | ) | (20,618 | ) | (287,383 | ) | (51,118 | ) | (338,501 | ) | |||||||||||
Other operating expenses | (177,173 | ) | (77,051 | ) | (40,048 | ) | (294,272 | ) | (5,455 | ) | (299,727 | ) | |||||||||||
Underwriting income | $ | 50,891 | $ | 142,039 | $ | 30,116 | 223,046 | (1,461 | ) | 221,585 | |||||||||||||
Net investment income | 137,459 | 28,498 | 165,957 | ||||||||||||||||||||
Net realized gains | 38,649 | 8,974 | 47,623 | ||||||||||||||||||||
Net impairment losses recognized in earnings | (6,912 | ) | — | (6,912 | ) | ||||||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | 22,056 | — | 22,056 | ||||||||||||||||||||
Other income (loss) | 317 | — | 317 | ||||||||||||||||||||
Corporate expenses | (26,763 | ) | — | (26,763 | ) | ||||||||||||||||||
Interest expense | (16,747 | ) | — | (16,747 | ) | ||||||||||||||||||
Net foreign exchange gains (losses) | 44,282 | 2,636 | 46,918 | ||||||||||||||||||||
Income (loss) before income taxes | 415,387 | 38,647 | 454,034 | ||||||||||||||||||||
Income tax expense | (19,458 | ) | — | (19,458 | ) | ||||||||||||||||||
Net income (loss) | 395,929 | 38,647 | 434,576 | ||||||||||||||||||||
Dividends attributable to redeemable noncontrolling interests | — | (9,651 | ) | (9,651 | ) | ||||||||||||||||||
Amounts attributable to noncontrolling interests | — | (25,799 | ) | (25,799 | ) | ||||||||||||||||||
Net income (loss) available to Arch | 395,929 | 3,197 | 399,126 | ||||||||||||||||||||
Preferred dividends | (10,969 | ) | — | (10,969 | ) | ||||||||||||||||||
Net income (loss) available to Arch common shareholders | $ | 384,960 | $ | 3,197 | $ | 388,157 | |||||||||||||||||
Underwriting Ratios | |||||||||||||||||||||||
Loss ratio | 62.8 | % | 40.4 | % | 22.8 | % | 52.9 | % | 70.9 | % | 54.7 | % | |||||||||||
Acquisition expense ratio | 14.9 | % | 20.8 | % | 20.1 | % | 17.2 | % | 28.5 | % | 18.3 | % | |||||||||||
Other operating expense ratio | 17.4 | % | 13.9 | % | 38.9 | % | 17.6 | % | 3.0 | % | 16.2 | % | |||||||||||
Combined ratio | 95.1 | % | 75.1 | % | 81.8 | % | 87.7 | % | 102.4 | % | 89.2 | % |
(1) | Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
19 |
Estimated Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | Cost or Amortized Cost | OTTI Unrealized Losses (2) | |||||||||||||||
June 30, 2016 | |||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||
Corporate bonds | $ | 2,952,173 | $ | 68,437 | $ | (17,635 | ) | $ | 2,901,371 | $ | (2,304 | ) | |||||||
Mortgage backed securities | 656,891 | 12,973 | (1,177 | ) | 645,095 | (3,443 | ) | ||||||||||||
Municipal bonds | 1,897,128 | 47,135 | (678 | ) | 1,850,671 | — | |||||||||||||
Commercial mortgage backed securities | 624,391 | 13,854 | (1,004 | ) | 611,541 | — | |||||||||||||
U.S. government and government agencies | 2,701,042 | 33,940 | (749 | ) | 2,667,851 | — | |||||||||||||
Non-U.S. government securities | 1,172,745 | 46,672 | (37,074 | ) | 1,163,147 | — | |||||||||||||
Asset backed securities | 1,365,766 | 13,492 | (5,413 | ) | 1,357,687 | (69 | ) | ||||||||||||
Total | 11,370,136 | 236,503 | (63,730 | ) | 11,197,363 | (5,816 | ) | ||||||||||||
Equity securities | 501,916 | 87,768 | (11,163 | ) | 425,311 | — | |||||||||||||
Other investments | 182,957 | 19,550 | (4,507 | ) | 167,914 | — | |||||||||||||
Short-term investments | 853,531 | 351 | (2,584 | ) | 855,764 | — | |||||||||||||
Total | $ | 12,908,540 | $ | 344,172 | $ | (81,984 | ) | $ | 12,646,352 | $ | (5,816 | ) | |||||||
December 31, 2015 | |||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||
Corporate bonds | $ | 2,725,729 | $ | 15,978 | $ | (60,508 | ) | $ | 2,770,259 | $ | (3,553 | ) | |||||||
Mortgage backed securities | 754,870 | 9,872 | (5,334 | ) | 750,332 | (3,350 | ) | ||||||||||||
Municipal bonds | 1,626,281 | 27,014 | (1,534 | ) | 1,600,801 | — | |||||||||||||
Commercial mortgage backed securities | 764,152 | 3,269 | (6,978 | ) | 767,861 | — | |||||||||||||
U.S. government and government agencies | 2,423,455 | 6,228 | (9,978 | ) | 2,427,205 | — | |||||||||||||
Non-U.S. government securities | 917,664 | 10,414 | (39,122 | ) | 946,372 | — | |||||||||||||
Asset backed securities | 1,620,506 | 3,307 | (12,951 | ) | 1,630,150 | (22 | ) | ||||||||||||
Total | 10,832,657 | 76,082 | (136,405 | ) | 10,892,980 | (6,925 | ) | ||||||||||||
Equity securities | 629,182 | 94,341 | (17,796 | ) | 552,637 | — | |||||||||||||
Other investments | 300,476 | 43,798 | (4,665 | ) | 261,343 | — | |||||||||||||
Short-term investments | 587,904 | 187 | (3,425 | ) | 591,142 | — | |||||||||||||
Total | $ | 12,350,219 | $ | 214,408 | $ | (162,291 | ) | $ | 12,298,102 | $ | (6,925 | ) |
(1) | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
(2) | Represents the total other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income (“AOCI”). It does not include the change in fair value subsequent to the impairment measurement date. At June 30, 2016, the net unrealized gain related to securities for which a non-credit OTTI was recognized in AOCI was $1.5 million, compared to a net unrealized loss of $1.4 million at December 31, 2015. |
20 |
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | ||||||||||||||||||
June 30, 2016 | |||||||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||||||
Corporate bonds | $ | 197,372 | $ | (4,776 | ) | $ | 127,233 | $ | (12,859 | ) | $ | 324,605 | $ | (17,635 | ) | ||||||||
Mortgage backed securities | 67,489 | (760 | ) | 16,999 | (417 | ) | 84,488 | (1,177 | ) | ||||||||||||||
Municipal bonds | 109,185 | (277 | ) | 21,887 | (401 | ) | 131,072 | (678 | ) | ||||||||||||||
Commercial mortgage backed securities | 29,312 | (526 | ) | 29,192 | (478 | ) | 58,504 | (1,004 | ) | ||||||||||||||
U.S. government and government agencies | 112,776 | (749 | ) | — | — | 112,776 | (749 | ) | |||||||||||||||
Non-U.S. government securities | 299,048 | (15,856 | ) | 137,035 | (21,218 | ) | 436,083 | (37,074 | ) | ||||||||||||||
Asset backed securities | 182,387 | (3,147 | ) | 79,147 | (2,266 | ) | 261,534 | (5,413 | ) | ||||||||||||||
Total | 997,569 | (26,091 | ) | 411,493 | (37,639 | ) | 1,409,062 | (63,730 | ) | ||||||||||||||
Equity securities | 156,789 | (11,163 | ) | — | — | 156,789 | (11,163 | ) | |||||||||||||||
Other investments | 37,943 | (4,507 | ) | — | — | 37,943 | (4,507 | ) | |||||||||||||||
Short-term investments | 33,404 | (2,584 | ) | — | — | 33,404 | (2,584 | ) | |||||||||||||||
Total | $ | 1,225,705 | $ | (44,345 | ) | $ | 411,493 | $ | (37,639 | ) | $ | 1,637,198 | $ | (81,984 | ) | ||||||||
December 31, 2015 | |||||||||||||||||||||||
Fixed maturities (1): | |||||||||||||||||||||||
Corporate bonds | $ | 1,810,988 | $ | (37,445 | ) | $ | 129,896 | $ | (23,063 | ) | $ | 1,940,884 | $ | (60,508 | ) | ||||||||
Mortgage backed securities | 487,018 | (4,508 | ) | 48,991 | (826 | ) | 536,009 | (5,334 | ) | ||||||||||||||
Municipal bonds | 269,015 | (1,303 | ) | 9,692 | (231 | ) | 278,707 | (1,534 | ) | ||||||||||||||
Commercial mortgage backed securities | 511,261 | (6,639 | ) | 20,596 | (339 | ) | 531,857 | (6,978 | ) | ||||||||||||||
U.S. government and government agencies | 1,991,163 | (9,978 | ) | — | — | 1,991,163 | (9,978 | ) | |||||||||||||||
Non-U.S. government securities | 458,414 | (13,494 | ) | 138,792 | (25,628 | ) | 597,206 | (39,122 | ) | ||||||||||||||
Asset backed securities | 1,217,163 | (9,328 | ) | 134,841 | (3,623 | ) | 1,352,004 | (12,951 | ) | ||||||||||||||
Total | 6,745,022 | (82,695 | ) | 482,808 | (53,710 | ) | 7,227,830 | (136,405 | ) | ||||||||||||||
Equity securities | 232,275 | (17,796 | ) | — | — | 232,275 | (17,796 | ) | |||||||||||||||
Other investments | 93,614 | (4,665 | ) | — | — | 93,614 | (4,665 | ) | |||||||||||||||
Short-term investments | 30,625 | (3,425 | ) | — | — | 30,625 | (3,425 | ) | |||||||||||||||
Total | $ | 7,101,536 | $ | (108,581 | ) | $ | 482,808 | $ | (53,710 | ) | $ | 7,584,344 | $ | (162,291 | ) |
(1) | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
21 |
June 30, 2016 | December 31, 2015 | |||||||||||||||
Maturity | Estimated Fair Value | Amortized Cost | Estimated Fair Value | Amortized Cost | ||||||||||||
Due in one year or less | $ | 247,256 | $ | 244,247 | $ | 337,898 | $ | 341,595 | ||||||||
Due after one year through five years | 5,077,739 | 5,036,912 | 4,644,516 | 4,677,230 | ||||||||||||
Due after five years through 10 years | 2,772,938 | 2,699,463 | 2,214,413 | 2,228,638 | ||||||||||||
Due after 10 years | 625,155 | 602,418 | 496,302 | 497,174 | ||||||||||||
8,723,088 | 8,583,040 | 7,693,129 | 7,744,637 | |||||||||||||
Mortgage backed securities | 656,891 | 645,095 | 754,870 | 750,332 | ||||||||||||
Commercial mortgage backed securities | 624,391 | 611,541 | 764,152 | 767,861 | ||||||||||||
Asset backed securities | 1,365,766 | 1,357,687 | 1,620,506 | 1,630,150 | ||||||||||||
Total (1) | $ | 11,370,136 | $ | 11,197,363 | $ | 10,832,657 | $ | 10,892,980 |
(1) | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
Remaining Contractual Maturity of the Agreements | ||||||||||||||||||||
Overnight and Continuous | Less than 30 Days | 30-90 Days | 90 Days or More | Total | ||||||||||||||||
June 30, 2016 | ||||||||||||||||||||
U.S. government and government agencies | $ | 242,184 | $ | 21,539 | $ | 4,109 | $ | 26,168 | $ | 294,000 | ||||||||||
Corporate bonds | 33,120 | — | — | — | 33,120 | |||||||||||||||
Equity securities | 11,198 | — | — | — | 11,198 | |||||||||||||||
Total | $ | 286,502 | $ | 21,539 | $ | 4,109 | $ | 26,168 | $ | 338,318 | ||||||||||
Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 8 | $ | — | ||||||||||||||||||
Amounts related to securities lending not included in offsetting disclosure in Note 8 | $ | 338,318 | ||||||||||||||||||
December 31, 2015 | ||||||||||||||||||||
U.S. government and government agencies | $ | 235,728 | $ | — | $ | 82,286 | $ | 9,598 | $ | 327,612 | ||||||||||
Corporate bonds | 55,086 | — | — | — | 55,086 | |||||||||||||||
Equity securities | 6,722 | 4,424 | — | — | 11,146 | |||||||||||||||
Total | $ | 297,536 | $ | 4,424 | $ | 82,286 | $ | 9,598 | $ | 393,844 | ||||||||||
Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 8 | $ | — | ||||||||||||||||||
Amounts related to securities lending not included in offsetting disclosure in Note 8 | $ | 393,844 |
22 |
June 30, 2016 | December 31, 2015 | ||||||
Available for sale: | |||||||
Asian and emerging markets | $ | 109,767 | $ | 206,861 | |||
Investment grade fixed income | 33,549 | 31,370 | |||||
Credit related funds | 1,698 | 22,512 | |||||
Other | 37,943 | 39,733 | |||||
Total available for sale | 182,957 | 300,476 | |||||
Fair value option: | |||||||
Term loan investments (par value: $1,115,627 and $1,197,143) | 1,026,543 | 1,108,017 | |||||
Mezzanine debt funds | 117,441 | 121,589 | |||||
Credit related funds | 236,184 | 219,049 | |||||
Investment grade fixed income | 65,391 | 63,053 | |||||
Asian and emerging markets | 112,265 | 34,761 | |||||
Other (1) | 107,916 | 124,502 | |||||
Total fair value option | 1,665,740 | 1,670,971 | |||||
Total | $ | 1,848,697 | $ | 1,971,447 |
(1) | Includes fund investments with strategies in mortgage servicing rights, transportation, infrastructure and other. |
June 30, 2016 | December 31, 2015 | ||||||
Fixed maturities | $ | 1,047,662 | $ | 936,802 | |||
Other investments | 1,665,740 | 1,670,971 | |||||
Short-term investments | 344,797 | 285,923 | |||||
Equity securities | 7,830 | 798 | |||||
Investments accounted for using the fair value option | $ | 3,066,029 | $ | 2,894,494 |
June 30, 2016 | December 31, 2015 | ||||||
Investments accounted for using the equity method (1) | $ | 676,893 | $ | 584,158 | |||
Investments accounted for using the fair value option (2) | 83,931 | 90,969 | |||||
Total | $ | 760,824 | $ | 675,127 |
(1) | Aggregate unfunded commitments were $794.7 million at June 30, 2016, compared to $535.4 million at December 31, 2015. |
(2) | Aggregate unfunded commitments were $26.6 million at June 30, 2016, compared to $22.7 million at December 31, 2015. |
23 |
June 30, | |||||||
2016 | 2015 | ||||||
Three Months Ended | |||||||
Fixed maturities | $ | 77,994 | $ | 71,275 | |||
Term loan investments | 18,608 | 18,033 | |||||
Equity securities (dividends) | 3,663 | 2,578 | |||||
Short-term investments | 816 | 225 | |||||
Other (1) | 8,260 | 10,489 | |||||
Gross investment income | 109,341 | 102,600 | |||||
Investment expenses | (21,003 | ) | (15,637 | ) | |||
Net investment income | $ | 88,338 | $ | 86,963 | |||
Six Months Ended | |||||||
Fixed maturities | $ | 151,667 | $ | 139,871 | |||
Term loan investments | 38,620 | 32,777 | |||||
Equity securities (dividends) | 7,098 | 5,257 | |||||
Short-term investments | 1,312 | 421 | |||||
Other (1) | 22,003 | 23,236 | |||||
Gross investment income | 220,700 | 201,562 | |||||
Investment expenses | (38,627 | ) | (35,605 | ) | |||
Net investment income | $ | 182,073 | $ | 165,957 |
(1) | Includes income distributions from investment funds and other items. |
June 30, | |||||||
2016 | 2015 | ||||||
Three Months Ended | |||||||
Available for sale securities: | |||||||
Gross gains on investment sales | $ | 74,695 | $ | 82,233 | |||
Gross losses on investment sales | (43,293 | ) | (58,974 | ) | |||
Change in fair value of assets and liabilities accounted for using the fair value option: | |||||||
Fixed maturities | 18,632 | (5,191 | ) | ||||
Other investments | 13,136 | 785 | |||||
Equity securities | 401 | (69 | ) | ||||
Short-term investments | (621 | ) | (4,375 | ) | |||
Derivative instruments (1) | 20,334 | (41,496 | ) | ||||
Other (2) | (15,066 | ) | (8,638 | ) | |||
Net realized gains (losses) | $ | 68,218 | $ | (35,725 | ) | ||
Six Months Ended | |||||||
Available for sale securities: | |||||||
Gross gains on investment sales | $ | 182,514 | $ | 179,824 | |||
Gross losses on investment sales | (106,424 | ) | (114,134 | ) | |||
Change in fair value of assets and liabilities accounted for using the fair value option: | |||||||
Fixed maturities | 18,299 | (8,493 | ) | ||||
Other investments | (8,412 | ) | 7,072 | ||||
Equity securities | 437 | (71 | ) | ||||
Short-term investments | (1,043 | ) | 1,471 | ||||
Derivative instruments (1) | 41,066 | (4,820 | ) | ||||
Other (2) | (20,895 | ) | (13,226 | ) | |||
Net realized gains (losses) | $ | 105,542 | $ | 47,623 |
(1) | See Note 8 for information on the Company’s derivative instruments. |
(2) | Includes the re-measurement of contingent consideration liability amounts. |
June 30, | |||||||
2016 | 2015 | ||||||
Three Months Ended | |||||||
Fixed maturities: | |||||||
Mortgage backed securities | $ | (82 | ) | $ | (326 | ) | |
Corporate bonds | (775 | ) | (10 | ) | |||
Non-U.S. government securities | (51 | ) | — | ||||
Asset backed securities | (2,500 | ) | — | ||||
Total | (3,408 | ) | (336 | ) | |||
Short-term investments | — | — | |||||
Equity securities | (1,935 | ) | (124 | ) | |||
Other investments | — | (653 | ) | ||||
Net impairment losses recognized in earnings | $ | (5,343 | ) | $ | (1,113 | ) | |
Six Months Ended | |||||||
Fixed maturities: | |||||||
Mortgage backed securities | $ | (555 | ) | $ | (1,398 | ) | |
Corporate bonds | (5,655 | ) | (1,986 | ) | |||
Non-U.S. government securities | (232 | ) | — | ||||
Asset backed securities | (2,506 | ) | — | ||||
Total | (8,948 | ) | (3,384 | ) | |||
Short-term investments | — | (2,341 | ) | ||||
Equity securities | (3,037 | ) | (253 | ) | |||
Other investments | (997 | ) | (934 | ) | |||
Net impairment losses recognized in earnings | $ | (12,982 | ) | $ | (6,912 | ) |
24 |
• | Corporate bonds — the Company reviewed the business prospects, credit ratings, estimated loss given default factors, foreign currency impacts and information received from asset managers and rating agencies for certain corporate bonds. Impairment losses primarily resulted from reductions on non-investment grade corporate bonds in the energy sector, reflecting current market conditions; |
• | Equity securities — the Company utilized information received from asset managers on common stocks, including the business prospects, recent events, industry and market data and other factors. Impairment losses were primarily on equities which were in an unrealized loss position for a significant length of time; |
• | Asset backed securities — the Company utilized underlying data provided by asset managers, cash flow projections and additional information from credit agencies in order to determine an expected recovery value for each security. Impairment losses primarily reflected a reduction on one security following an analysis of expected cash flows. |
• | Other investments — the Company utilized information received from asset managers on investment funds, including the business prospects, recent events, industry and market data and other factors. Impairment losses reflected a reduction on one fund which was in an unrealized loss position for a significant length of time; |
• | Mortgage backed securities — the Company utilized underlying data provided by asset managers, cash flow projections and additional information from credit agencies in order to determine an expected recovery value for each security. The analysis includes a review of cash flow projections under base case and stress case scenarios which modify the expected default expectations and loss severities and slow down prepayment assumptions. The significant inputs in the models include the expected default rates, delinquency rates and foreclosure costs. Impairment losses resulted from relatively small adjustments on a number of mortgage backed securities. |
June 30, | |||||||
2016 | 2015 | ||||||
Three Months Ended | |||||||
Balance at start of period | $ | 18,291 | $ | 24,344 | |||
Credit loss impairments recognized on securities not previously impaired | 287 | 281 | |||||
Credit loss impairments recognized on securities previously impaired | — | 55 | |||||
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | — | — | |||||
Reductions for securities sold during the period | (3,731 | ) | (3,774 | ) | |||
Balance at end of period | $ | 14,847 | $ | 20,906 | |||
Six Months Ended | |||||||
Balance at start of year | $ | 26,875 | $ | 20,196 | |||
Credit loss impairments recognized on securities not previously impaired | 1,350 | 4,770 | |||||
Credit loss impairments recognized on securities previously impaired | 522 | 134 | |||||
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | — | — | |||||
Reductions for securities sold during the period | (13,900 | ) | (4,194 | ) | |||
Balance at end of period | $ | 14,847 | $ | 20,906 |
25 |
June 30, 2016 | December 31, 2015 | ||||||
Assets used for collateral or guarantees: | |||||||
Affiliated transactions | $ | 3,903,933 | $ | 3,810,104 | |||
Third party agreements | 1,598,266 | 1,286,257 | |||||
Deposits with U.S. regulatory authorities | 477,429 | 391,458 | |||||
Deposits with non-U.S. regulatory authorities | 47,429 | 38,230 | |||||
Total restricted assets | $ | 6,027,057 | $ | 5,526,049 |
Level 1: | Inputs to the valuation methodology are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets |
Level 2: | Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument |
Level 3: | Inputs to the valuation methodology are unobservable and significant to the fair value measurement |
26 |
• | U.S. government and government agencies — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The Company determined that all U.S. Treasuries would be classified as Level 1 securities due to observed levels of trading activity, the high number of strongly correlated pricing quotes received on U.S. Treasuries and other factors. The fair values of U.S. government agency securities are generally determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads for these securities are observable market inputs, the fair values of U.S. government agency securities are classified within Level 2. |
• | Corporate bonds — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined using the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. As the significant inputs used in the pricing process for corporate bonds are observable market inputs, the fair value of these securities are classified within Level 2. |
• | Mortgage-backed securities — valuations provided by independent pricing services, substantially all through pricing vendors and index providers with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the expected average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for mortgage-backed securities are observable |
• | Municipal bonds — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally determined using spreads obtained from broker-dealers who trade in the relevant security market, trade prices and the new issue market. As the significant inputs used in the pricing process for municipal bonds are observable market inputs, the fair value of these securities are classified within Level 2. |
• | Commercial mortgage-backed securities — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for commercial mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. |
• | Non-U.S. government securities — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally based on international indices or valuation models which include daily observed yield curves, cross-currency basis index spreads and country credit spreads. As the significant inputs used in the pricing process for non-U.S. government securities are observable market inputs, the fair value of these securities are classified within Level 2. |
• | Asset-backed securities — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for asset-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. |
27 |
28 |
Estimated Fair Value Measurements Using: | |||||||||||||||
Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets measured at fair value (1): | |||||||||||||||
Available for sale securities: | |||||||||||||||
Fixed maturities: | |||||||||||||||
Corporate bonds | $ | 2,952,173 | $ | — | $ | 2,934,868 | $ | 17,305 | |||||||
Mortgage backed securities | 656,891 | — | 656,891 | — | |||||||||||
Municipal bonds | 1,897,128 | — | 1,897,128 | — | |||||||||||
Commercial mortgage backed securities | 624,391 | — | 624,391 | — | |||||||||||
U.S. government and government agencies | 2,701,042 | 2,558,706 | 142,336 | — | |||||||||||
Non-U.S. government securities | 1,172,745 | — | 1,172,745 | — | |||||||||||
Asset backed securities | 1,365,766 | — | 1,316,555 | 49,211 | |||||||||||
Total | 11,370,136 | 2,558,706 | 8,744,914 | 66,516 | |||||||||||
Equity securities | 501,916 | 500,158 | 1,758 | — | |||||||||||
Short-term investments | 853,531 | 837,202 | 16,329 | — | |||||||||||
Other investments | 79,174 | 79,174 | — | — | |||||||||||
Other investments measured at net asset value (2) | 103,783 | ||||||||||||||
Total other investments | 182,957 | 79,174 | — | — | |||||||||||
Derivative instruments (4) | 30,625 | — | 30,625 | — | |||||||||||
Fair value option: | |||||||||||||||
Corporate bonds | 754,034 | — | 754,034 | — | |||||||||||
Non-U.S. government bonds | 101,492 | — | 101,492 | — | |||||||||||
Mortgage backed securities | 17,560 | — | 17,560 | — | |||||||||||
Asset backed securities | 22,850 | — | 22,850 | — | |||||||||||
U.S. government and government agencies | 151,726 | 151,726 | — | — | |||||||||||
Short-term investments | 344,797 | 344,797 | — | — | |||||||||||
Equity securities | 7,830 | 7,090 | 740 | — | |||||||||||
Other investments | 1,082,309 | 55,766 | 1,026,543 | — | |||||||||||
Other investments measured at net asset value (2) | 583,431 | ||||||||||||||
Total | 3,066,029 | 559,379 | 1,923,219 | — | |||||||||||
Total assets measured at fair value | $ | 16,005,194 | $ | 4,534,619 | $ | 10,716,845 | $ | 66,516 | |||||||
Liabilities measured at fair value: | |||||||||||||||
Contingent consideration liabilities | $ | (111,670 | ) | $ | — | $ | — | $ | (111,670 | ) | |||||
Securities sold but not yet purchased (3) | (54,668 | ) | — | (54,668 | ) | — | |||||||||
Derivative instruments (4) | (26,428 | ) | — | (26,428 | ) | — | |||||||||
Total liabilities measured at fair value | $ | (192,766 | ) | $ | — | $ | (81,096 | ) | $ | (111,670 | ) |
(1) | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 6, “Investment Information—Securities Lending Agreements.” |
(2) | In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. |
(3) | Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. |
(4) | See Note 8, “Derivative Instruments.” |
29 |
Estimated Fair Value Measurements Using: | |||||||||||||||
Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets measured at fair value (1): | |||||||||||||||
Available for sale securities: | |||||||||||||||
Fixed maturities: | |||||||||||||||
Corporate bonds | $ | 2,725,729 | $ | — | $ | 2,709,361 | $ | 16,368 | |||||||
Mortgage backed securities | 754,870 | — | 754,870 | — | |||||||||||
Municipal bonds | 1,626,281 | — | 1,626,281 | — | |||||||||||
Commercial mortgage backed securities | 764,152 | — | 764,152 | — | |||||||||||
U.S. government and government agencies | 2,423,455 | 2,378,662 | 44,793 | — | |||||||||||
Non-U.S. government securities | 917,664 | — | 917,664 | — | |||||||||||
Asset backed securities | 1,620,506 | — | 1,563,006 | 57,500 | |||||||||||
Total | 10,832,657 | 2,378,662 | 8,380,127 | 73,868 | |||||||||||
Equity securities | 629,182 | 627,441 | 1,741 | — | |||||||||||
Short-term investments | 587,904 | 572,604 | 15,300 | — | |||||||||||
Other investments | 99,159 | 99,159 | — | — | |||||||||||
Other investments measured at net asset value (2) | 201,317 | ||||||||||||||
Total other investments | 300,476 | 99,159 | — | — | |||||||||||
Derivative instruments (4) | 20,022 | — | 20,022 | — | |||||||||||
Fair value option: | |||||||||||||||
Corporate bonds | 771,733 | — | 771,733 | — | |||||||||||
Non-U.S. government bonds | 81,824 | — | 81,824 | — | |||||||||||
Mortgage backed securities | 57,687 | — | 57,687 | — | |||||||||||
Asset backed securities | 25,444 | — | 25,444 | — | |||||||||||
U.S. government and government agencies | 114 | 114 | — | — | |||||||||||
Short-term investments | 285,923 | 285,923 | — | — | |||||||||||
Equity securities | 798 | 798 | — | — | |||||||||||
Other investments | 1,176,312 | 68,295 | 1,108,017 | — | |||||||||||
Other investments measured at net asset value (2) | 494,659 | ||||||||||||||
Total | 2,894,494 | 355,130 | 2,044,705 | — | |||||||||||
Total assets measured at fair value | $ | 15,264,735 | $ | 4,032,996 | $ | 10,461,895 | $ | 73,868 | |||||||
Liabilities measured at fair value: | |||||||||||||||
Contingent consideration liabilities | $ | (96,048 | ) | $ | — | $ | — | $ | (96,048 | ) | |||||
Securities sold but not yet purchased (3) | (30,583 | ) | — | (30,583 | ) | — | |||||||||
Derivative instruments (4) | (11,863 | ) | — | (11,863 | ) | — | |||||||||
Total liabilities measured at fair value | $ | (138,494 | ) | $ | — | $ | (42,446 | ) | $ | (96,048 | ) |
(1) | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 6, “Investment Information—Securities Lending Agreements.” |
(2) | In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. |
(3) | Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. |
(4) | See Note 8, “Derivative Instruments.” |
30 |
Assets | Liabilities | ||||||||||||||
s | Available For Sale | Fair Value Option | |||||||||||||
Asset Backed Securities | Corporate Bonds | Total | Contingent Consideration Liabilities | ||||||||||||
Three Months Ended June 30, 2016 | |||||||||||||||
Balance at beginning of period | $ | 57,500 | $ | 15,166 | $ | 72,666 | $ | (100,710 | ) | ||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||
Included in earnings (1) | (2,500 | ) | 1,363 | (1,137 | ) | (10,923 | ) | ||||||||
Included in other comprehensive income | — | — | — | (37 | ) | ||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||
Purchases | — | 776 | 776 | — | |||||||||||
Issuances | — | — | — | — | |||||||||||
Sales | — | — | — | — | |||||||||||
Settlements | (5,789 | ) | — | (5,789 | ) | — | |||||||||
Transfers in and/or out of Level 3 | — | — | — | — | |||||||||||
Balance at end of period | $ | 49,211 | $ | 17,305 | $ | 66,516 | $ | (111,670 | ) | ||||||
Three Months Ended June 30, 2015 | |||||||||||||||
Balance at beginning of period | $ | 57,500 | $ | — | $ | 57,500 | $ | (66,461 | ) | ||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||
Included in earnings (1) | — | — | — | (4,795 | ) | ||||||||||
Included in other comprehensive income | — | — | — | — | |||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||
Purchases | — | — | — | — | |||||||||||
Issuances | — | — | — | — | |||||||||||
Sales | — | — | — | — | |||||||||||
Settlements | — | — | — | — | |||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | |||||||||||
Balance at end of period | $ | 57,500 | $ | — | $ | 57,500 | $ | (71,256 | ) | ||||||
Six Months Ended June 30, 2016 | |||||||||||||||
Balance at beginning of year | $ | 57,500 | $ | 16,368 | $ | 73,868 | $ | (96,048 | ) | ||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||
Included in earnings (1) | (2,500 | ) | 161 | (2,339 | ) | (16,121 | ) | ||||||||
Included in other comprehensive income | — | — | — | (37 | ) | ||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||
Purchases | — | 776 | 776 | — | |||||||||||
Issuances | — | — | — | — | |||||||||||
Sales | — | — | — | — | |||||||||||
Settlements | (5,789 | ) | — | (5,789 | ) | 536 | |||||||||
Transfers in and/or out of Level 3 | — | — | — | — | |||||||||||
Balance at end of period | $ | 49,211 | $ | 17,305 | $ | 66,516 | $ | (111,670 | ) | ||||||
Six Months Ended June 30, 2015 | |||||||||||||||
Balance at beginning of year | $ | 57,500 | $ | — | $ | 57,500 | $ | (61,845 | ) | ||||||
Total gains or (losses) (realized/unrealized) | |||||||||||||||
Included in earnings (1) | — | — | — | (8,343 | ) | ||||||||||
Included in other comprehensive income | — | — | — | — | |||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||
Purchases | — | — | — | — | |||||||||||
Issuances | — | — | — | (1,068 | ) | ||||||||||
Sales | — | — | — | — | |||||||||||
Settlements | — | — | — | — | |||||||||||
Transfers in and/or out of Level 3 | — | — | — | — | |||||||||||
Balance at end of period | $ | 57,500 | $ | — | $ | 57,500 | $ | (71,256 | ) |
(1) | Gains or losses on asset backed securities were included in net impairment losses recognized in earnings while gains or losses on corporate bonds and contingent consideration liabilities were included in net realized gains (losses). |
31 |
Estimated Fair Value | |||||||||||
Asset Derivatives | Liability Derivatives | Notional Value (1) | |||||||||
June 30, 2016 | |||||||||||
Futures contracts (2) | $ | 1,208 | $ | (1,673 | ) | $ | 2,287,791 | ||||
Foreign currency forward contracts (2) | 17,032 | (18,718 | ) | 1,436,006 | |||||||
TBAs (3) | 121,760 | (117,673 | ) | 226,299 | |||||||
Other (2) | 12,385 | (6,037 | ) | 1,938,497 | |||||||
Total | $ | 152,385 | $ | (144,101 | ) | ||||||
December 31, 2015 | |||||||||||
Futures contracts (2) | $ | 2,816 | $ | (1,202 | ) | $ | 1,797,115 | ||||
Foreign currency forward contracts (2) | 9,336 | (6,344 | ) | 773,619 | |||||||
TBAs (3) | 6,525 | — | 6,316 | ||||||||
Other (2) | 7,870 | (4,317 | ) | 1,694,935 | |||||||
Total | $ | 26,547 | $ | (11,863 | ) |
(1) | Represents the absolute notional value of all outstanding contracts, consisting of long and short positions. |
(2) | The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’ |
(3) | The fair value of TBAs are included in ‘fixed maturities available for sale, at fair value.’ |
32 |
Derivatives not designated as | June 30, | |||||||
hedging instruments: | 2016 | 2015 | ||||||
Three Months Ended | ||||||||
Net realized gains (losses): | ||||||||
Futures contracts | $ | 34,871 | $ | (31,446 | ) | |||
Foreign currency forward contracts | (13,782 | ) | (8,724 | ) | ||||
TBAs | 37 | (182 | ) | |||||
Other | (792 | ) | (1,144 | ) | ||||
Total | $ | 20,334 | $ | (41,496 | ) | |||
Six Months Ended | ||||||||
Net realized gains (losses): | ||||||||
Futures contracts | $ | 61,322 | $ | (12,120 | ) | |||
Foreign currency forward contracts | (18,534 | ) | 8,095 | |||||
TBAs | 334 | 304 | ||||||
Other | (2,056 | ) | (1,099 | ) | ||||
Total | $ | 41,066 | $ | (4,820 | ) |
33 |
Amounts Reclassified from AOCI | ||||||||||||||||||
Consolidated Statement of Income | Three Months Ended | Six Months Ended | ||||||||||||||||
Details About | Line Item That Includes | June 30, | June 30, | |||||||||||||||
AOCI Components | Reclassification | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Unrealized appreciation on available-for-sale investments | ||||||||||||||||||
Net realized gains (losses) | $ | 31,404 | $ | 23,259 | $ | 76,091 | $ | 65,690 | ||||||||||
Other-than-temporary impairment losses | (5,395 | ) | (1,126 | ) | (13,132 | ) | (8,373 | ) | ||||||||||
Total before tax | 26,009 | 22,133 | 62,959 | 57,317 | ||||||||||||||
Income tax (expense) benefit | (3,915 | ) | (919 | ) | (8,642 | ) | (5,171 | ) | ||||||||||
Net of tax | $ | 22,094 | $ | 21,214 | $ | 54,317 | $ | 52,146 |
Before Tax Amount | Tax Expense (Benefit) | Net of Tax Amount | |||||||||
Three Months Ended June 30, 2016 | |||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||
Unrealized holding gains (losses) arising during period | $ | 117,904 | $ | 15,444 | $ | 102,460 | |||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) | (52 | ) | — | (52 | ) | ||||||
Less reclassification of net realized gains (losses) included in net income | 26,009 | 3,915 | 22,094 | ||||||||
Foreign currency translation adjustments | (18,186 | ) | (35 | ) | (18,151 | ) | |||||
Other comprehensive income (loss) | $ | 73,657 | $ | 11,494 | $ | 62,163 | |||||
Three Months Ended June 30, 2015 | |||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||
Unrealized holding gains (losses) arising during period | $ | (96,630 | ) | $ | (14,695 | ) | $ | (81,935 | ) | ||
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) | (13 | ) | — | (13 | ) | ||||||
Less reclassification of net realized gains (losses) included in net income | 22,133 | 919 | 21,214 | ||||||||
Foreign currency translation adjustments | 11,697 | 117 | 11,580 | ||||||||
Other comprehensive income (loss) | $ | (107,079 | ) | $ | (15,497 | ) | $ | (91,582 | ) | ||
Six Months Ended June 30, 2016 | |||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||
Unrealized holding gains (losses) arising during period | $ | 270,078 | $ | 34,637 | $ | 235,441 | |||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) | (150 | ) | — | (150 | ) | ||||||
Less reclassification of net realized gains (losses) included in net income | 62,959 | 8,642 | 54,317 | ||||||||
Foreign currency translation adjustments | (326 | ) | 512 | (838 | ) | ||||||
Other comprehensive income (loss) | $ | 206,643 | $ | 26,507 | $ | 180,136 | |||||
Six Months Ended June 30, 2015 | |||||||||||
Unrealized appreciation (decline) in value of investments: | |||||||||||
Unrealized holding gains (losses) arising during period | $ | (2,243 | ) | $ | (4,612 | ) | $ | 2,369 | |||
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) | (1,461 | ) | — | (1,461 | ) | ||||||
Less reclassification of net realized gains (losses) included in net income | 57,317 | 5,171 | 52,146 | ||||||||
Foreign currency translation adjustments | (11,929 | ) | (752 | ) | (11,177 | ) | |||||
Other comprehensive income (loss) | $ | (72,950 | ) | $ | (10,535 | ) | $ | (62,415 | ) |
34 |
June 30, 2016 | ||||||||||||||||||||
Condensed Consolidating Balance Sheet | ACGL (Parent Guarantor) | Arch-U.S. (Subsidiary Issuer) | Other ACGL Subsidiaries | Consolidating Adjustments and Eliminations | ACGL Consolidated | |||||||||||||||
Assets | ||||||||||||||||||||
Total investments | $ | 126 | $ | 54,433 | $ | 16,628,029 | $ | (14,700 | ) | $ | 16,667,888 | |||||||||
Cash | 7,212 | 15,726 | 493,653 | — | 516,591 | |||||||||||||||
Investments in subsidiaries | 7,092,328 | 1,802,240 | — | (8,894,568 | ) | — | ||||||||||||||
Due from subsidiaries and affiliates | 27 | 50,563 | 388,302 | (438,892 | ) | — | ||||||||||||||
Premiums receivable | — | — | 1,775,867 | (515,260 | ) | 1,260,607 | ||||||||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | — | — | 5,993,929 | (3,958,959 | ) | 2,034,970 | ||||||||||||||
Contractholder receivables | — | — | 1,600,426 | — | 1,600,426 | |||||||||||||||
Prepaid reinsurance premiums | — | — | 1,690,278 | (1,149,324 | ) | 540,954 | ||||||||||||||
Deferred acquisition costs, net | — | — | 462,906 | — | 462,906 | |||||||||||||||
Other assets | 13,911 | 46,982 | 1,417,947 | (151,265 | ) | 1,327,575 | ||||||||||||||
Total assets | $ | 7,113,604 | $ | 1,969,944 | $ | 30,451,337 | $ | (15,122,968 | ) | $ | 24,411,917 | |||||||||
Liabilities | ||||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | — | $ | — | $ | 13,402,389 | $ | (3,930,742 | ) | $ | 9,471,647 | |||||||||
Unearned premiums | — | — | 3,767,683 | (1,149,324 | ) | 2,618,359 | ||||||||||||||
Reinsurance balances payable | — | — | 811,247 | (515,260 | ) | 295,987 | ||||||||||||||
Contractholder payables | — | — | 1,600,426 | — | 1,600,426 | |||||||||||||||
Collateral held for insured obligations | — | — | 261,228 | 261,228 | ||||||||||||||||
Deposit accounting liabilities | — | — | 22,325 | — | 22,325 | |||||||||||||||
Senior notes | 296,914 | 494,478 | — | — | 791,392 | |||||||||||||||
Revolving credit agreement borrowings | 100,000 | — | 297,830 | — | 397,830 | |||||||||||||||
Due to subsidiaries and affiliates | 1 | 35,003 | 403,888 | (438,892 | ) | — | ||||||||||||||
Other liabilities | 12,767 | 48,023 | 1,373,538 | (179,482 | ) | 1,254,846 | ||||||||||||||
Total liabilities | 409,682 | 577,504 | 21,940,554 | (6,213,700 | ) | 16,714,040 | ||||||||||||||
Redeemable noncontrolling interests | — | — | 220,066 | (14,700 | ) | 205,366 | ||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||
Total shareholders’ equity available to Arch | 6,703,922 | 1,392,440 | 7,502,128 | (8,894,568 | ) | 6,703,922 | ||||||||||||||
Non-redeemable noncontrolling interests | — | — | 788,589 | — | 788,589 | |||||||||||||||
Total shareholders’ equity | 6,703,922 | 1,392,440 | 8,290,717 | (8,894,568 | ) | 7,492,511 | ||||||||||||||
Total liabilities, noncontrolling interests and shareholders’ equity | $ | 7,113,604 | $ | 1,969,944 | $ | 30,451,337 | $ | (15,122,968 | ) | $ | 24,411,917 |
35 |
December 31, 2015 | ||||||||||||||||||||
Condensed Consolidating Balance Sheet | ACGL (Parent Guarantor) | Arch-U.S. (Subsidiary Issuer) | Other ACGL Subsidiaries | Consolidating Adjustments and Eliminations | ACGL Consolidated | |||||||||||||||
Assets | ||||||||||||||||||||
Total investments | $ | 50 | $ | 42,210 | $ | 15,815,381 | $ | (14,700 | ) | $ | 15,842,941 | |||||||||
Cash | 6,809 | 17,023 | 529,494 | — | 553,326 | |||||||||||||||
Investments in subsidiaries | 6,609,174 | 1,712,757 | — | (8,321,931 | ) | — | ||||||||||||||
Due from subsidiaries and affiliates | 23 | 48,811 | 384,469 | (433,303 | ) | — | ||||||||||||||
Premiums receivable | — | — | 1,376,310 | (392,867 | ) | 983,443 | ||||||||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | — | — | 5,783,452 | (3,916,079 | ) | 1,867,373 | ||||||||||||||
Contractholder receivables | — | — | 1,486,296 | — | 1,486,296 | |||||||||||||||
Prepaid reinsurance premiums | — | — | 1,511,795 | (1,084,186 | ) | 427,609 | ||||||||||||||
Deferred acquisition costs, net | — | — | 433,477 | — | 433,477 | |||||||||||||||
Other assets | 4,138 | 45,522 | 2,119,279 | (586,134 | ) | 1,582,805 | ||||||||||||||
Total assets | $ | 6,620,194 | $ | 1,866,323 | $ | 29,439,953 | $ | (14,749,200 | ) | $ | 23,177,270 | |||||||||
Liabilities | ||||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | — | $ | — | $ | 13,010,608 | $ | (3,885,358 | ) | $ | 9,125,250 | |||||||||
Unearned premiums | — | — | 3,418,118 | (1,084,186 | ) | 2,333,932 | ||||||||||||||
Reinsurance balances payable | — | — | 603,586 | (379,466 | ) | 224,120 | ||||||||||||||
Contractholder payables | — | — | 1,486,296 | — | 1,486,296 | |||||||||||||||
Collateral held for insured obligations | — | — | 248,982 | — | 248,982 | |||||||||||||||
Deposit accounting liabilities | — | — | 463,507 | (203,143 | ) | 260,364 | ||||||||||||||
Senior notes | 296,874 | 494,432 | — | — | 791,306 | |||||||||||||||
Revolving credit agreement borrowings | 100,000 | — | 430,434 | — | 530,434 | |||||||||||||||
Due to subsidiaries and affiliates | 26 | 35,000 | 398,277 | (433,303 | ) | — | ||||||||||||||
Other liabilities | 18,413 | 50,890 | 1,385,500 | (427,111 | ) | 1,027,692 | ||||||||||||||
Total liabilities | 415,313 | 580,322 | 21,445,308 | (6,412,567 | ) | 16,028,376 | ||||||||||||||
Redeemable noncontrolling interests | — | — | 219,882 | (14,700 | ) | 205,182 | ||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||
Total shareholders’ equity available to Arch | 6,204,881 | 1,286,001 | 7,035,932 | (8,321,933 | ) | 6,204,881 | ||||||||||||||
Non-redeemable noncontrolling interests | — | — | 738,831 | — | 738,831 | |||||||||||||||
Total shareholders’ equity | 6,204,881 | 1,286,001 | 7,774,763 | (8,321,933 | ) | 6,943,712 | ||||||||||||||
Total liabilities, noncontrolling interests and shareholders’ equity | $ | 6,620,194 | $ | 1,866,323 | $ | 29,439,953 | $ | (14,749,200 | ) | $ | 23,177,270 |
36 |
Three Months Ended June 30, 2016 | ||||||||||||||||||||
Condensed Consolidating Statement of Income and Comprehensive Income | ACGL (Parent Guarantor) | Arch-U.S. (Subsidiary Issuer) | Other ACGL Subsidiaries | Consolidating Adjustments and Eliminations | ACGL Consolidated | |||||||||||||||
Revenues | ||||||||||||||||||||
Net premiums earned | $ | — | $ | — | $ | 1,005,985 | $ | — | $ | 1,005,985 | ||||||||||
Net investment income | — | 775 | 94,097 | (6,534 | ) | 88,338 | ||||||||||||||
Net realized gains (losses) | — | — | 68,218 | — | 68,218 | |||||||||||||||
Net impairment losses recognized in earnings | — | — | (5,343 | ) | — | (5,343 | ) | |||||||||||||
Other underwriting income | — | — | 41,450 | (16,226 | ) | 25,224 | ||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | — | — | 8,737 | — | 8,737 | |||||||||||||||
Other income (loss) | (7 | ) | — | — | — | (7 | ) | |||||||||||||
Total revenues | (7 | ) | 775 | 1,213,144 | (22,760 | ) | 1,191,152 | |||||||||||||
Expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | — | — | 584,592 | — | 584,592 | |||||||||||||||
Acquisition expenses | — | — | 175,281 | — | 175,281 | |||||||||||||||
Other operating expenses | — | — | 159,590 | — | 159,590 | |||||||||||||||
Corporate expenses | 17,441 | 359 | (600 | ) | — | 17,200 | ||||||||||||||
Interest expense | 5,929 | 6,647 | 25,527 | (22,440 | ) | 15,663 | ||||||||||||||
Net foreign exchange (gains) losses | — | — | (14,125 | ) | (10,537 | ) | (24,662 | ) | ||||||||||||
Total expenses | 23,370 | 7,006 | 930,265 | (32,977 | ) | 927,664 | ||||||||||||||
Income (loss) before income taxes | (23,377 | ) | (6,231 | ) | 282,879 | 10,217 | 263,488 | |||||||||||||
Income tax (expense) benefit | — | 2,086 | (16,217 | ) | — | (14,131 | ) | |||||||||||||
Income (loss) before equity in net income of subsidiaries | (23,377 | ) | (4,145 | ) | 266,662 | 10,217 | 249,357 | |||||||||||||
Equity in net income of subsidiaries | 234,432 | 19,873 | — | (254,305 | ) | — | ||||||||||||||
Net income | 211,055 | 15,728 | 266,662 | (244,088 | ) | 249,357 | ||||||||||||||
Net (income) loss attributable to noncontrolling interests | — | — | (38,623 | ) | 321 | (38,302 | ) | |||||||||||||
Net income available to Arch | 211,055 | 15,728 | 228,039 | (243,767 | ) | 211,055 | ||||||||||||||
Preferred dividends | (5,485 | ) | — | — | — | (5,485 | ) | |||||||||||||
Net income available to Arch common shareholders | $ | 205,570 | $ | 15,728 | $ | 228,039 | $ | (243,767 | ) | $ | 205,570 | |||||||||
Comprehensive income (loss) available to Arch | $ | 273,260 | $ | 28,536 | $ | 300,542 | $ | (329,078 | ) | $ | 273,260 |
37 |
Three Months Ended June 30, 2015 | ||||||||||||||||||||
Condensed Consolidating Statement of Income and Comprehensive Income | ACGL (Parent Guarantor) | Arch-U.S. (Subsidiary Issuer) | Other ACGL Subsidiaries | Consolidating Adjustments and Eliminations | ACGL Consolidated | |||||||||||||||
Revenues | ||||||||||||||||||||
Net premiums earned | $ | — | $ | — | $ | 943,438 | $ | — | $ | 943,438 | ||||||||||
Net investment income | — | 800 | 87,154 | (991 | ) | 86,963 | ||||||||||||||
Net realized gains (losses) | — | 1 | (35,726 | ) | — | (35,725 | ) | |||||||||||||
Net impairment losses recognized in earnings | — | — | (1,113 | ) | — | (1,113 | ) | |||||||||||||
Other underwriting income | — | — | 7,717 | — | 7,717 | |||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | — | — | 16,167 | — | 16,167 | |||||||||||||||
Other income (loss) | — | — | 2,205 | — | 2,205 | |||||||||||||||
Total revenues | — | 801 | 1,019,842 | (991 | ) | 1,019,652 | ||||||||||||||
Expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | — | — | 519,426 | — | 519,426 | |||||||||||||||
Acquisition expenses | — | — | 175,425 | — | 175,425 | |||||||||||||||
Other operating expenses | — | — | 151,190 | — | 151,190 | |||||||||||||||
Corporate expenses | 16,900 | 1,012 | (494 | ) | — | 17,418 | ||||||||||||||
Interest expense | 5,862 | 6,769 | (7,793 | ) | (827 | ) | 4,011 | |||||||||||||
Net foreign exchange (gains) losses | — | — | 6,942 | 12,641 | 19,583 | |||||||||||||||
Total expenses | 22,762 | 7,781 | 844,696 | 11,814 | 887,053 | |||||||||||||||
Income (loss) before income taxes | (22,762 | ) | (6,980 | ) | 175,146 | (12,805 | ) | 132,599 | ||||||||||||
Income tax (expense) benefit | — | 3,697 | (10,477 | ) | — | (6,780 | ) | |||||||||||||
Income (loss) before equity in net income of subsidiaries | (22,762 | ) | (3,283 | ) | 164,669 | (12,805 | ) | 125,819 | ||||||||||||
Equity in net income of subsidiaries | 138,552 | 14,077 | — | (152,629 | ) | — | ||||||||||||||
Net income | 115,790 | 10,794 | 164,669 | (165,434 | ) | 125,819 | ||||||||||||||
Net (income) loss attributable to noncontrolling interests | — | — | (10,193 | ) | 164 | (10,029 | ) | |||||||||||||
Net income available to Arch | 115,790 | 10,794 | 154,476 | (165,270 | ) | 115,790 | ||||||||||||||
Preferred dividends | (5,485 | ) | — | — | — | (5,485 | ) | |||||||||||||
Net income available to Arch common shareholders | $ | 110,305 | $ | 10,794 | $ | 154,476 | $ | (165,270 | ) | $ | 110,305 | |||||||||
Comprehensive income (loss) available to Arch | $ | 24,208 | $ | (13,505 | ) | $ | 50,249 | $ | (36,744 | ) | $ | 24,208 |
38 |
Six Months Ended June 30, 2016 | ||||||||||||||||||||
Condensed Consolidating Statement of Income and Comprehensive Income | ACGL (Parent Guarantor) | Arch-U.S. (Subsidiary Issuer) | Other ACGL Subsidiaries | Consolidating Adjustments and Eliminations | ACGL Consolidated | |||||||||||||||
Revenues | ||||||||||||||||||||
Net premiums earned | $ | — | $ | — | $ | 1,957,564 | $ | — | $ | 1,957,564 | ||||||||||
Net investment income | 1 | 1,548 | 194,358 | (13,834 | ) | 182,073 | ||||||||||||||
Net realized gains (losses) | — | — | 105,542 | — | 105,542 | |||||||||||||||
Net impairment losses recognized in earnings | — | — | (12,982 | ) | — | (12,982 | ) | |||||||||||||
Other underwriting income | — | — | 46,769 | (16,498 | ) | 30,271 | ||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | — | — | 15,392 | — | 15,392 | |||||||||||||||
Other income (loss) | 199 | — | (231 | ) | — | (32 | ) | |||||||||||||
Total revenues | 200 | 1,548 | 2,306,412 | (30,332 | ) | 2,277,828 | ||||||||||||||
Expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | — | — | 1,107,541 | — | 1,107,541 | |||||||||||||||
Acquisition expenses | — | — | 345,746 | — | 345,746 | |||||||||||||||
Other operating expenses | — | — | 311,859 | — | 311,859 | |||||||||||||||
Corporate expenses | 26,796 | 941 | (1,154 | ) | — | 26,583 | ||||||||||||||
Interest expense | 11,863 | 13,319 | 36,279 | (29,691 | ) | 31,770 | ||||||||||||||
Net foreign exchange (gains) losses | — | — | 2,370 | (3,466 | ) | (1,096 | ) | |||||||||||||
Total expenses | 38,659 | 14,260 | 1,802,641 | (33,157 | ) | 1,822,403 | ||||||||||||||
Income (loss) before income taxes | (38,459 | ) | (12,712 | ) | 503,771 | 2,825 | 455,425 | |||||||||||||
Income tax (expense) benefit | — | 4,330 | (34,771 | ) | — | (30,441 | ) | |||||||||||||
Income (loss) before equity in net income of subsidiaries | (38,459 | ) | (8,382 | ) | 469,000 | 2,825 | 424,984 | |||||||||||||
Equity in net income of subsidiaries | 404,312 | 42,739 | — | (447,051 | ) | — | ||||||||||||||
Net income | 365,853 | 34,357 | 469,000 | (444,226 | ) | 424,984 | ||||||||||||||
Net (income) loss attributable to noncontrolling interests | — | — | (59,773 | ) | 642 | (59,131 | ) | |||||||||||||
Net income available to Arch | 365,853 | 34,357 | 409,227 | (443,584 | ) | 365,853 | ||||||||||||||
Preferred dividends | (10,969 | ) | — | — | — | (10,969 | ) | |||||||||||||
Net income available to Arch common shareholders | $ | 354,884 | $ | 34,357 | $ | 409,227 | $ | (443,584 | ) | $ | 354,884 | |||||||||
Comprehensive income (loss) available to Arch | $ | 546,189 | $ | 87,185 | $ | 592,793 | $ | (679,978 | ) | $ | 546,189 | |||||||||
39 |
Six Months Ended June 30, 2015 | ||||||||||||||||||||
Condensed Consolidating Statement of Income and Comprehensive Income | ACGL (Parent Guarantor) | Arch-U.S. (Subsidiary Issuer) | Other ACGL Subsidiaries | Consolidating Adjustments and Eliminations | ACGL Consolidated | |||||||||||||||
Revenues | ||||||||||||||||||||
Net premiums earned | $ | — | $ | — | $ | 1,853,702 | $ | — | $ | 1,853,702 | ||||||||||
Net investment income | — | 805 | 173,164 | (8,012 | ) | 165,957 | ||||||||||||||
Net realized gains (losses) | — | 1 | 47,622 | — | 47,623 | |||||||||||||||
Net impairment losses recognized in earnings | — | — | (6,912 | ) | — | (6,912 | ) | |||||||||||||
Other underwriting income | — | — | 19,253 | — | 19,253 | |||||||||||||||
Equity in net income (loss) of investment funds accounted for using the equity method | — | — | 22,056 | — | 22,056 | |||||||||||||||
Other income (loss) | — | — | 317 | — | 317 | |||||||||||||||
Total revenues | — | 806 | 2,109,202 | (8,012 | ) | 2,101,996 | ||||||||||||||
Expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | — | — | 1,013,142 | — | 1,013,142 | |||||||||||||||
Acquisition expenses | — | — | 338,501 | — | 338,501 | |||||||||||||||
Other operating expenses | — | — | 299,727 | — | 299,727 | |||||||||||||||
Corporate expenses | 25,532 | 2,271 | (1,040 | ) | — | 26,763 | ||||||||||||||
Interest expense | 11,718 | 13,135 | (258 | ) | (7,848 | ) | 16,747 | |||||||||||||
Net foreign exchange (gains) losses | — | — | (32,688 | ) | (14,230 | ) | (46,918 | ) | ||||||||||||
Total expenses | 37,250 | 15,406 | 1,617,384 | (22,078 | ) | 1,647,962 | ||||||||||||||
Income (loss) before income taxes | (37,250 | ) | (14,600 | ) | 491,818 | 14,066 | 454,034 | |||||||||||||
Income tax (expense) benefit | — | 5,110 | (24,568 | ) | — | (19,458 | ) | |||||||||||||
Income (loss) before equity in net income of subsidiaries | (37,250 | ) | (9,490 | ) | 467,250 | 14,066 | 434,576 | |||||||||||||
Equity in net income of subsidiaries | 436,376 | 28,572 | — | (464,948 | ) | — | ||||||||||||||
Net income | 399,126 | 19,082 | 467,250 | (450,882 | ) | 434,576 | ||||||||||||||
Net (income) loss attributable to noncontrolling interests | — | — | (35,614 | ) | 164 | (35,450 | ) | |||||||||||||
Net income available to Arch | 399,126 | 19,082 | 431,636 | (450,718 | ) | 399,126 | ||||||||||||||
Preferred dividends | (10,969 | ) | — | — | — | (10,969 | ) | |||||||||||||
Net income available to Arch common shareholders | $ | 388,157 | $ | 19,082 | $ | 431,636 | $ | (450,718 | ) | $ | 388,157 | |||||||||
Comprehensive income (loss) available to Arch | $ | 336,711 | $ | (1,755 | ) | $ | 383,442 | $ | (381,687 | ) | $ | 336,711 |
40 |
Six Months Ended June 30, 2016 | ||||||||||||||||||||||
Condensed Consolidating Statement of Cash Flows | ACGL (Parent Guarantor) | Arch-U.S. (Subsidiary Issuer) | Other ACGL Subsidiaries | Consolidating Adjustments and Eliminations | ACGL Consolidated | |||||||||||||||||
Operating Activities | ||||||||||||||||||||||
Net Cash Provided By (Used For) Operating Activities | $ | 89,499 | $ | 10,732 | $ | 588,067 | $ | (147,074 | ) | $ | 541,224 | |||||||||||
Investing Activities | ||||||||||||||||||||||
Purchases of fixed maturity investments | — | — | (17,541,731 | ) | — | (17,541,731 | ) | |||||||||||||||
Purchases of equity securities | — | — | (212,678 | ) | — | (212,678 | ) | |||||||||||||||
Purchases of other investments | — | — | (650,613 | ) | — | (650,613 | ) | |||||||||||||||
Proceeds from the sales of fixed maturity investments | — | — | 16,978,549 | — | 16,978,549 | |||||||||||||||||
Proceeds from the sales of equity securities | — | — | 337,619 | — | 337,619 | |||||||||||||||||
Proceeds from the sales, redemptions and maturities of other investments | — | — | 636,535 | — | 636,535 | |||||||||||||||||
Proceeds from redemptions and maturities of fixed maturity investments | — | 41,500 | 329,480 | — | 370,980 | |||||||||||||||||
Net settlements of derivative instruments | — | — | 45,174 | — | 45,174 | |||||||||||||||||
Net (purchases) sales of short-term investments | (76 | ) | (53,729 | ) | (250,655 | ) | — | (304,460 | ) | |||||||||||||
Change in cash collateral related to securities lending | — | — | (18,715 | ) | — | (18,715 | ) | |||||||||||||||
Contributions to subsidiaries | (3,300 | ) | — | (2,779 | ) | 6,079 | — | |||||||||||||||
Intercompany loans issued | — | — | — | — | — | |||||||||||||||||
Purchase of business, net of cash acquired | — | — | (1,460 | ) | — | (1,460 | ) | |||||||||||||||
Purchases of fixed assets | (8 | ) | — | (8,276 | ) | — | (8,284 | ) | ||||||||||||||
Change in other assets | 2,000 | — | 11,416 | — | 13,416 | |||||||||||||||||
Net Cash Provided By (Used For) Investing Activities | (1,384 | ) | (12,229 | ) | (348,134 | ) | 6,079 | (355,668 | ) | |||||||||||||
Financing Activities | ||||||||||||||||||||||
Purchases of common shares under share repurchase program | (75,256 | ) | — | — | — | (75,256 | ) | |||||||||||||||
Proceeds from common shares issued, net | (1,487 | ) | — | 6,079 | (6,079 | ) | (1,487 | ) | ||||||||||||||
Proceeds from borrowings | — | — | 46,000 | — | 46,000 | |||||||||||||||||
Repayments of borrowings | — | — | (179,171 | ) | — | (179,171 | ) | |||||||||||||||
Change in cash collateral related to securities lending | — | — | 18,715 | — | 18,715 | |||||||||||||||||
Dividends paid to redeemable noncontrolling interests | — | — | (9,632 | ) | 638 | (8,994 | ) | |||||||||||||||
Dividends paid to parent (1) | — | — | (146,436 | ) | 146,436 | — | ||||||||||||||||
Other | — | 200 | (2,423 | ) | — | (2,223 | ) | |||||||||||||||
Preferred dividends paid | (10,969 | ) | — | — | — | (10,969 | ) | |||||||||||||||
Net Cash Provided By (Used For) Financing Activities | (87,712 | ) | 200 | (266,868 | ) | 140,995 | (213,385 | ) | ||||||||||||||
Effects of exchange rates changes on foreign currency cash | — | — | (8,906 | ) | — | (8,906 | ) | |||||||||||||||
Increase (decrease) in cash | 403 | (1,297 | ) | (35,841 | ) | — | (36,735 | ) | ||||||||||||||
Cash beginning of year | 6,809 | 17,023 | 529,494 | — | 553,326 | |||||||||||||||||
Cash end of period | $ | 7,212 | $ | 15,726 | $ | 493,653 | $ | — | $ | 516,591 |
41 |
Six Months Ended June 30, 2015 | ||||||||||||||||||||||
Condensed Consolidating Statement of Cash Flows | ACGL (Parent Guarantor) | Arch-U.S. (Subsidiary Issuer) | Other ACGL Subsidiaries | Consolidating Adjustments and Eliminations | ACGL Consolidated | |||||||||||||||||
Operating Activities | ||||||||||||||||||||||
Net Cash Provided By (Used For) Operating Activities | $ | 378,703 | $ | 8,282 | $ | 433,833 | $ | (435,619 | ) | $ | 385,199 | |||||||||||
Investing Activities | ||||||||||||||||||||||
Purchases of fixed maturity investments | — | — | (14,641,391 | ) | — | (14,641,391 | ) | |||||||||||||||
Purchases of equity securities | — | — | (288,535 | ) | — | (288,535 | ) | |||||||||||||||
Purchases of other investments | — | — | (779,678 | ) | — | (779,678 | ) | |||||||||||||||
Proceeds from the sales of fixed maturity investments | — | 20,002 | 14,313,434 | — | 14,333,436 | |||||||||||||||||
Proceeds from the sales of equity securities | — | — | 272,343 | — | 272,343 | |||||||||||||||||
Proceeds from the sales, redemptions and maturities of other investments | — | — | 587,650 | — | 587,650 | |||||||||||||||||
Proceeds from redemptions and maturities of fixed maturity investments | — | — | 474,984 | — | 474,984 | |||||||||||||||||
Net settlements of derivative instruments | — | — | 19,006 | — | 19,006 | |||||||||||||||||
Proceeds from investment in joint venture | — | — | 40,000 | — | 40,000 | |||||||||||||||||
Net (purchases) sales of short-term investments | (365 | ) | (12,171 | ) | 16,243 | — | 3,707 | |||||||||||||||
Change in cash collateral related to securities lending | — | — | (18,329 | ) | — | (18,329 | ) | |||||||||||||||
Contributions to subsidiaries | — | — | (9,290 | ) | 9,290 | — | ||||||||||||||||
Intercompany loans issued | — | (39,500 | ) | (27,500 | ) | 67,000 | — | |||||||||||||||
Purchase of business, net of cash acquired | — | — | 818 | — | 818 | |||||||||||||||||
Purchases of fixed assets | (24 | ) | — | (6,372 | ) | — | (6,396 | ) | ||||||||||||||
Change in other assets | — | — | (36,769 | ) | — | (36,769 | ) | |||||||||||||||
Net Cash Provided By (Used For) Investing Activities | (389 | ) | (31,669 | ) | (83,386 | ) | 76,290 | (39,154 | ) | |||||||||||||
Financing Activities | ||||||||||||||||||||||
Purchases of common shares under share repurchase program | (361,877 | ) | — | — | — | (361,877 | ) | |||||||||||||||
Proceeds from common shares issued, net | 2,178 | — | 9,290 | (9,290 | ) | 2,178 | ||||||||||||||||
Proceeds from intercompany borrowings | — | 27,500 | 39,500 | (67,000 | ) | — | ||||||||||||||||
Change in cash collateral related to securities lending | — | — | 18,329 | — | 18,329 | |||||||||||||||||
Dividends paid to redeemable noncontrolling interests | — | — | (9,632 | ) | 319 | (9,313 | ) | |||||||||||||||
Dividends paid to parent (1) | — | — | (435,300 | ) | 435,300 | — | ||||||||||||||||
Other | — | 28 | 54,990 | — | 55,018 | |||||||||||||||||
Preferred dividends paid | (10,969 | ) | — | — | — | (10,969 | ) | |||||||||||||||
Net Cash Provided By (Used For) Financing Activities | (370,668 | ) | 27,528 | (322,823 | ) | 359,329 | (306,634 | ) | ||||||||||||||
Effects of exchange rates changes on foreign currency cash | — | — | (39 | ) | — | (39 | ) | |||||||||||||||
Increase (decrease) in cash | 7,646 | 4,141 | 27,585 | — | 39,372 | |||||||||||||||||
Cash beginning of year | 3,218 | 2,787 | 479,697 | — | 485,702 | |||||||||||||||||
Cash end of period | $ | 10,864 | $ | 6,928 | $ | 507,282 | $ | — | $ | 525,074 |
42 |
43 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
44 |
Arch Portfolio | Benchmark Return | ||||
2016 Second Quarter | 1.27 | % | 1.08 | % | |
2015 Second Quarter | (0.04 | )% | (0.15 | )% | |
Six Months Ended June 30, 2016 | 3.11 | % | 3.50 | % | |
Six Months Ended June 30, 2015 | 1.07 | % | 0.14 | % |
45 |
% | ||
BoAML 1-10 Year AA U.S. Corporate & Yankees Index | 21.25 | % |
BoAML 1-5 Year U.S. Treasury Index | 13.00 | |
BoAML U.S. Mortgage Backed Securities Index | 10.00 | |
BoAML 3-5 Year Fixed Rate Asset Backed Securities Index | 7.00 | |
BoAML 1-10 Year U.S. Municipal Securities Index | 7.00 | |
BoAML U.S. High Yield Constrained Index | 5.50 | |
BoAML 0-3 Month U.S. Treasury Bill Index | 5.00 | |
Barclays Capital CMBS Inv. Grade, AAA Rated Index | 5.00 | |
Barclays Capital Agency Bullet, 10-10 Year Index | 5.00 | |
MSCI All Country World Gross Total Return Index | 5.00 | |
BoAML 1-10 Year Euro Government Index | 4.50 | |
BoAML 5-10 Year U.S. Treasury Index | 3.25 | |
BoAML 1-5 Year U.K. Gilt Index | 3.00 | |
BoAML 1-10 Year Australian Governments Index | 2.50 | |
BoAML 1-5 Year Canada Government Index | 1.50 | |
BoAML Euro Government Index | 1.00 | |
BoAML 20+ Year Canada Government Index | 0.50 | |
Total | 100.00 | % |
46 |
47 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income available to Arch common shareholders | $ | 205,570 | $ | 110,305 | $ | 354,884 | $ | 388,157 | |||||||
Net realized (gains) losses | (43,935 | ) | 27,837 | (76,399 | ) | (39,638 | ) | ||||||||
Net impairment losses recognized in earnings | 5,343 | 1,113 | 12,982 | 6,912 | |||||||||||
Equity in net (income) loss of investment funds accounted for using the equity method | (8,737 | ) | (16,168 | ) | (15,392 | ) | (22,057 | ) | |||||||
Net foreign exchange (gains) losses | (22,703 | ) | 22,241 | (494 | ) | (44,574 | ) | ||||||||
Income tax expense | 5,036 | 628 | 10,735 | 7,002 | |||||||||||
After-tax operating income available to Arch common shareholders | $ | 140,574 | $ | 145,956 | $ | 286,316 | $ | 295,802 | |||||||
Beginning common shareholders’ equity | $ | 6,088,587 | $ | 5,963,702 | $ | 5,879,881 | $ | 5,805,053 | |||||||
Ending common shareholders’ equity | 6,378,922 | 5,812,515 | 6,378,922 | 5,812,515 | |||||||||||
Average common shareholders’ equity | $ | 6,233,755 | $ | 5,888,109 | $ | 6,129,402 | $ | 5,808,784 | |||||||
Annualized return on average common equity % | 13.2 | 7.5 | 11.6 | 13.4 | |||||||||||
Annualized operating return on average common equity % | 9.0 | 9.9 | 9.3 | 10.2 |
Three Months Ended June 30, | ||||||||||
2016 | 2015 | % Change | ||||||||
Gross premiums written | $ | 762,043 | $ | 744,810 | 2.3 | |||||
Premiums ceded | (246,875 | ) | (235,743 | ) | ||||||
Net premiums written | 515,168 | 509,067 | 1.2 | |||||||
Change in unearned premiums | 12,482 | 758 | ||||||||
Net premiums earned | 527,650 | 509,825 | 3.5 | |||||||
Other underwriting income | — | 521 | ||||||||
Losses and loss adjustment expenses | (354,633 | ) | (320,926 | ) | ||||||
Acquisition expenses, net | (77,317 | ) | (76,723 | ) | ||||||
Other operating expenses | (92,371 | ) | (89,054 | ) | ||||||
Underwriting income | $ | 3,329 | $ | 23,643 | (85.9 | ) | ||||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 67.2 | % | 62.9 | % | 4.3 | |||||
Acquisition expense ratio | 14.7 | % | 15.0 | % | (0.3 | ) | ||||
Other operating expense ratio | 17.5 | % | 17.5 | % | — | |||||
Combined ratio | 99.4 | % | 95.4 | % | 4.0 |
48 |
Six Months Ended June 30, | ||||||||||
2016 | 2015 | % Change | ||||||||
Gross premiums written | $ | 1,560,596 | $ | 1,510,963 | 3.3 | |||||
Premiums ceded | (495,664 | ) | (459,893 | ) | ||||||
Net premiums written | 1,064,932 | 1,051,070 | 1.3 | |||||||
Change in unearned premiums | (24,193 | ) | (33,331 | ) | ||||||
Net premiums earned | 1,040,739 | 1,017,739 | 2.3 | |||||||
Other underwriting income | — | 948 | ||||||||
Losses and loss adjustment expenses | (678,242 | ) | (638,822 | ) | ||||||
Acquisition expenses, net | (151,671 | ) | (151,801 | ) | ||||||
Other operating expenses | (178,232 | ) | (177,173 | ) | ||||||
Underwriting income | $ | 32,594 | $ | 50,891 | (36.0 | ) | ||||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 65.2 | % | 62.8 | % | 2.4 | |||||
Acquisition expense ratio | 14.6 | % | 14.9 | % | (0.3 | ) | ||||
Other operating expense ratio | 17.1 | % | 17.4 | % | (0.3 | ) | ||||
Combined ratio | 96.9 | % | 95.1 | % | 1.8 |
• | Construction and national accounts: primary and excess casualty coverages to middle and large accounts in the construction industry and a wide range of products for middle and large national accounts, specializing in loss sensitive primary casualty insurance programs (including large deductible, self-insured retention and retrospectively rated programs). |
• | Excess and surplus casualty: primary and excess casualty insurance coverages, including middle market energy business, and contract binding, which primarily provides casualty coverage through a network of appointed agents to small and medium risks. |
• | Lenders products: collateral protection, debt cancellation and service contract reimbursement products to banks, credit unions, automotive dealerships and original equipment manufacturers and other specialty programs that pertain to automotive lending and leasing. |
• | Professional lines: directors’ and officers’ liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity and other financial related coverages for corporate, private equity, venture capital, real estate investment trust, limited partnership, financial institution and not-for-profit clients of all sizes and medical professional and general liability insurance coverages for the healthcare industry. The business is predominately written on a claims-made basis. |
• | Programs: primarily package policies, underwriting workers’ compensation and umbrella liability business in support of desirable package programs, targeting |
• | Property, energy, marine and aviation: primary and excess general property insurance coverages, including catastrophe-exposed property coverage, for commercial clients. Coverages for marine include hull, war, specie and liability. Aviation and stand alone terrorism are also offered. |
• | Travel, accident and health: specialty travel and accident and related insurance products for individual, group travelers, travel agents and suppliers, as well as accident and health, which provides accident, disability and medical plan insurance coverages for employer groups, medical plan members, students and other participant groups. |
• | Other: includes alternative market risks (including captive insurance programs), excess workers’ compensation and employer’s liability insurance coverages for qualified self-insured groups, associations and trusts, and contract and commercial surety coverages, including contract bonds (payment and performance bonds) primarily for medium and large contractors and commercial surety bonds for Fortune 1,000 companies and smaller transaction business programs. |
Three Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Professional lines | $ | 107,519 | 20.9 | $ | 100,100 | 19.7 | |||||||
Construction and national accounts | 85,260 | 16.5 | 77,096 | 15.1 | |||||||||
Programs | 75,420 | 14.6 | 106,179 | 20.9 | |||||||||
Excess and surplus casualty | 60,412 | 11.7 | 53,971 | 10.6 | |||||||||
Travel, accident and health | 54,456 | 10.6 | 35,416 | 7.0 | |||||||||
Property, energy, marine and aviation | 50,194 | 9.7 | 62,049 | 12.2 | |||||||||
Lenders products | 25,254 | 4.9 | 24,011 | 4.7 | |||||||||
Other | 56,653 | 11.0 | 50,245 | 9.9 | |||||||||
Total | $ | 515,168 | 100.0 | $ | 509,067 | 100.0 |
49 |
Six Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Professional lines | $ | 216,986 | 20.4 | $ | 211,278 | 20.1 | |||||||
Construction and national accounts | 189,734 | 17.8 | 173,599 | 16.5 | |||||||||
Programs | 165,204 | 15.5 | 224,376 | 21.3 | |||||||||
Excess and surplus casualty | 114,069 | 10.7 | 103,341 | 9.8 | |||||||||
Travel, accident and health | 111,719 | 10.5 | 74,328 | 7.1 | |||||||||
Property, energy, marine and aviation | 100,169 | 9.4 | 120,716 | 11.5 | |||||||||
Lenders products | 50,038 | 4.7 | 46,827 | 4.5 | |||||||||
Other | 117,013 | 11.0 | 96,605 | 9.2 | |||||||||
Total | $ | 1,064,932 | 100.0 | $ | 1,051,070 | 100.0 |
Three Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Professional lines | $ | 108,556 | 20.6 | $ | 107,420 | 21.1 | |||||||
Construction and national accounts | 84,414 | 16.0 | 71,580 | 14.0 | |||||||||
Programs | 90,595 | 17.2 | 112,942 | 22.2 | |||||||||
Excess and surplus casualty | 57,155 | 10.8 | 51,709 | 10.1 | |||||||||
Travel, accident and health | 59,821 | 11.3 | 39,979 | 7.8 | |||||||||
Property, energy, marine and aviation | 47,076 | 8.9 | 53,825 | 10.6 | |||||||||
Lenders products | 23,007 | 4.4 | 21,259 | 4.2 | |||||||||
Other | 57,026 | 10.8 | 51,111 | 10.0 | |||||||||
Total | $ | 527,650 | 100.0 | $ | 509,825 | 100.0 |
Six Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Professional lines | $ | 213,500 | 20.5 | $ | 215,292 | 21.2 | |||||||
Construction and national accounts | 161,457 | 15.5 | 143,810 | 14.1 | |||||||||
Programs | 189,096 | 18.2 | 228,906 | 22.5 | |||||||||
Excess and surplus casualty | 112,120 | 10.8 | 104,056 | 10.2 | |||||||||
Travel, accident and health | 107,366 | 10.3 | 73,711 | 7.2 | |||||||||
Property, energy, marine and aviation | 96,113 | 9.2 | 108,906 | 10.7 | |||||||||
Lenders products | 47,409 | 4.6 | 44,118 | 4.3 | |||||||||
Other | 113,678 | 10.9 | 98,940 | 9.7 | |||||||||
Total | $ | 1,040,739 | 100.0 | $ | 1,017,739 | 100.0 |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Current year | 68.1 | % | 66.5 | % | 66.3 | % | 65.5 | % | |||
Prior period reserve development | (0.9 | )% | (3.6 | )% | (1.1 | )% | (2.7 | )% | |||
Loss ratio | 67.2 | % | 62.9 | % | 65.2 | % | 62.8 | % |
50 |
51 |
Three Months Ended June 30, | ||||||||||
2016 | 2015 | % Change | ||||||||
Gross premiums written | $ | 412,053 | $ | 342,101 | 20.4 | |||||
Premiums ceded | (119,951 | ) | (89,446 | ) | ||||||
Net premiums written | 292,102 | 252,655 | 15.6 | |||||||
Change in unearned premiums | (846 | ) | 21,310 | |||||||
Net premiums earned | 291,256 | 273,965 | 6.3 | |||||||
Other underwriting income | 20,118 | 2,658 | ||||||||
Losses and loss adjustment expenses | (146,091 | ) | (111,183 | ) | ||||||
Acquisition expenses, net | (55,796 | ) | (58,360 | ) | ||||||
Other operating expenses | (37,115 | ) | (39,007 | ) | ||||||
Underwriting income | $ | 72,372 | $ | 68,073 | 6.3 | |||||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 50.2 | % | 40.6 | % | 9.6 | |||||
Acquisition expense ratio | 19.2 | % | 21.3 | % | (2.1 | ) | ||||
Other operating expense ratio | 12.7 | % | 14.2 | % | (1.5 | ) | ||||
Combined ratio | 82.1 | % | 76.1 | % | 6.0 |
Six Months Ended June 30, | ||||||||||
2016 | 2015 | % Change | ||||||||
Gross premiums written | $ | 893,443 | $ | 827,213 | 8.0 | |||||
Premiums ceded | (280,517 | ) | (226,015 | ) | ||||||
Net premiums written | 612,926 | 601,198 | 2.0 | |||||||
Change in unearned premiums | (60,462 | ) | (47,516 | ) | ||||||
Net premiums earned | 552,464 | 553,682 | (0.2 | ) | ||||||
Other underwriting income | 20,443 | 4,087 | ||||||||
Losses and loss adjustment expenses | (257,689 | ) | (223,715 | ) | ||||||
Acquisition expenses, net | (110,583 | ) | (114,964 | ) | ||||||
Other operating expenses | (73,570 | ) | (77,051 | ) | ||||||
Underwriting income | $ | 131,065 | $ | 142,039 | (7.7 | ) | ||||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 46.6 | % | 40.4 | % | 6.2 | |||||
Acquisition expense ratio | 20.0 | % | 20.8 | % | (0.8 | ) | ||||
Other operating expense ratio | 13.3 | % | 13.9 | % | (0.6 | ) | ||||
Combined ratio | 79.9 | % | 75.1 | % | 4.8 |
• | Casualty: provides coverage to ceding company clients on third party liability and workers’ compensation exposures from ceding company clients, primarily on a treaty basis. Exposures include, among others, executive assurance, professional liability, workers’ compensation, excess and umbrella liability, excess motor and healthcare business. |
• | Marine and aviation: provides coverage for energy, hull, cargo, specie, liability and transit, and aviation business, including airline and general aviation risks. Business written may also include space business, which includes coverages for satellite assembly, launch and operation for commercial space programs. |
• | Other specialty: provides coverage to ceding company clients for proportional motor and other lines including surety, accident and health, workers’ compensation catastrophe, agriculture, trade credit and political risk. |
• | Property catastrophe: provides protection for most catastrophic losses that are covered in the underlying policies written by reinsureds, including hurricane, earthquake, flood, tornado, hail and fire, and coverage for other perils on a case-by-case basis. Property catastrophe reinsurance provides coverage on an excess of loss basis when aggregate losses and loss adjustment expense from a single occurrence of a covered peril exceed the retention specified in the contract. |
• | Property excluding property catastrophe: provides coverage for both personal lines and commercial property exposures and principally covers buildings, structures, equipment and contents. The primary perils in this business include fire, explosion, collapse, riot, |
52 |
• | Other. includes life reinsurance business on both a proportional and non-proportional basis, casualty clash business and, in limited instances, non-traditional business which is intended to provide insurers with risk management solutions that complement traditional reinsurance. |
Three Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Other specialty | $ | 113,943 | 39.0 | $ | 72,134 | 28.6 | |||||||
Property excluding property catastrophe | 69,831 | 23.9 | 57,005 | 22.6 | |||||||||
Casualty | 61,555 | 21.1 | 64,778 | 25.6 | |||||||||
Property catastrophe | 41,771 | 14.3 | 46,046 | 18.2 | |||||||||
Marine and aviation | 1,463 | 0.5 | 9,461 | 3.7 | |||||||||
Other | 3,539 | 1.2 | 3,231 | 1.3 | |||||||||
Total | $ | 292,102 | 100.0 | $ | 252,655 | 100.0 | |||||||
Pro rata | $ | 146,231 | 50.1 | $ | 128,976 | 51.0 | |||||||
Excess of loss | 145,871 | 49.9 | 123,679 | 49.0 | |||||||||
Total | $ | 292,102 | 100.0 | $ | 252,655 | 100.0 |
Six Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Other specialty | $ | 214,763 | 35.0 | $ | 173,282 | 28.8 | |||||||
Property excluding property catastrophe | 143,554 | 23.4 | 146,929 | 24.4 | |||||||||
Casualty | 188,038 | 30.7 | 182,636 | 30.4 | |||||||||
Property catastrophe | 39,476 | 6.4 | 61,489 | 10.2 | |||||||||
Marine and aviation | 19,003 | 3.1 | 30,305 | 5.0 | |||||||||
Other | 8,092 | 1.3 | 6,557 | 1.1 | |||||||||
Total | $ | 612,926 | 100.0 | $ | 601,198 | 100.0 | |||||||
Pro rata | $ | 258,440 | 42.2 | $ | 259,211 | 43.1 | |||||||
Excess of loss | 354,486 | 57.8 | 341,987 | 56.9 | |||||||||
Total | $ | 612,926 | 100.0 | $ | 601,198 | 100.0 |
53 |
Three Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Other specialty | $ | 109,493 | 37.6 | $ | 80,256 | 29.3 | |||||||
Property excluding property catastrophe | 65,487 | 22.5 | 69,600 | 25.4 | |||||||||
Casualty | 80,157 | 27.5 | 83,186 | 30.4 | |||||||||
Property catastrophe | 19,823 | 6.8 | 24,325 | 8.9 | |||||||||
Marine and aviation | 12,559 | 4.3 | 13,423 | 4.9 | |||||||||
Other | 3,737 | 1.3 | 3,175 | 1.2 | |||||||||
Total | $ | 291,256 | 100.0 | $ | 273,965 | 100.0 | |||||||
Pro rata | $ | 153,933 | 52.9 | $ | 143,835 | 52.5 | |||||||
Excess of loss | 137,323 | 47.1 | 130,130 | 47.5 | |||||||||
Total | $ | 291,256 | 100.0 | $ | 273,965 | 100.0 |
Six Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Other specialty | $ | 183,742 | 33.3 | $ | 164,054 | 29.6 | |||||||
Property excluding property catastrophe | 137,440 | 24.9 | 149,364 | 27.0 | |||||||||
Casualty | 156,210 | 28.3 | 156,567 | 28.3 | |||||||||
Property catastrophe | 37,776 | 6.8 | 51,595 | 9.3 | |||||||||
Marine and aviation | 30,437 | 5.5 | 26,036 | 4.7 | |||||||||
Other | 6,859 | 1.2 | 6,066 | 1.1 | |||||||||
Total | $ | 552,464 | 100.0 | $ | 553,682 | 100.0 | |||||||
Pro rata | $ | 293,626 | 53.1 | $ | 297,350 | 53.7 | |||||||
Excess of loss | 258,838 | 46.9 | 256,332 | 46.3 | |||||||||
Total | $ | 552,464 | 100.0 | $ | 553,682 | 100.0 |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Current year | 74.2 | % | 61.7 | % | 67.8 | % | 61.3 | % | |||
Prior period reserve development | (24.0 | )% | (21.1 | )% | (21.2 | )% | (20.9 | )% | |||
Loss ratio | 50.2 | % | 40.6 | % | 46.6 | % | 40.4 | % |
54 |
Three Months Ended June 30, | ||||||||||
2016 | 2015 | % Change | ||||||||
Gross premiums written | $ | 118,434 | $ | 68,572 | 72.7 | |||||
Premiums ceded | (6,969 | ) | (6,902 | ) | ||||||
Net premiums written | 111,465 | 61,670 | 80.7 | |||||||
Change in unearned premiums | (44,953 | ) | (9,211 | ) | ||||||
Net premiums earned | 66,512 | 52,459 | 26.8 | |||||||
Other underwriting income | 4,137 | 3,686 | ||||||||
Losses and loss adjustment expenses | (366 | ) | (9,639 | ) | ||||||
Acquisition expenses, net | (8,523 | ) | (10,200 | ) | ||||||
Other operating expenses | (23,991 | ) | (19,679 | ) | ||||||
Underwriting income | $ | 37,769 | $ | 16,627 | 127.2 | |||||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 0.6 | % | 18.4 | % | (17.8 | ) | ||||
Acquisition expense ratio | 12.8 | % | 19.4 | % | (6.6 | ) | ||||
Other operating expense ratio | 36.1 | % | 37.5 | % | (1.4 | ) | ||||
Combined ratio | 49.5 | % | 75.3 | % | (25.8 | ) |
55 |
Six Months Ended June 30, | ||||||||||
2016 | 2015 | % Change | ||||||||
Gross premiums written | $ | 229,714 | $ | 129,113 | 77.9 | |||||
Premiums ceded | (11,736 | ) | (15,572 | ) | ||||||
Net premiums written | 217,978 | 113,541 | 92.0 | |||||||
Change in unearned premiums | (89,701 | ) | (10,715 | ) | ||||||
Net premiums earned | 128,277 | 102,826 | 24.8 | |||||||
Other underwriting income | 7,930 | 11,404 | ||||||||
Losses and loss adjustment expenses | (8,995 | ) | (23,448 | ) | ||||||
Acquisition expenses, net | (16,908 | ) | (20,618 | ) | ||||||
Other operating expenses | (48,606 | ) | (40,048 | ) | ||||||
Underwriting income | $ | 61,698 | $ | 30,116 | 104.9 | |||||
Underwriting Ratios | % Point Change | |||||||||
Loss ratio | 7.0 | % | 22.8 | % | (15.8 | ) | ||||
Acquisition expense ratio | 13.2 | % | 20.1 | % | (6.9 | ) | ||||
Other operating expense ratio | 37.9 | % | 38.9 | % | (1.0 | ) | ||||
Combined ratio | 58.1 | % | 81.8 | % | (23.7 | ) |
Three Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Client location: | |||||||||||||
United States | $ | 66,261 | 59.4 | $ | 47,460 | 77.0 | |||||||
Other | 45,204 | 40.6 | 14,210 | 23.0 | |||||||||
Total | $ | 111,465 | 100.0 | $ | 61,670 | 100.0 | |||||||
Underwriting location: | |||||||||||||
United States | $ | 42,442 | 38.1 | $ | 30,589 | 49.6 | |||||||
Other | 69,023 | 61.9 | 31,081 | 50.4 | |||||||||
Total | $ | 111,465 | 100.0 | $ | 61,670 | 100.0 |
Six Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Client location: | |||||||||||||
United States | 122,064 | 56.0 | 93,282 | 82.2 | |||||||||
Other | 95,914 | 44.0 | 20,259 | 17.8 | |||||||||
Total | $ | 217,978 | 100.0 | $ | 113,541 | 100.0 | |||||||
Underwriting location: | |||||||||||||
United States | $ | 77,772 | 35.7 | $ | 58,545 | 51.6 | |||||||
Other | 140,206 | 64.3 | 54,996 | 48.4 | |||||||||
Total | $ | 217,978 | 100.0 | $ | 113,541 | 100.0 |
56 |
Three Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Client Location: | |||||||||||||
United States | $ | 61,046 | 91.8 | $ | 50,009 | 95.3 | |||||||
Other | 5,466 | 8.2 | 2,450 | 4.7 | |||||||||
Total | $ | 66,512 | 100.0 | $ | 52,459 | 100.0 | |||||||
Underwriting location: | |||||||||||||
United States | $ | 34,124 | 51.3 | $ | 27,450 | 52.3 | |||||||
Other | 32,388 | 48.7 | 25,009 | 47.7 | |||||||||
Total | $ | 66,512 | 100.0 | $ | 52,459 | 100.0 |
Six Months Ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Client Location: | |||||||||||||
United States | $ | 118,178 | 92.1 | $ | 98,084 | 95.4 | |||||||
Other | 10,099 | 7.9 | 4,742 | 4.6 | |||||||||
Total | $ | 128,277 | 100.0 | $ | 102,826 | 100.0 | |||||||
Underwriting location: | |||||||||||||
United States | $ | 66,644 | 52.0 | $ | 52,969 | 51.5 | |||||||
Other | 61,633 | 48.0 | 49,857 | 48.5 | |||||||||
Total | $ | 128,277 | 100.0 | $ | 102,826 | 100.0 |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Current year | 17.2 | % | 20.5 | % | 17.8 | % | 26.4 | % | |||
Prior period reserve development | (16.6 | )% | (2.1 | )% | (10.8 | )% | (3.6 | )% | |||
Loss ratio | 0.6 | % | 18.4 | % | 7.0 | % | 22.8 | % |
57 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Fixed maturities | $ | 64,365 | $ | 61,191 | $ | 123,366 | $ | 123,559 | |||||||
Term loan investments | 5,669 | 4,566 | 10,527 | 8,841 | |||||||||||
Equity securities | 3,984 | 2,742 | 7,740 | 5,421 | |||||||||||
Short-term investments | 618 | 183 | 1,076 | 378 | |||||||||||
Other (1) | 8,152 | 10,472 | 21,824 | 23,209 | |||||||||||
Gross investment income | 82,788 | 79,154 | 164,533 | 161,408 | |||||||||||
Investment expenses (2) | (12,391 | ) | (11,983 | ) | (23,727 | ) | (23,949 | ) | |||||||
Net investment income | $ | 70,397 | $ | 67,171 | $ | 140,806 | 137,459 |
(1) | Amounts include dividends and interest distributions on investment funds and other items. |
(2) | Investment expenses were approximately 0.36% of average invested assets for the 2016 second quarter, compared to 0.37% for the 2015 second quarter, and 0.33% for the six months ended June 30, 2016, compared to 0.39% for the 2015 period. |
58 |
• | Investable Assets Managed by Arch |
59 |
Investable assets (1): | Estimated Fair Value | % of Total | ||||
June 30, 2016 | ||||||
Fixed maturities (2) | $ | 11,747,618 | 77.4 | |||
Short-term investments | 853,531 | 5.6 | ||||
Cash | 442,066 | 2.9 | ||||
Equity securities (2) | 509,006 | 3.4 | ||||
Other investments (2) | 1,186,578 | 7.8 | ||||
Investments accounted for using the equity method | 685,766 | 4.5 | ||||
Securities transactions entered into but not settled at the balance sheet date | (246,257 | ) | (1.6 | ) | ||
Total investable assets managed by Arch | $ | 15,178,308 | 100.0 | |||
December 31, 2015 | ||||||
Fixed maturities (2) | $ | 11,200,437 | 76.5 | |||
Short-term investments | 587,904 | 4.0 | ||||
Cash | 444,776 | 3.0 | ||||
Equity securities (2) | 629,980 | 4.3 | ||||
Other investments (2) | 1,209,285 | 8.3 | ||||
Investments accounted for using the equity method | 592,973 | 4.0 | ||||
Securities transactions entered into but not settled at the balance sheet date | (20,524 | ) | (0.1 | ) | ||
Total investable assets managed by Arch | $ | 14,644,831 | 100.0 |
(1) | In securities lending transactions, we receive collateral in excess of the fair value of the securities pledged. For purposes of this table, we have excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. |
(2) | Includes investments carried as available for sale, at fair value and at fair value under the fair value option. |
Estimated Fair Value | % of Total | |||||
June 30, 2016 | ||||||
Corporate bonds | $ | 3,210,603 | 27.3 | |||
Mortgage backed securities | 674,451 | 5.7 | ||||
Municipal bonds | 1,897,128 | 16.1 | ||||
Commercial mortgage backed securities | 624,391 | 5.3 | ||||
U.S. government and government agencies | 2,701,042 | 23.0 | ||||
Non-U.S. government securities | 1,274,237 | 10.8 | ||||
Asset backed securities | 1,365,766 | 11.6 | ||||
Total | $ | 11,747,618 | 100.0 | |||
December 31, 2015 | ||||||
Corporate bonds | $ | 2,960,694 | 26.4 | |||
Mortgage backed securities | 812,557 | 7.3 | ||||
Municipal bonds | 1,626,281 | 14.5 | ||||
Commercial mortgage backed securities | 764,152 | 6.8 | ||||
U.S. government and government agencies | 2,423,455 | 21.6 | ||||
Non-U.S. government securities | 992,792 | 8.9 | ||||
Asset backed securities | 1,620,506 | 14.5 | ||||
Total | $ | 11,200,437 | 100.0 |
60 |
Estimated Fair Value | % of Total | |||||
June 30, 2016 | ||||||
U.S. government and gov’t agencies (1) | $ | 3,364,709 | 28.6 | |||
AAA | 3,421,385 | 29.1 | ||||
AA | 2,255,666 | 19.2 | ||||
A | 1,541,075 | 13.1 | ||||
BBB | 525,084 | 4.5 | ||||
BB | 232,859 | 2.0 | ||||
B | 151,549 | 1.3 | ||||
Lower than B | 96,726 | 0.8 | ||||
Not rated | 158,565 | 1.3 | ||||
Total | $ | 11,747,618 | 100.0 | |||
December 31, 2015 | ||||||
U.S. government and gov’t agencies (1) | $ | 3,060,869 | 27.3 | |||
AAA | 4,000,750 | 35.7 | ||||
AA | 1,651,760 | 14.7 | ||||
A | 1,431,138 | 12.8 | ||||
BBB | 457,251 | 4.1 | ||||
BB | 203,426 | 1.8 | ||||
B | 138,770 | 1.2 | ||||
Lower than B | 130,545 | 1.2 | ||||
Not rated | 125,928 | 1.1 | ||||
Total | $ | 11,200,437 | 100.0 |
(1) | Includes U.S. government-sponsored agency mortgage backed securities and agency commercial mortgage backed securities. |
June 30, 2016 | ||||||||||
Severity of gross unrealized losses: | Estimated Fair Value | Gross Unrealized Losses | % of Total Gross Unrealized Losses | |||||||
June 30, 2016 | ||||||||||
0-10% | $ | 1,171,547 | $ | (20,224 | ) | 31.7 | ||||
10-20% | 215,026 | (36,708 | ) | 57.6 | ||||||
20-30% | 21,037 | (5,923 | ) | 9.3 | ||||||
Greater than 30% | 1,452 | (875 | ) | 1.4 | ||||||
Total | $ | 1,409,062 | $ | (63,730 | ) | 100.0 | ||||
December 31, 2015 | ||||||||||
0-10% | $ | 6,956,754 | $ | (74,229 | ) | 54.4 | ||||
10-20% | 173,441 | (28,789 | ) | 21.1 | ||||||
20-30% | 86,997 | (26,227 | ) | 19.2 | ||||||
Greater than 30% | 10,638 | (7,160 | ) | 5.2 | ||||||
Total | $ | 7,227,830 | $ | (136,405 | ) | 100.0 |
June 30, 2016 | ||||||||||
Severity of gross unrealized losses: | Estimated Fair Value | Gross Unrealized Losses | % of Total Gross Unrealized Losses | |||||||
June 30, 2016 | ||||||||||
0-10% | $ | 137,622 | $ | (3,391 | ) | 5.3 | ||||
10-20% | 21,986 | (3,809 | ) | 6.0 | ||||||
20-30% | 4,895 | (1,530 | ) | 2.4 | ||||||
Greater than 30% | 1,353 | (818 | ) | 1.3 | ||||||
Total | $ | 165,856 | $ | (9,548 | ) | 15.0 | ||||
December 31, 2015 | ||||||||||
0-10% | $ | 176,343 | $ | (5,139 | ) | 3.8 | ||||
10-20% | 28,707 | (4,807 | ) | 3.5 | ||||||
20-30% | 12,500 | (4,410 | ) | 3.2 | ||||||
Greater than 30% | 10,520 | (7,107 | ) | 5.2 | ||||||
Total | $ | 228,070 | $ | (21,463 | ) | 15.7 |
Estimated Fair Value | Credit Rating (1) | ||||
Apple Inc. | $ | 71,396 | AA+/Aa1 | ||
Wells Fargo & Company | 70,956 | A+/Aa3 | |||
Coca-Cola Co | 70,063 | AA-/Aa3 | |||
Microsoft Corporation | 61,400 | AAA/Aaa | |||
Oracle Corporation | 59,000 | AA-/A1 | |||
MassMutual Global Funding II | 54,483 | AA+/Aa2 | |||
Royal Dutch Shell PLC | 53,894 | A+/Aa2 | |||
Anheuser Busch Inbev SA | 45,574 | A-/A3 | |||
JPMorgan Chase & Co | 42,737 | A-/A3 | |||
Toyota Motor Corporation | 42,733 | AA-/Aa3 | |||
Total | $ | 572,236 |
(1) | Average credit ratings as assigned by S&P and Moody’s, respectively. |
61 |
Issuance Year | Amortized Cost | Average Credit Quality | Estimated Fair Value | |||||||
2003-2008 | $ | 64,394 | CC- | $ | 68,802 | |||||
2009 | 453 | AA | 453 | |||||||
2010 | 1,067 | NR | 1,142 | |||||||
2014 | 2,240 | NR | 2,205 | |||||||
2015 | 16,215 | A | 16,434 | |||||||
2016 | 977 | C- | 986 | |||||||
Total RMBS | $ | 85,346 | CC+ | $ | 90,022 | |||||
2002-2008 | 27,672 | A | 27,909 | |||||||
2009 | 534 | BBB | 535 | |||||||
2010 | 8,675 | AAA | 8,914 | |||||||
2011 | 576 | AAA | 579 | |||||||
2012 | 34,940 | AAA | 35,575 | |||||||
2013 | 84,173 | AA | 86,924 | |||||||
2014 | 123,512 | AA+ | 125,630 | |||||||
2015 | 157,786 | AAA | 161,574 | |||||||
2016 | 96,050 | AA+ | 97,513 | |||||||
Total CMBS | $ | 533,918 | AA+ | $ | 545,153 |
Non-Agency | Non-Agency | |||||
Additional Statistics: | RMBS | CMBS (1) | ||||
Weighted average loan age (months) | 114 | 32 | ||||
Weighted average life (months) (2) | 47 | 81 | ||||
Weighted average loan-to-value % (3) | 62.5 | % | 56.8 | % | ||
Total delinquencies (4) | 15.6 | % | 0.7 | % | ||
Current credit support % (5) | 8.0 | % | 37.1 | % |
(1) | Loans defeased with government/agency obligations were not material to the collateral underlying our CMBS holdings. |
(2) | The weighted average life for RMBS is based on the interest rates in effect at June 30, 2016. The weighted average life for CMBS reflects the average life of the collateral underlying our CMBS holdings. |
(3) | The range of loan-to-values is 13% to 96% on RMBS and 3% to 200% on CMBS. |
(4) | Total delinquencies includes 60 days and over. |
(5) | Current credit support percentage represents the percentage for a collateralized mortgage obligation (“CMO”) or CMBS class/tranche from other subordinate classes in the same CMO or CMBS deal. |
62 |
Weighted Average | |||||||||||||
Sector | Amortized Cost | Credit Quality | Credit Support | Estimated Fair Value | |||||||||
Credit cards | $ | 706,330 | AAA | 16 | % | $ | 715,273 | ||||||
Autos | 264,955 | AAA | 26 | % | 266,468 | ||||||||
Loans | 189,013 | A+ | 12 | % | 186,179 | ||||||||
Equipment | 119,367 | AA- | 2 | % | 118,574 | ||||||||
Other (1) | 78,022 | A | 20 | % | 79,272 | ||||||||
Total ABS (2) | $ | 1,357,687 | AA+ | $ | 1,365,766 |
(1) | Including rate reduction bonds, commodities, home equity, U.K. securitized and other. |
(2) | The effective duration of the total ABS was 1.9 years at June 30, 2016. |
Country (1) | Sovereign (2) | Corporate Bonds | Other (3) | Total | |||||||||||
Netherlands | $ | 115,660 | $ | 87,344 | $ | 11,674 | $ | 214,678 | |||||||
Germany | 84,677 | 26,803 | 26,991 | 138,471 | |||||||||||
France | 14,971 | 38,133 | 8,421 | 61,525 | |||||||||||
Luxembourg | — | 23,086 | 5,565 | 28,651 | |||||||||||
Supranational (4) | 17,131 | — | — | 17,131 | |||||||||||
Belgium | 5,187 | 8,555 | — | 13,742 | |||||||||||
Ireland | — | 1,044 | 6,198 | 7,242 | |||||||||||
Spain | — | — | 3,168 | 3,168 | |||||||||||
Italy | — | — | 1,147 | 1,147 | |||||||||||
Austria | — | 900 | — | 900 | |||||||||||
Greece | 890 | — | — | 890 | |||||||||||
Total | $ | 238,516 | $ | 185,865 | $ | 63,164 | $ | 487,545 |
(1) | The country allocations set forth in the table are based on various assumptions made by us in assessing the country in which the underlying credit risk resides, including a review of the jurisdiction of organization, business operations and other factors. Based on such analysis, we do not believe that we have any other Eurozone investments at June 30, 2016. |
(2) | Includes securities issued and/or guaranteed by Eurozone governments. |
(3) | Includes bank loans, equities and other. |
(4) | Includes World Bank, European Investment Bank, International Finance Corp. and European Bank for Reconstruction and Development. |
June 30, 2016 | ||||||||||
Severity of gross unrealized losses: | Estimated Fair Value | Gross Unrealized Losses | % of Total Gross Unrealized Losses | |||||||
June 30, 2016 | ||||||||||
0-10% | $ | 118,525 | $ | (3,836 | ) | 34.4 | ||||
10-20% | 30,520 | (4,401 | ) | 39.4 | ||||||
20-30% | 5,413 | (1,680 | ) | 15.0 | ||||||
Greater than 30% | 2,331 | (1,246 | ) | 11.2 | ||||||
Total | $ | 156,789 | $ | (11,163 | ) | 100.0 | ||||
December 31, 2015 | ||||||||||
0-10% | $ | 176,451 | $ | (5,926 | ) | 33.3 | ||||
10-20% | 39,728 | (6,528 | ) | 36.7 | ||||||
20-30% | 13,700 | (4,164 | ) | 23.4 | ||||||
Greater than 30% | 2,396 | (1,178 | ) | 6.6 | ||||||
Total | $ | 232,275 | $ | (17,796 | ) | 100.0 |
63 |
June 30, 2016 | December 31, 2015 | ||||||
Available for sale: | |||||||
Asian and emerging markets | $ | 109,767 | $ | 206,861 | |||
Investment grade fixed income | 33,549 | 31,370 | |||||
Credit related funds | 1,698 | 22,512 | |||||
Other | 37,943 | 39,733 | |||||
Total available for sale | 182,957 | 300,476 | |||||
Fair value option: | |||||||
Term loan investments (par value: $358,443 and $356,096) | 364,424 | 345,855 | |||||
Mezzanine debt funds | 117,441 | 121,589 | |||||
Credit related funds | 236,184 | 219,049 | |||||
Investment grade fixed income | 65,391 | 63,053 | |||||
Asian and emerging markets | 112,265 | 34,761 | |||||
Other (1) | 107,916 | 124,502 | |||||
Total fair value option | 1,003,621 | 908,809 | |||||
Total | $ | 1,186,578 | $ | 1,209,285 |
(1) | Includes fund investments with strategies in mortgage servicing rights, transportation and infrastructure assets and other. |
• | Investable Assets in the ‘Other’ Segment |
June 30, 2016 | December 31, 2015 | ||||||
Cash | $ | 74,525 | $ | 108,550 | |||
Investments accounted for using the fair value option: | |||||||
Term loan investments (par value: $757,184 and $841,047) | 662,119 | 762,162 | |||||
Fixed maturities | 670,180 | 569,022 | |||||
Short-term investments | 344,797 | 285,923 | |||||
Equity securities | 740 | — | |||||
Total investments accounted for using the fair value option | 1,677,836 | 1,617,107 | |||||
Securities sold but not yet purchased | (54,668 | ) | (30,583 | ) | |||
Securities transactions entered into but not settled at the balance sheet date | 5,738 | 1,033 | |||||
Total investable assets included in ‘other’ segment | $ | 1,703,431 | $ | 1,696,107 |
64 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Premiums written: | |||||||||||||||
Direct | $ | 839,844 | $ | 776,996 | $ | 1,697,954 | $ | 1,571,429 | |||||||
Assumed | 490,092 | 422,213 | 1,069,948 | 969,802 | |||||||||||
Ceded | (306,373 | ) | (255,629 | ) | (623,104 | ) | (530,656 | ) | |||||||
Net | $ | 1,023,563 | $ | 943,580 | $ | 2,144,798 | $ | 2,010,575 | |||||||
Premiums earned: | |||||||||||||||
Direct | $ | 795,358 | $ | 746,837 | $ | 1,575,128 | $ | 1,481,054 | |||||||
Assumed | 473,331 | 428,254 | 894,389 | 825,505 | |||||||||||
Ceded | (262,704 | ) | (231,653 | ) | (511,953 | ) | (452,857 | ) | |||||||
Net | $ | 1,005,985 | $ | 943,438 | $ | 1,957,564 | $ | 1,853,702 | |||||||
Losses and LAE: | |||||||||||||||
Direct | $ | 525,719 | $ | 462,967 | $ | 981,052 | $ | 893,808 | |||||||
Assumed | 265,321 | 214,103 | 457,781 | 373,648 | |||||||||||
Ceded | (206,448 | ) | (157,644 | ) | (331,292 | ) | (254,314 | ) | |||||||
Net | $ | 584,592 | $ | 519,426 | $ | 1,107,541 | $ | 1,013,142 |
June 30, 2016 | December 31, 2015 | ||||||
Insurance segment: | |||||||
Case reserves | $ | 1,406,699 | $ | 1,434,986 | |||
IBNR reserves | 3,158,524 | 3,080,122 | |||||
Total net reserves | 4,565,223 | 4,515,108 | |||||
Reinsurance segment: | |||||||
Case reserves | 742,901 | 699,860 | |||||
Additional case reserves | 104,827 | 99,343 | |||||
IBNR reserves | 1,566,024 | 1,593,186 | |||||
Total net reserves | 2,413,752 | 2,392,389 | |||||
Mortgage segment: | |||||||
Case reserves | 68,139 | 86,278 | |||||
IBNR reserves | 29,588 | 23,211 | |||||
Total net reserves | 97,727 | 109,489 | |||||
Other segment: | |||||||
Case reserves | 91,524 | 64,875 | |||||
Additional case reserves | 8,921 | 5,199 | |||||
IBNR reserves | 290,732 | 209,353 | |||||
Total net reserves | 391,177 | 279,427 | |||||
Total: | |||||||
Case reserves | 2,309,263 | 2,285,999 | |||||
Additional case reserves | 113,748 | 104,542 | |||||
IBNR reserves | 5,044,868 | 4,905,872 | |||||
Total net reserves | $ | 7,467,879 | $ | 7,296,413 |
65 |
June 30, 2016 | December 31, 2015 | ||||||
Insurance segment: | |||||||
Professional lines (1) | $ | 1,340,244 | $ | 1,346,882 | |||
Construction and national accounts | 915,105 | 876,278 | |||||
Excess and surplus casualty (2) | 688,296 | 682,286 | |||||
Programs | 685,522 | 687,405 | |||||
Property, energy, marine and aviation | 306,599 | 330,104 | |||||
Travel, accident and health | 72,776 | 64,537 | |||||
Lenders products | 43,765 | 44,273 | |||||
Other (3) | 512,916 | 483,343 | |||||
Total net reserves | $ | 4,565,223 | $ | 4,515,108 |
(1) | Includes professional liability, executive assurance and healthcare business. |
(2) | Includes casualty and contract binding business. |
(3) | Includes alternative markets, excess workers’ compensation and surety business. |
June 30, 2016 | December 31, 2015 | ||||||
Reinsurance segment: | |||||||
Casualty (1) | $ | 1,400,287 | $ | 1,386,084 | |||
Other specialty (2) | 434,450 | 420,865 | |||||
Property excluding property catastrophe (3) | 294,235 | 301,757 | |||||
Marine and aviation | 150,062 | 137,969 | |||||
Property catastrophe | 80,074 | 94,991 | |||||
Other (4) | 54,644 | 50,723 | |||||
Total net reserves | $ | 2,413,752 | $ | 2,392,389 |
(1) | Includes executive assurance, professional liability, workers’ compensation, excess motor, healthcare and other. |
(2) | Includes non-excess motor, surety, accident and health, workers’ compensation catastrophe, agriculture, trade credit and other. |
(3) | Includes facultative business. |
(4) | Includes life, casualty clash and other. |
(U.S. Dollars in millions) | Three Months Ended | ||||||||||||
June 30, 2016 | March 31, 2016 | ||||||||||||
Amount | % | Amount | % | ||||||||||
Total new insurance written (NIW) | $ | 6,420 | $ | 2,906 | |||||||||
Total NIW by credit quality (FICO score): | |||||||||||||
>=740 | $ | 3,950 | 61.5 | $ | 1,808 | 62.2 | |||||||
680-739 | 2,162 | 33.7 | 959 | 33.0 | |||||||||
620-679 | 307 | 4.8 | 139 | 4.8 | |||||||||
<620 | 1 | — | — | — | |||||||||
Total | $ | 6,420 | 100.0 | $ | 2,906 | 100.0 | |||||||
Total NIW by LTV: | |||||||||||||
95.01% and above | $ | 551 | 8.6 | $ | 175 | 6.0 | |||||||
90.01% to 95.00% | 2,983 | 46.5 | 1,233 | 42.4 | |||||||||
85.01% to 90.00% | 2,078 | 32.4 | 1,021 | 35.1 | |||||||||
85.01% and below | 808 | 12.6 | 477 | 16.4 | |||||||||
Total | $ | 6,420 | 100.0 | $ | 2,906 | 100.0 | |||||||
Total NIW purchase vs. refinance: | |||||||||||||
Purchase | $ | 5,309 | 82.7 | $ | 2,055 | 70.7 | |||||||
Refinance | 1,111 | 17.3 | 851 | 29.3 | |||||||||
Total | $ | 6,420 | 100.0 | $ | 2,906 | 100.0 |
66 |
(U.S. Dollars in millions) | June 30, 2016 | March 31, 2016 | |||||||||||
Amount | % | Amount | % | ||||||||||
Insurance In Force (IIF) (1): | |||||||||||||
U.S. mortgage insurance | $ | 33,367 | 30.7 | $ | 28,433 | 30.9 | |||||||
Mortgage reinsurance | 22,242 | 20.5 | 22,393 | 24.3 | |||||||||
Other (3) | 52,926 | 48.8 | 41,172 | 44.8 | |||||||||
Total | $ | 108,535 | 100.0 | $ | 91,998 | 100.0 | |||||||
Risk In Force (RIF) (2): | |||||||||||||
U.S. mortgage insurance | $ | 8,396 | 64.8 | $ | 7,165 | 62.5 | |||||||
Mortgage reinsurance | 2,567 | 19.8 | 2,661 | 23.2 | |||||||||
Other (3) | 1,993 | 15.4 | 1,636 | 14.3 | |||||||||
Total | $ | 12,956 | 100.0 | $ | 11,462 | 100.0 | |||||||
Ending number of policies in force | 172,666 | 153,984 |
(1) | Represents the aggregate dollar amount of each insured mortgage loan’s current principal balance. |
(2) | Represents the aggregate dollar amount of each insured mortgage loan’s current principal balance multiplied by the insurance coverage percentage specified in the policy for insurance policies issued and after contract limits and/or loss ratio caps for credit risk-sharing or reinsurance transactions. |
(3) | Includes GSE credit risk-sharing products and international insurance business. |
(U.S. Dollars in millions) | June 30, 2016 | March 31, 2016 | |||||||||||
Amount | % | Amount | % | ||||||||||
Total RIF by credit quality (FICO): | |||||||||||||
>=740 | $ | 4,766 | 56.8 | $ | 3,995 | 55.8 | |||||||
680-739 | 2,779 | 33.1 | 2,354 | 32.9 | |||||||||
620-679 | 753 | 9.0 | 712 | 9.9 | |||||||||
<620 | 98 | 1.2 | 104 | 1.5 | |||||||||
Total | $ | 8,396 | 100.0 | $ | 7,165 | 100.0 | |||||||
Weighted average FICO score | 741 | 739 | |||||||||||
Total RIF by LTV: | |||||||||||||
95.01% and above | $ | 1,135 | 13.5 | $ | 1,052 | 14.7 | |||||||
90.01% to 95.00% | 4,379 | 52.2 | 3,677 | 51.3 | |||||||||
85.01% to 90.00% | 2,438 | 29.0 | 2,056 | 28.7 | |||||||||
85.00% and below | 444 | 5.3 | 380 | 5.3 | |||||||||
Total | $ | 8,396 | 100.0 | $ | 7,165 | 100.0 | |||||||
Weighted average LTV | 92.9 | % | 93.0 | % |
(U.S. Dollars in millions) | June 30, 2016 | March 31, 2016 | |||||||||||
Amount | % | Amount | % | ||||||||||
Total RIF by State: | |||||||||||||
California | $ | 727 | 8.7 | $ | 622 | 8.7 | |||||||
Wisconsin | 620 | 7.4 | 585 | 8.2 | |||||||||
Texas | 469 | 5.6 | 401 | 5.6 | |||||||||
Florida | 422 | 5.0 | 345 | 4.8 | |||||||||
Minnesota | 351 | 4.2 | 319 | 4.5 | |||||||||
Massachusetts | 330 | 3.9 | 262 | 3.7 | |||||||||
Virginia | 300 | 3.6 | 237 | 3.3 | |||||||||
Washington | 279 | 3.3 | 261 | 3.6 | |||||||||
Illinois | 279 | 3.3 | 218 | 3.0 | |||||||||
Ohio | 260 | 3.1 | 212 | 3.0 | |||||||||
Others | 4,359 | 51.9 | 3,703 | 51.7 | |||||||||
Total | $ | 8,396 | 100.0 | $ | 7,165 | 100.0 | |||||||
Coverage ratio (1) | 25.2 | % | 25.2 | % | |||||||||
Analysts’ persistency (2) | 75.6 | % | 74.2 | % | |||||||||
Risk-to-capital ratio (3) | 12.4:1 | 11.1:1 |
(1) | Represents the end of period RIF divided by end of period IIF. |
(2) | Represents the percentage of IIF at the beginning of a 12-month period that remained in force at the end of the period. |
(3) | Represents total current (non-delinquent) RIF, net of reinsurance, divided by total statutory capital. Ratio calculated for Arch MI U.S. only (estimate for June 30, 2016). |
(U.S. Dollars in thousands, except loan count) | Three Months Ended | |||||||
June 30, 2016 | March 31, 2016 | |||||||
Roll-forward of insured loans in default: | ||||||||
Beginning delinquent number of loans | 2,325 | 2,702 | ||||||
New notices | 1,033 | 1,048 | ||||||
Cures | (919 | ) | (1,206 | ) | ||||
Paid claims | (193 | ) | (222 | ) | ||||
Delinquent rescissions and denials | (1 | ) | 3 | |||||
Ending delinquent number of loans | 2,245 | 2,325 | ||||||
Ending percentage of loans in default | 1.3 | % | 1.5 | % | ||||
Losses: | ||||||||
Number of claims paid | 193 | 222 | ||||||
Total paid claims | $ | 7,744 | $ | 9,168 | ||||
Average per claim | $ | 40.1 | $ | 41.3 | ||||
Severity (1) | 94.8 | % | 93.9 | % | ||||
Average reserve per default (in thousands) | $ | 27.8 | $ | 32.1 |
(1) | Represents total paid claims divided by RIF of loans for which claims were paid. |
67 |
(U.S. dollars in thousands, except share data) | June 30, 2016 | December 31, 2015 | |||||
Total shareholders’ equity available to Arch | $ | 6,703,922 | $ | 6,204,881 | |||
Less preferred shareholders’ equity | 325,000 | 325,000 | |||||
Common shareholders’ equity available to Arch | $ | 6,378,922 | $ | 5,879,881 | |||
Common shares outstanding, net of treasury shares (1) | 122,572,260 | 122,627,783 | |||||
Book value per common share | $ | 52.04 | $ | 47.95 |
(1) | Excludes the effects of 7,222,726 and 7,482,462 stock options and 405,303 and 413,364 restricted stock units outstanding at June 30, 2016 and December 31, 2015, respectively. |
68 |
69 |
Six Months Ended | |||||||
June 30, | |||||||
2016 | 2015 | ||||||
Total cash provided by (used for): | |||||||
Operating activities | $ | 410,213 | $ | 247,361 | |||
Investing activities | (341,885 | ) | 95,779 | ||||
Financing activities | (65,158 | ) | (346,961 | ) | |||
Effects of exchange rate changes on foreign currency cash | (8,991 | ) | (414 | ) | |||
Increase (decrease) in cash | $ | (5,821 | ) | $ | (4,235 | ) |
70 |
71 |
• | Fixed Income Securities |
72 |
(U.S. dollars in billions) | Interest Rate Shift in Basis Points | ||||||||||||||||||
-100 | -50 | — | +50 | +100 | |||||||||||||||
June 30, 2016 | |||||||||||||||||||
Total fair value | $ | 14.78 | $ | 14.51 | $ | 14.23 | $ | 13.95 | $ | 13.69 | |||||||||
Change from base | 3.86 | % | 2.01 | % | (1.95 | )% | (3.80 | )% | |||||||||||
Change in unrealized value | $ | 0.55 | $ | 0.29 | $ | (0.28 | ) | $ | (0.54 | ) | |||||||||
Dec. 31, 2015 | |||||||||||||||||||
Total fair value | $ | 14.04 | $ | 13.80 | $ | 13.57 | $ | 13.34 | $ | 13.12 | |||||||||
Change from base | 3.44 | % | 1.70 | % | (1.69 | )% | (3.32 | )% | |||||||||||
Change in unrealized value | $ | 0.47 | $ | 0.23 | $ | (0.23 | ) | $ | (0.45 | ) |
(U.S. dollars in billions) | Credit Spread Shift in Basis Points | ||||||||||||||||||
-100 | -50 | — | +50 | +100 | |||||||||||||||
June 30, 2016 | |||||||||||||||||||
Total fair value | $ | 14.65 | $ | 14.44 | $ | 14.23 | $ | 14.01 | $ | 13.80 | |||||||||
Change from base | 2.99 | % | 1.50 | % | (1.50 | )% | (2.99 | )% | |||||||||||
Change in unrealized value | $ | 0.43 | $ | 0.21 | $ | (0.21 | ) | $ | (0.43 | ) | |||||||||
Dec. 31, 2015 | |||||||||||||||||||
Total fair value | $ | 13.97 | $ | 13.77 | $ | 13.57 | $ | 13.37 | $ | 13.17 | |||||||||
Change from base | 2.97 | % | 1.48 | % | (1.48 | )% | (2.97 | )% | |||||||||||
Change in unrealized value | $ | 0.40 | $ | 0.20 | $ | (0.20 | ) | $ | (0.40 | ) |
• | Certain Other Investments and Equity Securities |
• | Investment-Related Derivatives |
73 |
(U.S. dollars in thousands, except per share data) | June 30, 2016 | December 31, 2015 | |||||
Net assets (liabilities), denominated in foreign currencies, excluding shareholders’ equity and derivatives | $ | (39,404 | ) | $ | (163,199 | ) | |
Shareholders’ equity denominated in foreign currencies (1) | 311,963 | 328,133 | |||||
Net foreign currency forward contracts outstanding (2) | 178,323 | (97,658 | ) | ||||
Net exposures denominated in foreign currencies | $ | 450,882 | $ | 67,276 | |||
Pre-tax impact of a hypothetical 10% appreciation of the U.S. Dollar against foreign currencies: | |||||||
Shareholders’ equity | $ | (45,088 | ) | $ | (6,728 | ) | |
Book value per common share | $ | (0.37 | ) | $ | (0.05 | ) | |
Pre-tax impact of a hypothetical 10% decline of the U.S. Dollar against foreign currencies: | |||||||
Shareholders’ equity | $ | 45,088 | $ | 6,728 | |||
Book value per common share | $ | 0.37 | $ | 0.05 |
(1) | Represents capital contributions held in the foreign currencies of our operating units. |
(2) | Represents the net notional value of outstanding foreign currency forward contracts. |
74 |
75 |
Issuer Purchases of Equity Securities | ||||||||||||||
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan or Programs (2) | ||||||||||
4/1/2016 - 4/30/2016 | 1,772 | $ | 71.36 | — | $ | 446,501 | ||||||||
5/1/2016 - 5/31/2016 | 123,559 | 71.34 | — | $ | 446,501 | |||||||||
6/1/2016 - 6/30/2016 | 7,045 | 70.97 | — | $ | 446,501 | |||||||||
Total | 132,376 | $ | 71.32 | — | $ | 446,501 |
(1) | Includes repurchases by ACGL of shares, from time to time, from employees in order to facilitate the payment of withholding taxes on restricted shares granted and the exercise of stock appreciation rights. We purchased these shares at their fair value, as determined by reference to the closing price of our common shares on the day the restricted shares vested or the stock appreciation rights were exercised. |
(2) | Remaining amount available at June 30, 2016 under ACGL’s share repurchase authorization, under which repurchases may be effected from time to time in open market or privately negotiated transactions through December 31, 2016. |
76 |
Exhibit No. | Description | |
3 | Bye-Laws of Arch Capital Group Ltd., a Bermuda company | |
10.1 | Restricted Share Agreement with Arch Capital Group Ltd. substantially in the form signed by the Non-Employee Directors of Arch Capital Group Ltd. for May 6, 2016 grants | |
10.2 | Restricted Share Agreement with Arch Capital Group Ltd. substantially in the form signed by each of Constantine Iordanou, Mark D. Lyons, Marc Grandisson, W. Preston Hutchings, David McElroy and Louis T. Petrillo for May 13, 2016 grants | |
10.3 | Non-Qualified Stock Option Agreement with Constantine Iordanou, Mark D. Lyons, Marc Grandisson, W. Preston Hutchings, David McElroy and Louis T. Petrillo for May 13, 2016 grants | |
10.4 | Restricted Share Unit Agreement, dated as of May 13, 2016, between Arch Capital Group Ltd. and David McElroy | |
10.5 | Share Appreciation Right Agreement, dated February 27, 2015, between Arch Capital Group Ltd. and Constantine Iordanou | |
10.6 | Non-Qualified Stock Option Agreement, dated February 26, 2016, between Arch Capital Group Ltd. and Constantine Iordanou | |
10.7 | Third Amended and Restated Arch Capital Group Ltd. Incentive Compensation Plan | |
15 | Accountants’ Awareness Letter (regarding unaudited interim financial information) | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101 | The following financial information from Arch Capital Group Ltd.’s Quarterly Report for the quarter ended June 30, 2016 formatted in XBRL: (i) Consolidated Balance Sheets at June 30, 2016 and December 31, 2015; (ii) Consolidated Statements of Income for the three and six month periods ended June 30, 2016 and 2015; (iii) Consolidated Statements of Comprehensive Income for the three and six month periods ended June 30, 2016 and 2015; (iv) Consolidated Statements of Changes in Shareholders’ Equity for the six month periods ended June 30, 2016 and 2015; (v) Consolidated Statements of Cash Flows for the six month periods ended June 30, 2016 and 2015; and (vi) Notes to Consolidated Financial Statements. |
77 |
ARCH CAPITAL GROUP LTD. | ||
(REGISTRANT) | ||
/s/ Constantine Iordanou | ||
Date: August 5, 2016 | Constantine Iordanou | |
Chief Executive Officer (Principal Executive Officer) and Chairman of the Board of Directors | ||
/s/ Mark D. Lyons | ||
Date: August 5, 2016 | Mark D. Lyons | |
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
78 |
Exhibit No. | Description | |
3 | Bye-Laws of Arch Capital Group Ltd., a Bermuda company | |
10.1 | Restricted Share Agreement with Arch Capital Group Ltd. substantially in the form signed by the Non-Employee Directors of Arch Capital Group Ltd. for May 6, 2016 grants | |
10.2 | Restricted Share Agreement with Arch Capital Group Ltd. substantially in the form signed by each of Constantine Iordanou, Mark D. Lyons, Marc Grandisson, W. Preston Hutchings, David McElroy and Louis T. Petrillo for May 13, 2016 grants | |
10.3 | Non-Qualified Stock Option Agreement with Constantine Iordanou, Mark D. Lyons, Marc Grandisson, W. Preston Hutchings, David McElroy and Louis T. Petrillo for May 13, 2016 grants | |
10.4 | Restricted Share Unit Agreement, dated as of May 13, 2016, between Arch Capital Group Ltd. and David McElroy | |
10.5 | Share Appreciation Right Agreement, dated February 27, 2015, between Arch Capital Group Ltd. and Constantine Iordanou | |
10.6 | Non-Qualified Stock Option Agreement, dated February 26, 2016, between Arch Capital Group Ltd. and Constantine Iordanou | |
10.7 | Third Amended and Restated Arch Capital Group Ltd. Incentive Compensation Plan | |
15 | Accountants’ Awareness Letter (regarding unaudited interim financial information) | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101 | The following financial information from Arch Capital Group Ltd.’s Quarterly Report for the quarter ended June 30, 2016 formatted in XBRL: (i) Consolidated Balance Sheets at June 30, 2016 and December 31, 2015; (ii) Consolidated Statements of Income for the three and six month periods ended June 30, 2016 and 2015; (iii) Consolidated Statements of Comprehensive Income for the three and six month periods ended June 30, 2016 and 2015; (iv) Consolidated Statements of Changes in Shareholders’ Equity for the six month periods ended June 30, 2016 and 2015; (v) Consolidated Statements of Cash Flows for the six month periods ended June 30, 2016 and 2015; and (vi) Notes to Consolidated Financial Statements. |
79 |
(a) | words denoting the plural number include the singular number and vice versa; |
(b) | words denoting the masculine gender include the feminine gender; |
(c) | words importing persons include companies, associations or bodies of persons whether corporate or not; |
(d) | the word: |
(e) | unless otherwise provided herein words or expressions defined in the Act shall bear the same meaning in these Bye-laws. |
(a) | of all elections and appointments of Officers; |
(b) | of the names of the Directors present at each meeting of the Board and of any committee appointed by the Board; and |
(c) | of all resolutions and proceedings of general meetings of the Members, meetings of the Board and meetings of committees appointed by the Board. |
(a) | be entitled (subject to Bye-law 45) to one vote per share; |
(b) | be entitled to such dividends as the Board may from time to time declare; |
(c) | in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a reorganisation or otherwise or upon any distribution of capital, be entitled to the surplus assets of the Company; and |
(d) | generally be entitled to enjoy all of the rights attaching to shares. |
(a) | The number of shares constituting that series and the distinctive designation of that series; |
(b) | The dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series; |
(c) | Whether that series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; |
(d) | Whether that series shall have conversion or exchange privileges (including, without limitation, conversion into Common Shares), and, if so, the terms and conditions of such conversion or exchange, including provision for adjustment of the conversion or exchange rate in such events as the Board shall determine; |
(e) | Whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the manner of selecting shares for redemption if less than all shares are to be redeemed, the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; |
(f) | Whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; |
(g) | The right of the shares of that series to the benefit of conditions and restrictions upon the creation of indebtedness of the Company or any subsidiary, upon the issue of any additional shares (including additional shares of such series or any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Company or any subsidiary of any outstanding shares of the Company; |
(h) | The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, and the relative rights of priority, if any, of payment of shares of that series; and |
(i) | Any other relative participating, optional or other special rights, qualifications, limitations or restrictions of that series. |
(a) | determining the Members entitled to receive any dividend; and |
(b) | determining the Members entitled to receive notice of and to vote at any general meeting of the Company. |
(a) | prior to such time the Board approved either the business combination or the transaction which resulted in the Member becoming an Interested Member, or |
(b) | upon consummation of the transaction which resulted in the Member becoming an Interested Member, the Interested Member owned at least 85% of the voting shares of the Company outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (i) by persons who are Directors and also officers and (ii) employee share plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or |
(c) | at or subsequent to such time the business combination is approved by the Board and authorized at an annual or special general meeting, and not by written consent, by the affirmative vote of holders of shares representing at least 662∕3% of the outstanding voting power of the shares of the Company entitled to vote generally at an election of Directors (excluding shares owned by the Interested Member). |
(a) | a Member becomes an Interested Member inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the Member ceases to be an Interested Member and (ii) would not, at any time within the 3 year period immediately prior to a business combination between the Company and such Member, have been an Interested Member but for the inadvertent acquisition of ownership; or |
(b) | the business combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (i) constitutes one of the transactions described in the second sentence of this paragraph; (ii) is with or by a person who either was not an Interested Member during the previous 3 years or who became an Interested Member with the approval of the Board; and (iii) is approved or not opposed by a majority of the members of the Board then in office (but not less than 1) who were Directors prior to any person becoming an Interested Member during the previous 3 years or were recommended for election or elected to succeed such Directors by a majority of such Directors. The proposed transactions referred to in the preceding sentence are limited to (x) an amalgamation, scheme of arrangement, merger, consolidation or similar transaction involving the Company (except for any such transaction in respect of which no vote of the Members of the Company is required); (y) a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Company or of any direct or indirect subsidiary of the Company (other than to any direct or indirect wholly-owned subsidiary of the Company or to the Company) having an aggregate market value equal to 50% or more of either that aggregate market value of all of the assets of the Company determined on a consolidated basis or the aggregate market value of all the outstanding shares of the Company; or (z) a proposed tender or exchange offer for 50% or more of the outstanding voting shares of the Company. The Company shall give not less than 20 days notice to all |
(a) | “affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person. |
(b) | “associate,” when used to indicate a relationship with any person, means (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting shares, (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity, and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person. |
(c) | “business combination,” when used in reference to the Company and any Interested Member of the Company, means: |
(i) | any amalgamation, scheme of arrangement, merger, consolidation or similar transaction involving the Company or any direct or indirect subsidiary of the Company with (A) the Interested Member, or (B) with any other corporation, partnership, unincorporated association or other entity if such transaction is caused by the Interested Member and as a result of such transaction subsection (a) of this section is not applicable to the surviving entity; |
(ii) | any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a Member of such Company, to or with the Interested Member, whether as part of a dissolution or otherwise, of assets of the Company or of any direct or indirect subsidiary of the Company which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Company determined on a consolidated basis or the aggregate market value of all the outstanding shares of the Company; |
(iii) | any transaction which results in the issuance or transfer by the Company or by any direct or indirect subsidiary of the Company of any shares of the Company or of such subsidiary to the Interested Member, except (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares of the Company or any such subsidiary which securities were outstanding prior to the time that the Interested Member became such, (B) pursuant to a Subsidiary Amalgamation; (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares |
(iv) | any transaction involving the Company or any direct or indirect subsidiary of the Company which has the effect, directly or indirectly, of increasing the proportionate share of the shares of any class or series, or securities convertible into the shares of any class or series, of the Company or of any such subsidiary which is owned by the Interested Member, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the Interested Member; or |
(v) | any receipt by the Interested Member of the benefit, directly or indirectly (except proportionately as a Member of the Company) of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subparagraphs (i)-(iv) above) provided by or through the Company or any direct or indirect subsidiary. |
(d) | “control,” including the term “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of any corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this Bye-law, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity. |
(e) | “Interested Member” means any person (other than the Company and any direct or indirect subsidiary of the Company) that (i) is the owner of 15% or more of the outstanding voting shares of the Company, or (ii) is an affiliate or associate of the Company and was the owner of 15% or more of the outstanding voting shares of the Company at any time within the 3-year period immediately prior to the date on which it is sought to be determined whether such person is an Interested Member, and the affiliates and associates of such person; provided, however, that the term “Interested Member” shall not include any person whose ownership of shares in excess of the 15% limitation set forth |
(f) | “stock” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest. |
(g) | “voting stock” means, with respect to any corporation, stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. |
(h) | “owner” including the terms “own” and “owned” when used with respect to any stock means a person that individually or with or through any of its affiliates or associates: |
(i) | beneficially owns such stock, directly or indirectly; or |
(ii) | has (A) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered stock is accepted for purchase or exchange; or (B) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or |
(iii) | has any arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of clause (ii) of this paragraph), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock. |
(i) | “Subsidiary Amalgamation” means an amalgamation, scheme of arrangement, merger, consolidation or similar transaction with or into a single direct or indirect wholly-owned subsidiary of the Company if: (1) the Company and the direct or indirect wholly-owned subsidiary of the Company are the only constituent companies to such transaction; (2) each share or fraction of a share of the Company outstanding immediately prior to the effective time of such transaction is converted in such transaction into a share or equal fraction of a share of shares of a holding company having the same designations, rights, powers and preferences, and the qualifications, limitations and restrictions thereof, as the share of the constituent company being converted in such transaction; (3) the holding company and each of the constituent companies to such transaction are companies incorporated in Bermuda; (4) the memorandum of association and bye-laws of the holding company immediately following the effective time of such transaction contain provisions identical to the memorandum of continuance and bye-laws of the Company immediately prior to the effective time of such transaction (other than provisions, if any, regarding the incorporator or incorporators, the corporate name, the registered office and agent, the initial board of directors and the initial subscribers for shares and such provisions contained in any amendment to the charter documents as were necessary to effect a change, exchange, reclassification or cancellation of shares, if such change, exchange, reclassification or cancellation has become effective); (5) as a result of such transaction the Company or its successor or continuing company becomes or remains a direct or indirect wholly-owned subsidiary of the holding company; (6) the directors of the Company become or remain the directors of the holding company upon the effective time of such transaction; (7) the memorandum of association and bye-laws of the surviving or continuing company immediately following the effective time of such transaction are identical to the memorandum of association and bye-laws of the Company immediately prior to the effective time of such transaction (other than provisions, if any, regarding the incorporator or incorporators, the corporate name, the registered office and agent, the initial board of directors and the initial subscribers for shares and such provisions contained in any amendment to the charter documents as were necessary to effect a change, exchange, reclassification or cancellation of shares, if such change, exchange, reclassification or cancellation has become effective); provided, however, that (i) the memorandum of association and bye-laws of the surviving or continuing company shall be amended in such transaction to contain a provision requiring that any act or transaction by or involving the surviving or continuing company that requires for its adoption under the Act or its bye-laws the approval of the Members of the surviving or continuing company shall, by specific reference to this subsection, require, in addition, the approval of the Members of the holding company (or any successor), by the same vote as is required by the Act and/or by its bye-laws of the surviving or continuing company, and (ii) the bye-laws of the surviving or continuing company may be amended in such transaction to reduce the number of classes and shares of capital stock that the surviving or continuing company is authorized to issue; and (8) the Members of the Company do not recognize gain or loss for United States federal income |
(a) | the affirmative vote of the holders of at least sixty-five percent (65%) of the voting power of the shares entitled to vote generally at an election of directors shall be required to amend, alter, change or repeal, or adopt any provision inconsistent with the purpose or intent of, Bye-laws 10(2), 11, 15, 31, 32, 33, 39, 45, 46(3), 52, 53, 79(1) and 79(2); and |
(b) | the affirmative vote set forth in Bye-law 78(4) shall be required to amend, alter, change or repeal, or adopt any provision inconsistent with the purpose or intent of, Bye-law 78. |
(i) | the adoption of any agreement for, or the approval of, any amalgamation, merger or consolidation of the Company or any subsidiary with or into any person or group that is the beneficial owner of 10% or more of the then outstanding shares of voting stock of the Company (“Non-exempted Beneficial Owner”) or any affiliate thereof; |
(ii) | the sale, lease, transfer or other disposition of all or any portion of the assets of the Company or any subsidiary (other than in the ordinary course of business) to any Non-exempted Beneficial Owner or its affiliates; |
(iii) | the issuance or transfer by the Company or any subsidiary of voting securities of the Company or any subsidiary to a Non-exempted Beneficial Owner or any affiliate thereof; or |
(iv) | any amendment of this Bye-law 79(3). |
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
By: | Dawna Ferguson |
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
By: | /s/ Dawna Ferguson__________ Name: Dawna Ferguson Title: Secretary |
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
(A) | any person (within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a Permitted Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting Securities representing 50% or more of the total voting power or value of all the then outstanding Voting Securities; or |
(B) | the individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Board”) together with those who become directors subsequent to such date and whose recommendation, election or nomination for election to the Board was approved by a vote of at least a majority of the directors then still in office who either were directors as of such date or whose recommendation, election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or |
(C) | the consummation of a merger, consolidation, recapitalization, liquidation, sale or disposition by the Company of all or substantially all of the Company's assets, or reorganization of the Company, other than any such transaction which would (x) result in more than 50% of the total voting power and value represented by the voting securities of the surviving entity outstanding immediately after such transaction being beneficially owned by the former shareholders of the Company and (y) not otherwise be deemed a Change in Control under subparagraphs (A) or (B) of this paragraph. |
By: | /s/ Dawna Ferguson Name: Dawna Ferguson Title: Secretary |
(i) | Equity, calculated at a rate equal to the average rate earned on the investment portfolios of the Company and its Subsidiaries during the initial 12-month calendar year period included in the Plan Year, net of investment expenses relating to such portfolios; and |
(ii) | Cash Flow, calculated at the following rates: (A) with respect to all business other than property business, the average risk free rate equal to the yield on a U.S. Treasury security with a duration equal to estimated weighted average duration of the underwriting (or policy) year liabilities, net of estimated investment expenses relating to a portfolio of U.S. Treasury securities, and, (B) with respect to property business, the average |
1. | I have reviewed this quarterly report on Form 10-Q of Arch Capital Group Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 5, 2016 | |
By: | /s/ Constantine Iordanou | |
Name: | Constantine Iordanou | |
Title: | Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Arch Capital Group Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 5, 2016 | |
By: | /s/ Mark D. Lyons | |
Name: | Mark D. Lyons | |
Title: | Executive Vice President, Chief Financial Officer and Treasurer |
(1) | the Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and |
(2) | the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 5, 2016 | |
By: | /s/ Constantine Iordanou | |
Name: | Constantine Iordanou | |
Title: | Chief Executive Officer |
(1) | the Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and |
(2) | the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 5, 2016 | |
By: | /s/ Mark D. Lyons | |
Name: | Mark D. Lyons | |
Title: | Executive Vice President, Chief Financial Officer and Treasurer |
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Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 28, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ARCH CAPITAL GROUP LTD. | |
Entity Central Index Key | 0000947484 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 122,572,026 |
Unaudited Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
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Fixed maturities available for sale, at amortized cost | $ 10,879,863 | $ 10,515,440 |
Short-term investments available for sale, at amortized cost | 855,764 | 591,141 |
Collateral received under securities lending, at amortized cost | 338,318 | 385,984 |
Equity securities available for sale, at cost | 414,537 | 543,767 |
Other investments available for sale, at cost | 167,914 | 261,343 |
Securities pledged under securities lending, at amortized cost | $ 328,274 | $ 386,411 |
Common shares, par value per share | $ 0.0033 | $ 0.0033 |
Common shares issued (shares) | 174,355,513 | 173,107,849 |
Common shares held in treasury (shares) | 51,783,253 | 50,480,066 |
Unaudited Consolidated Statements of Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Revenues | ||||
Net premiums written | $ 1,023,563 | $ 943,580 | $ 2,144,798 | $ 2,010,575 |
Change in unearned premiums | (17,578) | (142) | (187,234) | (156,873) |
Net premiums earned | 1,005,985 | 943,438 | 1,957,564 | 1,853,702 |
Net investment income | 88,338 | 86,963 | 182,073 | 165,957 |
Net realized gains (losses) | 68,218 | (35,725) | 105,542 | 47,623 |
Other-than-temporary impairment losses | (5,395) | (1,126) | (13,132) | (8,373) |
Less investment impairments recognized in other comprehensive income, before taxes | 52 | 13 | 150 | 1,461 |
Net impairment losses recognized in earnings | (5,343) | (1,113) | (12,982) | (6,912) |
Other underwriting income | 25,224 | 7,717 | 30,271 | 19,253 |
Equity in net income (loss) of investment funds accounted for using the equity method | 8,737 | 16,167 | 15,392 | 22,056 |
Other income (loss) | (7) | 2,205 | (32) | 317 |
Total revenues | 1,191,152 | 1,019,652 | 2,277,828 | 2,101,996 |
Expenses | ||||
Losses and loss adjustment expenses | 584,592 | 519,426 | 1,107,541 | 1,013,142 |
Acquisition expenses | 175,281 | 175,425 | 345,746 | 338,501 |
Other operating expenses | 159,590 | 151,190 | 311,859 | 299,727 |
Corporate expenses | 17,200 | 17,418 | 26,583 | 26,763 |
Interest expense | 15,663 | 4,011 | 31,770 | 16,747 |
Net foreign exchange (gains) losses | (24,662) | 19,583 | (1,096) | (46,918) |
Total expenses | 927,664 | 887,053 | 1,822,403 | 1,647,962 |
Income before income taxes | 263,488 | 132,599 | 455,425 | 454,034 |
Income tax expense | (14,131) | (6,780) | (30,441) | (19,458) |
Net income | 249,357 | 125,819 | 424,984 | 434,576 |
Net (income) loss attributable to noncontrolling interests | (38,302) | (10,029) | (59,131) | (35,450) |
Net income available to Arch | 211,055 | 115,790 | 365,853 | 399,126 |
Preferred dividends | (5,485) | (5,485) | (10,969) | (10,969) |
Net income available to Arch common shareholders | $ 205,570 | $ 110,305 | $ 354,884 | $ 388,157 |
Net income per common share | ||||
Basic (per share) | $ 1.70 | $ 0.91 | $ 2.94 | $ 3.16 |
Diluted (per share) | $ 1.65 | $ 0.88 | $ 2.85 | $ 3.05 |
Weighted average common shares and common share equivalents outstanding | ||||
Basic (shares) | 120,599,060 | 121,719,214 | 120,513,620 | 122,957,384 |
Diluted (shares) | 124,365,596 | 125,885,420 | 124,425,126 | 127,156,713 |
General |
6 Months Ended |
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Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General Arch Capital Group Ltd. (“ACGL”) is a Bermuda public limited liability company which provides insurance and reinsurance on a worldwide basis through its wholly-owned subsidiaries. As used herein, the “Company” means ACGL and its subsidiaries. The Company’s consolidated financial statements include the results of Watford Holdings Ltd. and its wholly owned subsidiaries (“Watford Re”). See Note 3. The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (“2015 Form 10-K”), including the Company’s audited consolidated financial statements and related notes. The Company has reclassified the presentation of certain prior year information to conform to the current presentation. Such reclassifications had no effect on the Company’s net income, comprehensive income, shareholders’ equity or cash flows. Tabular amounts are in U.S. Dollars in thousands, except share amounts, unless otherwise noted. |
Recent Accounting Pronouncements |
6 Months Ended |
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Jun. 30, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Issued Accounting Standards Adopted The Company adopted a new accounting standard in the 2016 first quarter that provided targeted improvements to consolidation guidance for limited partnerships and other similarly structured entities. The adoption of this standard resulted in the Company concluding that it no longer had a variable interest in Alternative Re Ltd. and, as a result, no longer is required to consolidate Alternative Re Ltd. in its financial statements. Alternative Re Ltd. is a Bermuda-domiciled company that provides collateralized segregated accounts to its clients. The Company applied this new standard on a modified retrospective basis as of January 1, 2016. Such adoption did not impact the Company’s shareholders’ equity or net income. The adoption of the new standard also resulted in a review of certain funds within the Company’s investment portfolio where the Company has a limited partnership interest. See Note 6 for disclosures on limited partnership interests. The Company also adopted new accounting guidance pertaining to hybrid instruments. The new guidance clarified the evaluation of whether the nature of a host contract within a hybrid instrument issued in the form of a share is more akin to debt or equity. The Company has adopted this new guidance on a modified retrospective basis as of January 1, 2016. Based on a review of hybrid instruments issued in the form of a share (both held in its investment portfolio and issued as part of capital raising), the Company determined the new accounting guidance had no impact on the classification or accounting for its existing hybrid instruments. Recently Issued Accounting Standards Not Yet Adopted An accounting standard was issued in the 2015 second quarter requiring new disclosures about the reserve for losses and loss adjustment expenses for short-duration insurance contracts. These disclosures will provide additional insight into an insurance entity’s ability to underwrite and anticipate costs associated with claims. This accounting guidance is effective for the 2016 annual reporting period and interim periods thereafter and should be applied retrospectively. The Company is assessing the impact the implementation of this standard will have on the disclosures included in its consolidated financial statements. A new accounting standard was issued in the 2016 first quarter to improve and simplify the accounting for employee share-based payment transactions. The new standard provides simplifications with respect to income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows for these types of transactions. The standard is effective in the 2017 first quarter and early adoption is permitted. The application of the new standard is dependent on the specific area that is amended. The Company is assessing the impact the implementation of this standard will have on its consolidated financial statements. In the 2016 first quarter, new accounting guidance was issued pertaining to the accounting for leases by a lessee. The new accounting guidance requires that the lessee recognize an asset and a liability for leases with a lease term greater than 12 months regardless of whether the lease is classified as operating or financing. Under current accounting, operating leases are not reflected in the balance sheet. This accounting guidance is effective for the 2019 first quarter, though early application is permitted, and should be applied on a modified retrospective basis. The Company is assessing the impact the implementation of this standard will have on its consolidated financial statements. A new accounting standard was issued in the 2016 second quarter that changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. This accounting guidance is effective for the 2020 first quarter, though early application is permitted in the 2019 first quarter, and should be applied on a modified retrospective basis for the majority of the provisions. The Company is assessing the impact the implementation of this standard will have on its consolidated financial statements. |
Variable Interest Entities and Noncontrolling Interests |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity and Noncontrolling Interests | Variable Interest Entities and Noncontrolling Interests A variable interest entity (“VIE”) refers to an entity that has characteristics such as (i) insufficient equity at risk to allow the entity to finance its activities without additional financial support or (ii) instances where the equity investors, as a group, do not have characteristics of a controlling financial interest. The primary beneficiary of a VIE is defined as the variable interest holder that is determined to have the controlling financial interest as a result of having both (i) the power to direct the activities of a VIE that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. If a company is determined to be the primary beneficiary, it is required to consolidate the VIE in its financial statements. Watford Holdings Ltd. In March 2014, the Company invested $100.0 million and acquired approximately 11% of Watford Holdings Ltd.’s common equity and a warrant to purchase additional common equity. Watford Holdings Ltd. is the parent of Watford Re Ltd., a multi-line Bermuda reinsurance company (together with Watford Holdings Ltd., “Watford Re”). Watford Re is considered a VIE and the Company concluded that it is the primary beneficiary of Watford Re. As such, the results of Watford Re are included in the Company’s consolidated financial statements. The Company does not guarantee or provide credit support for Watford Re, and the Company’s financial exposure to Watford Re is limited to its investment in Watford Re’s common and preferred shares and counterparty credit risk (mitigated by collateral) arising from reinsurance transactions. The following table provides the carrying amount and balance sheet caption in which the assets and liabilities of Watford Re are reported:
For the six months ended June 30, 2016, Watford Re generated $131.0 million of cash provided by operating activities, $13.8 million of cash used for investing activities and $148.2 million of cash used for financing activities, compared to $137.8 million of cash provided by operating activities, $134.9 million of cash used for investing activities and $40.3 million of cash provided by financing activities for the six months ended June 30, 2015. Non-redeemable noncontrolling interests The Company accounts for the portion of Watford Re’s common equity attributable to third party investors in the shareholders’ equity section of its consolidated balance sheets. The noncontrolling ownership in Watford Re’s common shares was approximately 89% at June 30, 2016. The portion of Watford Re’s income or loss attributable to third party investors is recorded in the consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests.’ The following table sets forth activity in the non-redeemable noncontrolling interests:
Redeemable noncontrolling interests The Company accounts for redeemable noncontrolling interests in the mezzanine section of its consolidated balance sheets in accordance with applicable accounting guidance. Such redeemable noncontrolling interests relate to the 9,065,200 cumulative redeemable preference shares (“Watford Preference Shares”) issued in March 2014 with a par value of $0.01 per share and a liquidation preference of $25.00 per share. Preferred dividends, including the accretion of the discount and issuance costs, are included in ‘net (income) loss attributable to noncontrolling interests’ in the Company’s consolidated statements of income. The following table sets forth activity in the redeemable non-controlling interests:
The portion of Watford Re’s income or loss attributable to third party investors, recorded in the Company’s consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests,’ are summarized in the table below:
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Earnings Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per common share:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company classifies its businesses into three underwriting segments — insurance, reinsurance and mortgage — and two other operating segments — ‘other’ and corporate (non-underwriting). The Company determined its reportable segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of the Company’s consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results. The Company’s insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company’s chief operating decision makers, the Chairman and Chief Executive Officer, the President and Chief Operating Officer, and the Chief Financial Officer of ACGL. The chief operating decision makers do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for its three underwriting segments based on underwriting income or loss. The Company does not manage its assets by underwriting segment, with the exception of goodwill and intangible assets, and, accordingly, investment income is not allocated to each underwriting segment. The insurance segment consists of the Company’s insurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: construction and national accounts; excess and surplus casualty; lenders products; professional lines; programs; property, energy, marine and aviation; travel, accident and health; and other (consisting of alternative markets, excess workers' compensation and surety business). The reinsurance segment consists of the Company’s reinsurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: casualty; marine and aviation; other specialty; property catastrophe; property excluding property catastrophe (losses on a single risk, both excess of loss and pro rata); and other (consisting of life reinsurance, casualty clash and other). The mortgage segment includes the results of Arch Mortgage Insurance Company (“Arch MI U.S.”) and Arch Mortgage Insurance Designated Activity Company, leading providers of mortgage insurance products and services to the U.S. and European markets, respectively. Arch MI U.S. is approved as an eligible mortgage insurer by Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”), each a government sponsored enterprise, or “GSE.” The mortgage segment also includes GSE credit risk-sharing transactions and mortgage reinsurance for the U.S. and Australian markets. The corporate (non-underwriting) segment results include net investment income, other income (loss), corporate expenses, interest expense, net realized gains or losses, net impairment losses included in earnings, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses, income taxes and items related to the Company’s non-cumulative preferred shares. Such amounts exclude the results of the ‘other’ segment. The ‘other’ segment includes the results of Watford Re (see Note 3). Watford Re has its own management and board of directors that is responsible for the overall profitability of the ‘other’ segment. For the ‘other’ segment, performance is measured based on net income or loss. The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to common shareholders:
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Disclosure Investment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Information | Investment Information At June 30, 2016, total investable assets of $16.88 billion included $15.18 billion managed by the Company and $1.70 billion attributable to Watford Re. Available For Sale Investments The following table summarizes the fair value and cost or amortized cost of the Company’s investments classified as available for sale:
The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position:
At June 30, 2016, on a lot level basis, approximately 1,410 security lots out of a total of approximately 6,280 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $3.4 million. At December 31, 2015, on a lot level basis, approximately 3,560 security lots out of a total of approximately 5,550 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $3.1 million. The contractual maturities of the Company’s fixed maturities are shown in the following table. Expected maturities, which are management’s best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Securities Lending Agreements The Company enters into securities lending agreements with financial institutions to enhance investment income whereby it loans certain of its securities to third parties, primarily major brokerage firms, for short periods of time through a lending agent. The Company maintains legal control over the securities it lends, retains the earnings and cash flows associated with the loaned securities and receives a fee from the borrower for the temporary use of the securities. An indemnification agreement with the lending agent protects the Company in the event a borrower becomes insolvent or fails to return any of the securities on loan to the Company. The Company receives collateral in the form of cash or securities. Cash collateral primarily consists of short-term investments. At June 30, 2016, the fair value of the cash collateral received on securities lending was $75.9 million and the fair value of security collateral received was $262.4 million. At December 31, 2015, the fair value of the cash collateral received on securities lending was $52.7 million, which included $3.0 million that was reinvested in sub-prime mortgage backed securities, and the fair value of security collateral received was $336.7 million. The Company’s securities lending transactions were accounted for as secured borrowings with significant investment categories as follows:
Other Investments The following table summarizes the Company’s other investments, including available for sale and fair value option components:
Certain of the Company’s other investments are in investment funds for which the Company has the option to redeem at agreed upon values as described in each investment fund’s subscription agreement. Depending on the terms of the various subscription agreements, investments in investment funds may be redeemed daily, monthly, quarterly or on other terms. Two common redemption restrictions which may impact the Company’s ability to redeem these investment funds are gates and lockups. A gate is a suspension of redemptions which may be implemented by the general partner or investment manager of the fund in order to defer, in whole or in part, the redemption request in the event the aggregate amount of redemption requests exceeds a predetermined percentage of the investment fund’s net assets which may otherwise hinder the general partner or investment manager’s ability to liquidate holdings in an orderly fashion in order to generate the cash necessary to fund extraordinarily large redemption payouts. A lockup period is the initial amount of time an investor is contractually required to hold the security before having the ability to redeem. If the investment funds are eligible to be redeemed, the time to redeem such fund can take weeks or months following the notification. Fair Value Option The following table summarizes the Company’s assets and liabilities which are accounted for using the fair value option:
Limited partnership interests In the normal course of its activities, the Company invests in limited partnerships as part of its overall investment strategy. Such amounts are included in ‘investments accounted for using the equity method’ and ‘investments accounted for using the fair value option.’ Based on the new accounting guidance for consolidation, the Company determined that these limited partnership interests represented variable interests in the funds because the general partner did not have a significant interest in the fund. The Company has determined that it is not required to consolidate these investments because it is not the primary beneficiary of the funds. The Company’s maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the Company’s consolidated balance sheet and any unfunded commitment. The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item:
Net Investment Income The components of net investment income were derived from the following sources:
Net Realized Gains (Losses) Net realized gains (losses) were as follows, excluding other than-temporary impairment provision.
Equity in Net Income (Loss) of Investment Funds Accounted for Using the Equity Method The Company recorded $8.7 million of equity in net income related to investment funds accounted for using the equity method in the 2016 second quarter, compared to $16.2 million of equity in net income for the 2015 second quarter, and $15.4 million of equity in net income related to investment funds accounted for using the equity method for the six months ended June 30, 2016, compared to $22.1 million of equity in net income for the 2015 period. In applying the equity method, investments are initially recorded at cost and are subsequently adjusted based on the Company’s proportionate share of the net income or loss of the funds (which include changes in the market value of the underlying securities in the funds). Such investments are generally recorded on a one to three month lag based on the availability of reports from the investment funds. Other-Than-Temporary Impairments The Company performs quarterly reviews of its available for sale investments in order to determine whether declines in fair value below the amortized cost basis were considered other-than-temporary in accordance with applicable guidance. The following table details the net impairment losses recognized in earnings by asset class:
A description of the methodology and significant inputs used to measure the amount of net impairment losses recognized in earnings in the 2016 periods is as follows:
The Company believes that the $5.8 million of OTTI included in accumulated other comprehensive income at June 30, 2016 on the securities which were considered by the Company to be impaired was due to market and sector-related factors (i.e., not credit losses). At June 30, 2016, the Company did not intend to sell these securities, or any other securities which were in an unrealized loss position, and determined that it is more likely than not that the Company will not be required to sell such securities before recovery of their cost basis. The following table provides a roll forward of the amount related to credit losses recognized in earnings for which a portion of an OTTI was recognized in accumulated other comprehensive income:
Restricted Assets The Company is required to maintain assets on deposit, which primarily consist of fixed maturities, with various regulatory authorities to support its insurance and reinsurance operations. The Company’s insurance and reinsurance subsidiaries maintain assets in trust accounts as collateral for insurance and reinsurance transactions with affiliated companies and also have investments in segregated portfolios primarily to provide collateral or guarantees for letters of credit to third parties. See Note 9 for further details. The following table details the value of the Company’s restricted assets:
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Accounting guidance regarding fair value measurements addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP and provides a common definition of fair value to be used throughout GAAP. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. In addition, it establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement (Level 1 being the highest priority and Level 3 being the lowest priority). The levels in the hierarchy are defined as follows:
Following is a description of the valuation methodologies used for securities measured at fair value, as well as the general classification of such securities pursuant to the valuation hierarchy. The Company reviews its securities measured at fair value and discusses the proper classification of such investments with investment advisers and others. The Company determines the existence of an active market based on its judgment as to whether transactions for the financial instrument occur in such market with sufficient frequency and volume to provide reliable pricing information. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. The Company uses quoted values and other data provided by nationally recognized independent pricing sources as inputs into its process for determining fair values of its fixed maturity investments. To validate the techniques or models used by pricing sources, the Company's review process includes, but is not limited to: (i) quantitative analysis (e.g., comparing the quarterly return for each managed portfolio to its target benchmark, with significant differences identified and investigated); (ii) a review of the average number of prices obtained in the pricing process and the range of resulting fair values; (iii) initial and ongoing evaluation of methodologies used by outside parties to calculate fair value; (iv) a comparison of the fair value estimates to the Company’s knowledge of the current market; (v) a comparison of the pricing services' fair values to other pricing services' fair values for the same investments; and (vi) periodic back-testing, which includes randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates from the pricing service. A price source hierarchy was maintained in order to determine which price source would be used (i.e., a price obtained from a pricing service with more seniority in the hierarchy will be used over a less senior one in all cases). The hierarchy prioritizes pricing services based on availability and reliability and assigns the highest priority to index providers. Based on the above review, the Company will challenge any prices for a security or portfolio which are considered not to be representative of fair value. The Company did not adjust any of the prices obtained from the independent pricing sources at June 30, 2016. In certain circumstances, when fair values are unavailable from these independent pricing sources, quotes are obtained directly from broker-dealers who are active in the corresponding markets. Such quotes are subject to the validation procedures noted above. Of the $16.20 billion of financial assets and liabilities measured at fair value at June 30, 2016, approximately $379.5 million, or 2.4%, were priced using non-binding broker-dealer quotes. Of the $15.40 billion of financial assets and liabilities measured at fair value at December 31, 2015, approximately $317.8 million, or 2.1%, were priced using non-binding broker-dealer quotes. Fixed maturities The Company uses the market approach valuation technique to estimate the fair value of its fixed maturity securities, when possible. The market approach includes obtaining prices from independent pricing services, such as index providers and pricing vendors, as well as to a lesser extent quotes from broker-dealers. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. Each source has its own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of “matrix pricing” in which the independent pricing source uses observable market inputs including, but not limited to, investment yields, credit risks and spreads, benchmarking of like securities, broker-dealer quotes, reported trades and sector groupings to determine a reasonable fair value. The following describes the significant inputs generally used to determine the fair value of the Company’s fixed maturity securities by asset class:
Equity securities The Company determined that exchange-traded equity securities would be included in Level 1 as their fair values are based on quoted market prices in active markets. Other equity securities are included in Level 2 of the valuation hierarchy. Other investments The Company determined that exchange-traded investments in mutual funds would be included in Level 1 as their fair values are based on quoted market prices in active markets. Other investments also include term loan investments for which fair values are estimated by using quoted prices of term loan investments with similar characteristics, pricing models or matrix pricing. Such investments are generally classified within Level 2. The fair values for certain of the Company’s other investments are determined using net asset values as advised by external fund managers. The net asset value is based on the fund manager’s valuation of the underlying holdings in accordance with the fund’s governing documents. In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. Derivative instruments The Company’s futures contracts, foreign currency forward contracts, interest rate swaps and other derivatives trade in the over-the-counter derivative market. The Company uses the market approach valuation technique to estimate the fair value for these derivatives based on significant observable market inputs from third party pricing vendors, non-binding broker-dealer quotes and/or recent trading activity. As the significant inputs used in the pricing process for these derivative instruments are observable market inputs, the fair value of these securities are classified within Level 2. Short-term investments The Company determined that certain of its short-term investments held in highly liquid money market-type funds would be included in Level 1 as their fair values are based on quoted market prices in active markets. The fair values of other short-term investments are generally determined using the spread above the risk-free yield curve and are classified within Level 2. Contingent consideration liabilities Contingent consideration liabilities (included in ‘other liabilities’ in the consolidated balance sheets) include amounts related to the acquisition of CMG Mortgage Insurance Company and its affiliated mortgage insurance companies and other acquisitions. Such amounts are remeasured at fair value at each balance sheet date with changes in fair value recognized in ‘net realized gains (losses).’ To determine the fair value of contingent consideration liabilities, the Company estimates future payments using an income approach based on modeled inputs which include a weighted average cost of capital. The Company determined that contingent consideration liabilities would be included within Level 3. The following table presents the Company’s financial assets and liabilities measured at fair value by level at June 30, 2016:
The following table presents the Company’s financial assets and liabilities measured at fair value by level at December 31, 2015:
The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:
Financial Instruments Disclosed, But Not Carried, At Fair Value The Company uses various financial instruments in the normal course of its business. The carrying values of cash, accrued investment income, receivable for securities sold, certain other assets, payable for securities purchased and certain other liabilities approximated their fair values at June 30, 2016, due to their respective short maturities. As these financial instruments are not actively traded, their respective fair values are classified within Level 2. At June 30, 2016, the senior notes of ACGL were carried at their cost, net of debt issuance costs, of $296.9 million and had a fair value of $428.0 million while the senior notes of Arch-U.S. were carried at their cost, net of debt issuance costs, of $494.5 million and had a fair value of $602.8 million. The fair values of the senior notes were obtained from a third party pricing service and are based on observable market inputs. As such, the fair value of the senior notes is classified within Level 2. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments The Company’s investment strategy allows for the use of derivative instruments. The Company’s derivative instruments are recorded on its consolidated balance sheets at fair value. The Company utilizes exchange traded U.S. Treasury note, Eurodollar and other futures contracts and commodity futures to manage portfolio duration or replicate investment positions in its portfolios and the Company routinely utilizes foreign currency forward contracts, currency options, index futures contracts and other derivatives as part of its total return objective. In addition, certain of the Company’s investments are managed in portfolios which incorporate the use of foreign currency forward contracts which are intended to provide an economic hedge against foreign currency movements. In addition, the Company purchases to-be-announced mortgage backed securities (“TBAs”) as part of its investment strategy. TBAs represent commitments to purchase a future issuance of agency mortgage backed securities. For the period between purchase of a TBA and issuance of the underlying security, the Company’s position is accounted for as a derivative. The Company purchases TBAs in both long and short positions to enhance investment performance and as part of its overall investment strategy. The following table summarizes information on the fair values and notional values of the Company’s derivative instruments:
The Company did not hold any derivatives which were designated as hedging instruments at June 30, 2016 or December 31, 2015. The Company’s derivative instruments can be traded under master netting agreements, which establish terms that apply to all derivative transactions with a counterparty. In the event of a bankruptcy or other stipulated event of default, such agreements provide that the non-defaulting party may elect to terminate all outstanding derivative transactions, in which case all individual derivative positions (loss or gain) with a counterparty are closed out and netted and replaced with a single amount, usually referred to as the termination amount, which is expressed in a single currency. The resulting single net amount, where positive, is payable to the party “in-the-money” regardless of whether or not it is the defaulting party, unless the parties have agreed that only the non-defaulting party is entitled to receive a termination payment where the net amount is positive and is in its favor. Contractual close-out netting reduces derivatives credit exposure from gross to net exposure. At June 30, 2016, asset derivatives and liability derivatives of $152.2 million and $144.0 million, respectively, were subject to a master netting agreement, compared to $26.5 million and $11.9 million, respectively, at December 31, 2015. The remaining derivatives included in the preceding table were not subject to a master netting agreement. All realized and unrealized contract gains and losses on the Company’s derivative instruments are reflected in net realized gains (losses) in the consolidated statements of income, as summarized in the following table:
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Commitments and Contingencies |
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Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Letter of Credit and Revolving Credit Facilities As of June 30, 2016, ACGL and its wholly-owned subsidiaries had a $300.0 million unsecured revolving loan and letter of credit facility and a $500.0 million secured letter of credit facility (the “Credit Agreement”). Under the terms of the Credit Agreement, Arch Reinsurance Company and Arch Reinsurance Ltd. are limited to issuing an aggregate of $100.0 million of unsecured letters of credit as part of the unsecured revolving loan. The Credit Agreement expires on June 30, 2019. In addition, certain of ACGL’s subsidiaries had outstanding letters of credit of $242.4 million as of June 30, 2016, which were issued on a limited basis and for limited purposes (together with the secured portion of the Credit Agreement and these letter of credit facilities, the “LOC Facilities”). ACGL and its’ subsidiaries which are party to the LOC Facilities were in compliance with all covenants contained in the LOC Facilities at June 30, 2016. At such date, $416.9 million in letters of credit under the LOC Facilities were outstanding, which were secured by investments with a fair value of $473.9 million, and had $100.0 million of borrowings outstanding under the Credit Agreement. Under the $500.0 million secured letter of credit facility, ACGL’s subsidiaries had remaining capacity of $325.4 million (outstanding letters of credit of $174.6 million) at June 30, 2016. As of June 30, 2016, Watford Re had a $100.0 million letter of credit facility expiring on May 19, 2017 and an $800.0 million secured credit facility expiring on June 4, 2018, that provides for borrowings and the issuance of letters of credit not to exceed $400.0 million. Borrowings of revolving loans may be made by Watford Re at a variable rate based on LIBOR or an alternative base rate at the option of Watford Re. At June 30, 2016, Watford Re had $198.0 million in outstanding letters of credit under the two facilities and $297.8 million of borrowings outstanding under the secured credit facility, backed by Watford Re’s investment portfolio. Watford Re was in compliance with all covenants contained in both of its credit facilities at June 30, 2016. The Company does not guarantee or provide credit support for Watford Re, and the Company’s financial exposure to Watford Re is limited to its investment in Watford Re’s common and preferred shares and counterparty credit risk (mitigated by collateral) arising from the reinsurance transactions. Investment Commitments The Company’s investment commitments, which are primarily related to agreements entered into by the Company to invest in funds and separately managed accounts when called upon, were approximately $1.35 billion at June 30, 2016, compared to $1.11 billion at December 31, 2015. |
Share Transactions |
6 Months Ended |
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Jun. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Share Transactions | Share Transactions Share Repurchases The board of directors of ACGL has authorized the investment in ACGL’s common shares through a share repurchase program. Since the inception of the share repurchase program, ACGL has repurchased approximately 125.2 million common shares for an aggregate purchase price of $3.68 billion. For the six months ended June 30, 2016, ACGL repurchased 1.1 million common shares (no repurchases in the 2016 second quarter) for an aggregate purchase price of $75.3 million. During the 2015 second quarter and six months ended June 30, 2015 ACGL repurchased 3.2 million and 5.9 million common shares, respectively, for an aggregate purchase price of $199.0 million and $361.9 million, respectively. At June 30, 2016, $446.5 million of share repurchases were available under the program. The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions and corporate and regulatory considerations. Share-Based Compensation During the 2016 second quarter, the Company granted 427,379 stock options and 456,217 restricted shares and units to certain employees and directors with weighted average grant-date fair values of $17.46 and $71.61, respectively. During the 2015 second quarter, the Company granted 534,267 stock appreciation rights and stock options and 559,332 restricted shares and units to certain employees and directors with weighted average grant-date fair values of $16.09 and $62.51, respectively. The stock appreciation rights and stock options were valued at the grant date using the Black-Scholes option pricing model. Such values are being amortized over the respective substantive vesting period. For awards granted to retirement-eligible employees where no service is required for the employee to retain the award, the grant date fair value is immediately recognized as compensation expense at the grant date because the employee is able to retain the award without continuing to provide service. For employees near retirement eligibility, attribution of compensation cost is over the period from the grant date to the retirement eligibility date. |
Other Comprehensive Income (Loss) |
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income Note Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss):
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Guarantor Financial Information |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantor Financial Information | Guarantor Financial Information The following tables present condensed financial information for ACGL, Arch Capital Group (U.S.) Inc. (“Arch-U.S.”), a 100% owned subsidiary of ACGL, and ACGL’s other subsidiaries.
(1) Included in net cash provided by (used for) operating activities in the ACGL (Parent Guarantor) column.
(1) Included in net cash provided by (used for) operating activities in the ACGL (Parent Guarantor) column. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s income tax provision on income before income taxes resulted in an expense of 6.7% for the six months ended June 30, 2016, compared to an expense of 4.3% for the 2015 period. The Company’s effective tax rate, which is based upon the expected annual effective tax rate, may fluctuate from period to period based on the relative mix of income or loss reported by jurisdiction and the varying tax rates in each jurisdiction. The Company had a net deferred tax asset of $113.0 million at June 30, 2016, compared to $135.7 million at December 31, 2015. In addition, the Company paid $26.6 million and $26.0 million of income taxes for the six months ended June 30, 2016 and 2015, respectively. |
Legal Proceedings |
6 Months Ended |
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Jun. 30, 2016 | |
Disclosure Legal Proceedings [Abstract] | |
Legal Proceedings | Legal Proceedings The Company, in common with the insurance industry in general, is subject to litigation and arbitration in the normal course of its business. As of June 30, 2016, the Company was not a party to any litigation or arbitration which is expected by management to have a material adverse effect on the Company’s results of operations and financial condition and liquidity. |
Transactions with Related Parties |
6 Months Ended |
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Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Transactions with Related Parties Kewsong Lee, a director of ACGL, is a Managing Director and Deputy Chief Investment Officer for Corporate Private Equity of The Carlyle Group (“Carlyle”). As part of its investment philosophy, the Company invests a portion of its investment portfolio in alternative investment funds. As of June 30, 2016, the Company had aggregate commitments of $770.9 million to funds managed by Carlyle, of which $513.1 million was unfunded. The Company may make additional commitments to funds managed by Carlyle from time to time. During the six months ended June 30, 2016 and 2015, the Company made aggregate capital contributions to funds managed by Carlyle of $56.6 million and $25.6 million, respectively, and received aggregate cash distributions from funds managed by Carlyle of $13.8 million and $19.8 million, respectively. |
General (Policies) |
6 Months Ended |
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Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. |
Variable Interest Entities and Noncontrolling Interests (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying value of assets and liabilities of variable interest entity | The following table provides the carrying amount and balance sheet caption in which the assets and liabilities of Watford Re are reported:
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Activity in non-redeemable noncontrolling interests | The following table sets forth activity in the non-redeemable noncontrolling interests:
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Activity in redeemable noncontrolling interests | The following table sets forth activity in the redeemable non-controlling interests:
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Portion of income or loss attributable to third party investors | The portion of Watford Re’s income or loss attributable to third party investors, recorded in the Company’s consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests,’ are summarized in the table below:
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Earnings Per Common Share (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of basic and diluted earnings per common share | The following table sets forth the computation of basic and diluted earnings per common share:
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of underwriting income or loss by segment and reconciliation to net income available to common shareholders | The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to common shareholders:
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Investment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Investment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of fair value and cost or amortized cost of available for sale securities | The following table summarizes the fair value and cost or amortized cost of the Company’s investments classified as available for sale:
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Summary of available for sale securities in a continual unrealized loss position | The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position:
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Contractual maturities of the Company's fixed maturities and fixed maturities pledged under securities lending arrangements | The contractual maturities of the Company’s fixed maturities are shown in the following table. Expected maturities, which are management’s best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Securities lending transactions accounted for as secured borrowings, by significant investment category | The Company’s securities lending transactions were accounted for as secured borrowings with significant investment categories as follows:
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Summary of other investments, including available for sale and fair value option components | The following table summarizes the Company’s other investments, including available for sale and fair value option components:
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Summary of assets and liabilities accounted for using the fair value option | The following table summarizes the Company’s assets and liabilities which are accounted for using the fair value option:
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Summary of investments in limited partnership interests where the Company has a variable interest | The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item:
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Components of net investment income | The components of net investment income were derived from the following sources:
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Summary of net realized gains (losses), excluding other-than-temporary impairment provisions | Net realized gains (losses) were as follows, excluding other than-temporary impairment provision.
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Summary of OTTI recognized in earnings by asset class | The following table details the net impairment losses recognized in earnings by asset class:
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Rollforward of the amount related to credit losses recognized in earnings for which a portion was recognized in AOCI | The following table provides a roll forward of the amount related to credit losses recognized in earnings for which a portion of an OTTI was recognized in accumulated other comprehensive income:
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Summary of restricted assets | The following table details the value of the Company’s restricted assets:
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Fair Value (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value hierarchy | The following table presents the Company’s financial assets and liabilities measured at fair value by level at June 30, 2016:
The following table presents the Company’s financial assets and liabilities measured at fair value by level at December 31, 2015:
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Rollforward of Level 3 investments | The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:
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Derivative Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value and notional amount of derivatives | The following table summarizes information on the fair values and notional values of the Company’s derivative instruments:
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Summary of net realized gains (losses) recorded in the consolidated statements of income | All realized and unrealized contract gains and losses on the Company’s derivative instruments are reflected in net realized gains (losses) in the consolidated statements of income, as summarized in the following table:
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Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income Note Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details about amounts reclassified from AOCI | The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss):
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Schedule of comprehensive income (loss) |
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Guarantor Financial Information (Tables) |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed consolidating balance sheet |
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Condensed consolidating statement of income and comprehensive income |
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Condensed consolidating statement of cash flows |
(1) Included in net cash provided by (used for) operating activities in the ACGL (Parent Guarantor) column.
(1) Included in net cash provided by (used for) operating activities in the ACGL (Parent Guarantor) column. |
Variable Interest Entities and Noncontrolling Interests - Variable interest entity (Details) - USD ($) $ in Thousands |
1 Months Ended | 6 Months Ended | |
---|---|---|---|
Mar. 31, 2014 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Variable Interest Entity [Line Items] | |||
Net cash provided by operating activities | $ 541,224 | $ 385,199 | |
Net cash used for investing activities | (355,668) | (39,154) | |
Net cash used for financing activities | (213,385) | (306,634) | |
Variable Interest Entity, Primary Beneficiary | Watford Holdings Ltd | |||
Variable Interest Entity [Line Items] | |||
Initial investment contribution amount | $ 100,000 | ||
Ownership percentage | 11.00% | ||
Variable Interest Entity, Primary Beneficiary | Watford Re | |||
Variable Interest Entity [Line Items] | |||
Net cash provided by operating activities | 131,000 | 137,800 | |
Net cash used for investing activities | (13,800) | (134,900) | |
Net cash used for financing activities | $ (148,200) | $ 40,300 |
Variable Interest Entities and Noncontrolling Interests - Income or loss attributable to third party investors (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Noncontrolling Interest [Abstract] | ||||
Amounts attributable to non-redeemable noncontrolling interests | $ (33,716) | $ (5,286) | $ (49,958) | $ (25,799) |
Dividends attributable to redeemable noncontrolling interests | (4,586) | (4,743) | (9,173) | (9,651) |
Net (income) loss attributable to noncontrolling interests | $ (38,302) | $ (10,029) | $ (59,131) | $ (35,450) |
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Numerator: | ||||||||
Net income | $ 249,357 | $ 125,819 | $ 424,984 | $ 434,576 | ||||
Net (income) loss attributable to noncontrolling interests | (38,302) | (10,029) | (59,131) | (35,450) | ||||
Net income available to Arch | 211,055 | 115,790 | 365,853 | 399,126 | ||||
Preferred dividends | (5,485) | (5,485) | (10,969) | (10,969) | ||||
Net income (loss) available to Arch common shareholders | $ 205,570 | $ 110,305 | $ 354,884 | $ 388,157 | ||||
Denominator: | ||||||||
Weighted average common shares outstanding — basic | 120,599,060 | 121,719,214 | 120,513,620 | 122,957,384 | ||||
Effect of dilutive common share equivalents: | ||||||||
Nonvested restricted shares | 1,295,342 | 1,258,741 | 1,374,272 | 1,334,633 | ||||
Stock options | 2,471,194 | [1] | 2,907,465 | [1] | 2,537,234 | 2,864,696 | ||
Weighted average common shares and common share equivalents outstanding — diluted | 124,365,596 | 125,885,420 | 124,425,126 | 127,156,713 | ||||
Earnings per common share: | ||||||||
Basic (per share) | $ 1.70 | $ 0.91 | $ 2.94 | $ 3.16 | ||||
Diluted (per share) | $ 1.65 | $ 0.88 | $ 2.85 | $ 3.05 | ||||
Stock Options | ||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||
Antidilutive securities excluded from computation of earnings per common share (shares) | 575,931 | 1,009,113 | 1,027,784 | 1,187,162 | ||||
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Segment Information - Summary of underwriting income or loss by segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
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Segment Reporting Information [Line Items] | ||||||||
Gross premiums written | $ 1,329,936 | $ 1,199,209 | $ 2,767,902 | $ 2,541,231 | ||||
Premiums ceded | (306,373) | (255,629) | (623,104) | (530,656) | ||||
Net premiums written | 1,023,563 | 943,580 | 2,144,798 | 2,010,575 | ||||
Change in unearned premiums | (17,578) | (142) | (187,234) | (156,873) | ||||
Net premiums earned | 1,005,985 | 943,438 | 1,957,564 | 1,853,702 | ||||
Other underwriting income | 25,224 | 7,717 | 30,271 | 19,253 | ||||
Losses and loss adjustment expenses | (584,592) | (519,426) | (1,107,541) | (1,013,142) | ||||
Acquisition expenses, net | (175,281) | (175,425) | (345,746) | (338,501) | ||||
Other operating expenses | (159,590) | (151,190) | (311,859) | (299,727) | ||||
Underwriting income (loss) | 111,746 | 105,114 | 222,689 | 221,585 | ||||
Net investment income | 88,338 | 86,963 | 182,073 | 165,957 | ||||
Net realized gains (losses) | 68,218 | (35,725) | 105,542 | 47,623 | ||||
Net impairment losses recognized in earnings | (5,343) | (1,113) | (12,982) | (6,912) | ||||
Equity in net income (loss) of investment funds accounted for using the equity method | 8,737 | 16,167 | 15,392 | 22,056 | ||||
Other income (loss) | (7) | 2,205 | (32) | 317 | ||||
Corporate expenses | 17,200 | 17,418 | 26,583 | 26,763 | ||||
Interest expense | (15,663) | (4,011) | (31,770) | (16,747) | ||||
Net foreign exchange gains (losses) | 24,662 | (19,583) | 1,096 | 46,918 | ||||
Income before income taxes | 263,488 | 132,599 | 455,425 | 454,034 | ||||
Income tax expense | (14,131) | (6,780) | (30,441) | (19,458) | ||||
Net income (loss) | 249,357 | 125,819 | 424,984 | 434,576 | ||||
Dividends attributable to redeemable noncontrolling interests | (4,586) | (4,743) | (9,173) | (9,651) | ||||
Amounts attributable to non-redeemable noncontrolling interests | (33,716) | (5,286) | (49,958) | (25,799) | ||||
Net income available to Arch | 211,055 | 115,790 | 365,853 | 399,126 | ||||
Preferred dividends | (5,485) | (5,485) | (10,969) | (10,969) | ||||
Net income (loss) available to Arch common shareholders | $ 205,570 | $ 110,305 | $ 354,884 | $ 388,157 | ||||
Underwriting Ratios | ||||||||
Loss ratio | 58.10% | 55.10% | 56.60% | 54.70% | ||||
Acquisition expense ratio | 17.40% | 18.60% | 17.70% | 18.30% | ||||
Other operating expense ratio | 15.90% | 16.00% | 15.90% | 16.20% | ||||
Combined ratio | 91.40% | 89.70% | 90.20% | 89.20% | ||||
Goodwill and intangible assets | $ 88,327 | $ 102,518 | $ 88,327 | $ 102,518 | $ 97,531 | |||
Other | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Gross premiums written | [1] | 109,285 | 127,954 | 257,891 | 256,587 | |||
Premiums ceded | (4,457) | (7,766) | (8,929) | (11,821) | ||||
Net premiums written | 104,828 | 120,188 | 248,962 | 244,766 | ||||
Change in unearned premiums | 15,739 | (12,999) | (12,878) | (65,311) | ||||
Net premiums earned | 120,567 | 107,189 | 236,084 | 179,455 | ||||
Other underwriting income | 969 | 852 | 1,898 | 2,814 | ||||
Losses and loss adjustment expenses | (83,502) | (77,678) | (162,615) | (127,157) | ||||
Acquisition expenses, net | (33,645) | (30,142) | (66,584) | (51,118) | ||||
Other operating expenses | (6,113) | (3,450) | (11,451) | (5,455) | ||||
Underwriting income (loss) | (1,724) | (3,229) | (2,668) | (1,461) | ||||
Net investment income | 17,941 | 19,792 | 41,267 | 28,498 | ||||
Net realized gains (losses) | 27,291 | (8,865) | 32,753 | 8,974 | ||||
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 | ||||
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 | ||||
Other income (loss) | 0 | 0 | 0 | 0 | ||||
Corporate expenses | 0 | 0 | 0 | 0 | ||||
Interest expense | (3,231) | 0 | (6,711) | 0 | ||||
Net foreign exchange gains (losses) | 2,201 | 2,988 | 676 | 2,636 | ||||
Income before income taxes | 42,478 | 10,686 | 65,317 | 38,647 | ||||
Income tax expense | 0 | 0 | 0 | 0 | ||||
Net income (loss) | 42,478 | 10,686 | 65,317 | 38,647 | ||||
Dividends attributable to redeemable noncontrolling interests | (4,586) | (4,743) | (9,173) | (9,651) | ||||
Amounts attributable to non-redeemable noncontrolling interests | (33,716) | (5,286) | (49,958) | (25,799) | ||||
Net income available to Arch | 4,176 | 657 | 6,186 | 3,197 | ||||
Preferred dividends | 0 | 0 | 0 | 0 | ||||
Net income (loss) available to Arch common shareholders | $ 4,176 | $ 657 | $ 6,186 | $ 3,197 | ||||
Underwriting Ratios | ||||||||
Loss ratio | 69.30% | 72.50% | 68.90% | 70.90% | ||||
Acquisition expense ratio | 27.90% | 28.10% | 28.20% | 28.50% | ||||
Other operating expense ratio | 5.10% | 3.20% | 4.90% | 3.00% | ||||
Combined ratio | 102.30% | 103.80% | 102.00% | 102.40% | ||||
Goodwill and intangible assets | $ 0 | $ 0 | $ 0 | $ 0 | ||||
Sub-Total | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Gross premiums written | [1] | 1,292,199 | 1,155,253 | 2,683,260 | 2,466,931 | |||
Premiums ceded | (373,464) | (331,861) | (787,424) | (701,122) | ||||
Net premiums written | 918,735 | 823,392 | 1,895,836 | 1,765,809 | ||||
Change in unearned premiums | (33,317) | 12,857 | (174,356) | (91,562) | ||||
Net premiums earned | 885,418 | 836,249 | 1,721,480 | 1,674,247 | ||||
Other underwriting income | 24,255 | 6,865 | 28,373 | 16,439 | ||||
Losses and loss adjustment expenses | (501,090) | (441,748) | (944,926) | (885,985) | ||||
Acquisition expenses, net | (141,636) | (145,283) | (279,162) | (287,383) | ||||
Other operating expenses | (153,477) | (147,740) | (300,408) | (294,272) | ||||
Underwriting income (loss) | 113,470 | 108,343 | 225,357 | 223,046 | ||||
Net investment income | 70,397 | 67,171 | 140,806 | 137,459 | ||||
Net realized gains (losses) | 40,927 | (26,860) | 72,789 | 38,649 | ||||
Net impairment losses recognized in earnings | (5,343) | (1,113) | (12,982) | (6,912) | ||||
Equity in net income (loss) of investment funds accounted for using the equity method | 8,737 | 16,167 | 15,392 | 22,056 | ||||
Other income (loss) | (7) | 2,205 | (32) | 317 | ||||
Corporate expenses | 17,200 | 17,418 | 26,583 | 26,763 | ||||
Interest expense | (12,432) | (4,011) | (25,059) | (16,747) | ||||
Net foreign exchange gains (losses) | 22,461 | (22,571) | 420 | 44,282 | ||||
Income before income taxes | 221,010 | 121,913 | 390,108 | 415,387 | ||||
Income tax expense | (14,131) | (6,780) | (30,441) | (19,458) | ||||
Net income (loss) | 206,879 | 115,133 | 359,667 | 395,929 | ||||
Dividends attributable to redeemable noncontrolling interests | 0 | 0 | 0 | 0 | ||||
Amounts attributable to non-redeemable noncontrolling interests | 0 | 0 | 0 | 0 | ||||
Net income available to Arch | 206,879 | 115,133 | 359,667 | 395,929 | ||||
Preferred dividends | (5,485) | (5,485) | (10,969) | (10,969) | ||||
Net income (loss) available to Arch common shareholders | $ 201,394 | $ 109,648 | $ 348,698 | $ 384,960 | ||||
Underwriting Ratios | ||||||||
Loss ratio | 56.60% | 52.80% | 54.90% | 52.90% | ||||
Acquisition expense ratio | 16.00% | 17.40% | 16.20% | 17.20% | ||||
Other operating expense ratio | 17.30% | 17.70% | 17.50% | 17.60% | ||||
Combined ratio | 89.90% | 87.90% | 88.60% | 87.70% | ||||
Goodwill and intangible assets | $ 88,327 | $ 102,518 | $ 88,327 | $ 102,518 | ||||
Sub-Total | Insurance | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Gross premiums written | [1] | 762,043 | 744,810 | 1,560,596 | 1,510,963 | |||
Premiums ceded | (246,875) | (235,743) | (495,664) | (459,893) | ||||
Net premiums written | 515,168 | 509,067 | 1,064,932 | 1,051,070 | ||||
Change in unearned premiums | 12,482 | 758 | (24,193) | (33,331) | ||||
Net premiums earned | 527,650 | 509,825 | 1,040,739 | 1,017,739 | ||||
Other underwriting income | 0 | 521 | 0 | 948 | ||||
Losses and loss adjustment expenses | (354,633) | (320,926) | (678,242) | (638,822) | ||||
Acquisition expenses, net | (77,317) | (76,723) | (151,671) | (151,801) | ||||
Other operating expenses | (92,371) | (89,054) | (178,232) | (177,173) | ||||
Underwriting income (loss) | $ 3,329 | $ 23,643 | $ 32,594 | $ 50,891 | ||||
Underwriting Ratios | ||||||||
Loss ratio | 67.20% | 62.90% | 65.20% | 62.80% | ||||
Acquisition expense ratio | 14.70% | 15.00% | 14.60% | 14.90% | ||||
Other operating expense ratio | 17.50% | 17.50% | 17.10% | 17.40% | ||||
Combined ratio | 99.40% | 95.40% | 96.90% | 95.10% | ||||
Goodwill and intangible assets | $ 27,457 | $ 30,968 | $ 27,457 | $ 30,968 | ||||
Sub-Total | Reinsurance | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Gross premiums written | [1] | 412,053 | 342,101 | 893,443 | 827,213 | |||
Premiums ceded | (119,951) | (89,446) | (280,517) | (226,015) | ||||
Net premiums written | 292,102 | 252,655 | 612,926 | 601,198 | ||||
Change in unearned premiums | (846) | 21,310 | (60,462) | (47,516) | ||||
Net premiums earned | 291,256 | 273,965 | 552,464 | 553,682 | ||||
Other underwriting income | 20,118 | 2,658 | 20,443 | 4,087 | ||||
Losses and loss adjustment expenses | (146,091) | (111,183) | (257,689) | (223,715) | ||||
Acquisition expenses, net | (55,796) | (58,360) | (110,583) | (114,964) | ||||
Other operating expenses | (37,115) | (39,007) | (73,570) | (77,051) | ||||
Underwriting income (loss) | $ 72,372 | $ 68,073 | $ 131,065 | $ 142,039 | ||||
Underwriting Ratios | ||||||||
Loss ratio | 50.20% | 40.60% | 46.60% | 40.40% | ||||
Acquisition expense ratio | 19.20% | 21.30% | 20.00% | 20.80% | ||||
Other operating expense ratio | 12.70% | 14.20% | 13.30% | 13.90% | ||||
Combined ratio | 82.10% | 76.10% | 79.90% | 75.10% | ||||
Goodwill and intangible assets | $ 1,440 | $ 2,420 | $ 1,440 | $ 2,420 | ||||
Sub-Total | Mortgage | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Gross premiums written | [1] | 118,434 | 68,572 | 229,714 | 129,113 | |||
Premiums ceded | (6,969) | (6,902) | (11,736) | (15,572) | ||||
Net premiums written | 111,465 | 61,670 | 217,978 | 113,541 | ||||
Change in unearned premiums | (44,953) | (9,211) | (89,701) | (10,715) | ||||
Net premiums earned | 66,512 | 52,459 | 128,277 | 102,826 | ||||
Other underwriting income | 4,137 | 3,686 | 7,930 | 11,404 | ||||
Losses and loss adjustment expenses | (366) | (9,639) | (8,995) | (23,448) | ||||
Acquisition expenses, net | (8,523) | (10,200) | (16,908) | (20,618) | ||||
Other operating expenses | (23,991) | (19,679) | (48,606) | (40,048) | ||||
Underwriting income (loss) | $ 37,769 | $ 16,627 | $ 61,698 | $ 30,116 | ||||
Underwriting Ratios | ||||||||
Loss ratio | 0.60% | 18.40% | 7.00% | 22.80% | ||||
Acquisition expense ratio | 12.80% | 19.40% | 13.20% | 20.10% | ||||
Other operating expense ratio | 36.10% | 37.50% | 37.90% | 38.90% | ||||
Combined ratio | 49.50% | 75.30% | 58.10% | 81.80% | ||||
Goodwill and intangible assets | $ 59,430 | $ 69,130 | $ 59,430 | $ 69,130 | ||||
|
Segment Information - Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016
segment
| |
Underwriting segments | |
Segment Reporting Information [Line Items] | |
Number of segments | 3 |
Other operating segments | |
Segment Reporting Information [Line Items] | |
Number of segments | 2 |
Investment Information - Summary of available for sale securities (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
||||||
Available for sale securities: | |||||||
Estimated Fair Value | $ 12,908,540 | $ 12,350,219 | |||||
Gross Unrealized Gains | 344,172 | 214,408 | |||||
Gross Unrealized Losses | (81,984) | (162,291) | |||||
Cost or Amortized Cost | 12,646,352 | 12,298,102 | |||||
OTTI Unrealized Losses | [1] | (5,816) | (6,925) | ||||
Fixed maturities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 11,370,136 | 10,832,657 | |||||
Gross Unrealized Gains | [2] | 236,503 | 76,082 | ||||
Gross Unrealized Losses | [2] | (63,730) | (136,405) | ||||
Cost or Amortized Cost | [2] | 11,197,363 | 10,892,980 | ||||
OTTI Unrealized Losses | [1],[2] | (5,816) | (6,925) | ||||
Fixed maturities | Corporate bonds | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 2,952,173 | 2,725,729 | |||||
Gross Unrealized Gains | [2] | 68,437 | 15,978 | ||||
Gross Unrealized Losses | [2] | (17,635) | (60,508) | ||||
Cost or Amortized Cost | [2] | 2,901,371 | 2,770,259 | ||||
OTTI Unrealized Losses | [1],[2] | (2,304) | (3,553) | ||||
Fixed maturities | Mortgage backed securities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 656,891 | 754,870 | |||||
Gross Unrealized Gains | [2] | 12,973 | 9,872 | ||||
Gross Unrealized Losses | [2] | (1,177) | (5,334) | ||||
Cost or Amortized Cost | [2] | 645,095 | 750,332 | ||||
OTTI Unrealized Losses | [1],[2] | (3,443) | (3,350) | ||||
Fixed maturities | Municipal bonds | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 1,897,128 | 1,626,281 | |||||
Gross Unrealized Gains | [2] | 47,135 | 27,014 | ||||
Gross Unrealized Losses | [2] | (678) | (1,534) | ||||
Cost or Amortized Cost | [2] | 1,850,671 | 1,600,801 | ||||
OTTI Unrealized Losses | [1],[2] | 0 | 0 | ||||
Fixed maturities | Commercial mortgage backed securities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 624,391 | 764,152 | |||||
Gross Unrealized Gains | [2] | 13,854 | 3,269 | ||||
Gross Unrealized Losses | [2] | (1,004) | (6,978) | ||||
Cost or Amortized Cost | [2] | 611,541 | 767,861 | ||||
OTTI Unrealized Losses | [1],[2] | 0 | 0 | ||||
Fixed maturities | US government and government agencies | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 2,701,042 | 2,423,455 | |||||
Gross Unrealized Gains | [2] | 33,940 | 6,228 | ||||
Gross Unrealized Losses | [2] | (749) | (9,978) | ||||
Cost or Amortized Cost | [2] | 2,667,851 | 2,427,205 | ||||
OTTI Unrealized Losses | [1],[2] | 0 | 0 | ||||
Fixed maturities | Non-US government securities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 1,172,745 | 917,664 | |||||
Gross Unrealized Gains | [2] | 46,672 | 10,414 | ||||
Gross Unrealized Losses | [2] | (37,074) | (39,122) | ||||
Cost or Amortized Cost | [2] | 1,163,147 | 946,372 | ||||
OTTI Unrealized Losses | [1],[2] | 0 | 0 | ||||
Fixed maturities | Asset backed securities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 1,365,766 | 1,620,506 | |||||
Gross Unrealized Gains | [2] | 13,492 | 3,307 | ||||
Gross Unrealized Losses | [2] | (5,413) | (12,951) | ||||
Cost or Amortized Cost | [2] | 1,357,687 | 1,630,150 | ||||
OTTI Unrealized Losses | [1],[2] | (69) | (22) | ||||
Equity securities | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 501,916 | 629,182 | |||||
Gross Unrealized Gains | 87,768 | 94,341 | |||||
Gross Unrealized Losses | (11,163) | (17,796) | |||||
Cost or Amortized Cost | 425,311 | 552,637 | |||||
OTTI Unrealized Losses | [1] | 0 | 0 | ||||
Other investments | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 182,957 | 300,476 | |||||
Gross Unrealized Gains | 19,550 | 43,798 | |||||
Gross Unrealized Losses | (4,507) | (4,665) | |||||
Cost or Amortized Cost | 167,914 | 261,343 | |||||
OTTI Unrealized Losses | [1] | 0 | 0 | ||||
Short-term investments | |||||||
Available for sale securities: | |||||||
Estimated Fair Value | 853,531 | 587,904 | |||||
Gross Unrealized Gains | 351 | 187 | |||||
Gross Unrealized Losses | (2,584) | (3,425) | |||||
Cost or Amortized Cost | 855,764 | 591,142 | |||||
OTTI Unrealized Losses | [1] | $ 0 | $ 0 | ||||
|
Investment Information - Maturity profile of available for sale securities) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
|||
---|---|---|---|---|---|
Estimated Fair Value: | |||||
Estimated fair value | $ 11,050,464 | $ 10,459,353 | |||
Amortized Cost: | |||||
Amortized cost | 10,879,863 | 10,515,440 | |||
Fixed maturities | |||||
Estimated Fair Value: | |||||
Due in one year or less | 247,256 | 337,898 | |||
Due after one year through five years | 5,077,739 | 4,644,516 | |||
Due after five years through 10 years | 2,772,938 | 2,214,413 | |||
Due after 10 years | 625,155 | 496,302 | |||
Single maturity date | 8,723,088 | 7,693,129 | |||
Estimated fair value | [1] | 11,370,136 | 10,832,657 | ||
Amortized Cost: | |||||
Due in one year or less | 244,247 | 341,595 | |||
Due after one year through five years | 5,036,912 | 4,677,230 | |||
Due after five years through 10 years | 2,699,463 | 2,228,638 | |||
Due after 10 years | 602,418 | 497,174 | |||
Single maturity date | 8,583,040 | 7,744,637 | |||
Amortized cost | [1] | 11,197,363 | 10,892,980 | ||
Fixed maturities | Mortgage backed securities | |||||
Estimated Fair Value: | |||||
Securities without single maturity date | 656,891 | 754,870 | |||
Amortized Cost: | |||||
Securities without single maturity date | 645,095 | 750,332 | |||
Fixed maturities | Commercial mortgage backed securities | |||||
Estimated Fair Value: | |||||
Securities without single maturity date | 624,391 | 764,152 | |||
Amortized Cost: | |||||
Securities without single maturity date | 611,541 | 767,861 | |||
Fixed maturities | Asset backed securities | |||||
Estimated Fair Value: | |||||
Securities without single maturity date | 1,365,766 | 1,620,506 | |||
Amortized Cost: | |||||
Securities without single maturity date | $ 1,357,687 | $ 1,630,150 | |||
|
Investment Information - Securities lending agreements (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Disclosure Investment Information [Abstract] | ||
Fair value of cash collateral received on securities lending | $ 75,900 | $ 52,700 |
Approximate fair value of sub-prime securities backing the securities lending program | 3,000 | |
Fair value of non-cash collateral received on securities lending | 262,400 | 336,700 |
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 338,318 | 393,844 |
Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 8 | 0 | 0 |
Amounts related to securities lending not included in offsetting disclosure in Note 8 | 338,318 | 393,844 |
US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 294,000 | 327,612 |
Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 33,120 | 55,086 |
Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 11,198 | 11,146 |
Overnight and continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 286,502 | 297,536 |
Overnight and continuous | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 242,184 | 235,728 |
Overnight and continuous | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 33,120 | 55,086 |
Overnight and continuous | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 11,198 | 6,722 |
Less than 30 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 21,539 | 4,424 |
Less than 30 days | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 21,539 | 0 |
Less than 30 days | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
Less than 30 days | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 4,424 |
30 - 90 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 4,109 | 82,286 |
30 - 90 days | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 4,109 | 82,286 |
30 - 90 days | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
30 - 90 days | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
90 days or more | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 26,168 | 9,598 |
90 days or more | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 26,168 | 9,598 |
90 days or more | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
90 days or more | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | $ 0 | $ 0 |
Investment Information - Other investments (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
||
---|---|---|---|---|
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | $ 1,848,697 | $ 1,971,447 | ||
Available for sale | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 182,957 | 300,476 | ||
Available for sale | Asian and emerging markets | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 109,767 | 206,861 | ||
Available for sale | Investment grade fixed income | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 33,549 | 31,370 | ||
Available for sale | Credit related funds | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 1,698 | 22,512 | ||
Available for sale | Other | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 37,943 | 39,733 | ||
Fair value option | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 1,665,740 | 1,670,971 | ||
Fair value option | Asian and emerging markets | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 112,265 | 34,761 | ||
Fair value option | Investment grade fixed income | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 65,391 | 63,053 | ||
Fair value option | Credit related funds | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 236,184 | 219,049 | ||
Fair value option | Other | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | [1] | 107,916 | 124,502 | |
Fair value option | Term loan investments | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | 1,026,543 | 1,108,017 | ||
Other investments par | 1,115,627 | 1,197,143 | ||
Fair value option | Mezzanine debt funds | ||||
Schedule Of Other Investments [Line Items] | ||||
Other investments and fair value option investments | $ 117,441 | $ 121,589 | ||
|
Investment Information - Fair value option (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | $ 3,066,029 | $ 2,894,494 |
Fixed Maturities | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 1,047,662 | 936,802 |
Other investments | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 1,665,740 | 1,670,971 |
Short-term investments | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 344,797 | 285,923 |
Equity securities | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | $ 7,830 | $ 798 |
Investment Information - Limited partnership interests (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
|||||
---|---|---|---|---|---|---|---|
Schedule of Equity Method Investments [Line Items] | |||||||
Maximum loss exposure, amount | $ 760,824 | $ 675,127 | |||||
Aggregate unfunded commitments | 1,350,000 | 1,110,000 | |||||
Equity method investments | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Maximum loss exposure, amount | [1] | 676,893 | 584,158 | ||||
Aggregate unfunded commitments | 794,700 | 535,400 | |||||
Fair value option | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Maximum loss exposure, amount | [2] | 83,931 | 90,969 | ||||
Aggregate unfunded commitments | $ 26,600 | $ 22,700 | |||||
|
Investment Information - Net investment income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|||
Net investment income: | ||||||
Gross investment income | $ 109,341 | $ 102,600 | $ 220,700 | $ 201,562 | ||
Investment expenses | (21,003) | (15,637) | (38,627) | (35,605) | ||
Net investment income | 88,338 | 86,963 | 182,073 | 165,957 | ||
Fixed Maturities | ||||||
Net investment income: | ||||||
Gross investment income | 77,994 | 71,275 | 151,667 | 139,871 | ||
Term loan investments | ||||||
Net investment income: | ||||||
Gross investment income | 18,608 | 18,033 | 38,620 | 32,777 | ||
Equity securities (dividends) | ||||||
Net investment income: | ||||||
Gross investment income | 3,663 | 2,578 | 7,098 | 5,257 | ||
Short-term investments | ||||||
Net investment income: | ||||||
Gross investment income | 816 | 225 | 1,312 | 421 | ||
Other | ||||||
Net investment income: | ||||||
Gross investment income | [1] | $ 8,260 | $ 10,489 | $ 22,003 | $ 23,236 | |
|
Investment Information - Net realized gains and losses (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
||||||
Net realized gains and losses: | |||||||||
Available for sale securities, gross gains on investment sales | $ 74,695 | $ 82,233 | $ 182,514 | $ 179,824 | |||||
Available for sale securities, gross losses on investment sales | (43,293) | (58,974) | (106,424) | (114,134) | |||||
Derivative instruments | [1] | 20,334 | (41,496) | 41,066 | (4,820) | ||||
Other | [2] | (15,066) | (8,638) | (20,895) | (13,226) | ||||
Net realized gains (losses) | 68,218 | (35,725) | 105,542 | 47,623 | |||||
Fixed Maturities | |||||||||
Net realized gains and losses: | |||||||||
Change in fair value of assets and liabilities accounted for using the fair value option | 18,632 | (5,191) | 18,299 | (8,493) | |||||
Other investments | |||||||||
Net realized gains and losses: | |||||||||
Change in fair value of assets and liabilities accounted for using the fair value option | 13,136 | 785 | (8,412) | 7,072 | |||||
Equity securities | |||||||||
Net realized gains and losses: | |||||||||
Change in fair value of assets and liabilities accounted for using the fair value option | 401 | (69) | 437 | (71) | |||||
Short-term investments | |||||||||
Net realized gains and losses: | |||||||||
Change in fair value of assets and liabilities accounted for using the fair value option | $ (621) | $ (4,375) | $ (1,043) | $ 1,471 | |||||
|
Investment Information - Other than temporary impairments recognized in earnings (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | $ (5,343) | $ (1,113) | $ (12,982) | $ (6,912) |
Fixed Maturities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (3,408) | (336) | (8,948) | (3,384) |
Fixed Maturities | Mortgage backed securities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (82) | (326) | (555) | (1,398) |
Fixed Maturities | Corporate bonds | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (775) | (10) | (5,655) | (1,986) |
Fixed Maturities | Non-US government securities [Member] | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (51) | 0 | (232) | 0 |
Fixed Maturities | Asset backed securities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (2,500) | 0 | (2,506) | 0 |
Short-term investments | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | 0 | 0 | 0 | (2,341) |
Equity securities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (1,935) | (124) | (3,037) | (253) |
Other investments | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | $ 0 | $ (653) | $ (997) | $ (934) |
Investment Information - Other than temporary impairments rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Rollforward: | ||||
Balance at start of period | $ 18,291 | $ 24,344 | $ 26,875 | $ 20,196 |
Credit loss impairments recognized on securities not previously impaired | 287 | 281 | 1,350 | 4,770 |
Credit loss impairments recognized on securities previously impaired | 0 | 55 | 522 | 134 |
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | 0 | 0 | 0 | 0 |
Reductions for securities sold during the period | (3,731) | (3,774) | (13,900) | (4,194) |
Balance at end of period | $ 14,847 | $ 20,906 | $ 14,847 | $ 20,906 |
Investment Information - Restricted assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Restricted Assets [Line Items] | ||
Restricted assets | $ 6,027,057 | $ 5,526,049 |
Collateral or guarantees - affiliated transactions | ||
Restricted Assets [Line Items] | ||
Restricted assets | 3,903,933 | 3,810,104 |
Collateral or guarantees - third party agreements | ||
Restricted Assets [Line Items] | ||
Restricted assets | 1,598,266 | 1,286,257 |
Deposits with US regulatory authorities | ||
Restricted Assets [Line Items] | ||
Restricted assets | 477,429 | 391,458 |
Deposits with non-US regulatory authorities | ||
Restricted Assets [Line Items] | ||
Restricted assets | $ 47,429 | $ 38,230 |
Investment Information - Narrative (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Jun. 30, 2016
USD ($)
lots
|
Jun. 30, 2015
USD ($)
|
Jun. 30, 2016
USD ($)
lots
|
Jun. 30, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
lots
|
|||
Narrative items: | |||||||
Investable assets | $ 16,880,000 | $ 16,880,000 | |||||
Income (Loss) from Equity Method Investments | 8,737 | $ 16,167 | 15,392 | $ 22,056 | |||
OTTI unrealized (losses) gains at current fair value | $ 1,500 | $ 1,500 | $ (1,400) | ||||
Continuous unrealized loss, qualitative disclosures: | |||||||
Number of positions in an unrealized loss position (lots) | lots | 1,410 | 1,410 | 3,560 | ||||
Total number of positions (lots) | lots | 6,280 | 6,280 | 5,550 | ||||
Largest single loss | $ 3,400 | $ 3,400 | $ 3,100 | ||||
OTTI unrealized losses (gains) | [1] | 5,816 | $ 6,925 | ||||
Underwriting segments | |||||||
Narrative items: | |||||||
Investable assets | 15,180,000 | 15,180,000 | |||||
Income (Loss) from Equity Method Investments | 8,737 | 16,167 | 15,392 | 22,056 | |||
Other | |||||||
Narrative items: | |||||||
Investable assets | 1,700,000 | 1,700,000 | |||||
Income (Loss) from Equity Method Investments | $ 0 | $ 0 | $ 0 | $ 0 | |||
|
Fair Value - Fair Value Hierarchy (Details) - Recurring - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
|||||||
---|---|---|---|---|---|---|---|---|---|
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | $ 4,534,619 | $ 4,032,996 | |||||||
Liabilities measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Contingent consideration liability | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Securities sold but not yet purchased | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | [1] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 2,558,706 | 2,378,662 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 2,558,706 | 2,378,662 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 500,158 | 627,441 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 837,202 | 572,604 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 79,174 | 99,159 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other investments at fair value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 79,174 | 99,159 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 559,379 | 355,130 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 151,726 | 114 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 344,797 | 285,923 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 7,090 | 798 | |||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Other investments fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 55,766 | 68,295 | |||||||
Significant Other Observable Inputs (Level 2) | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 10,716,845 | 10,461,895 | |||||||
Liabilities measured at fair value | (81,096) | (42,446) | |||||||
Significant Other Observable Inputs (Level 2) | Contingent consideration liability | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | 0 | 0 | |||||||
Significant Other Observable Inputs (Level 2) | Securities sold but not yet purchased | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | [1] | (54,668) | (30,583) | ||||||
Significant Other Observable Inputs (Level 2) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | (26,428) | (11,863) | |||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 8,744,914 | 8,380,127 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 2,934,868 | 2,709,361 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 656,891 | 754,870 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 1,897,128 | 1,626,281 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 624,391 | 764,152 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 142,336 | 44,793 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 1,172,745 | 917,664 | ||||||
Significant Other Observable Inputs (Level 2) | Fixed maturities | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 1,316,555 | 1,563,006 | ||||||
Significant Other Observable Inputs (Level 2) | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,758 | 1,741 | |||||||
Significant Other Observable Inputs (Level 2) | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 16,329 | 15,300 | |||||||
Significant Other Observable Inputs (Level 2) | Other investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Other Observable Inputs (Level 2) | Other investments at fair value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Other Observable Inputs (Level 2) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 30,625 | 20,022 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,923,219 | 2,044,705 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 754,034 | 771,733 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 17,560 | 57,687 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 101,492 | 81,824 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 22,850 | 25,444 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 740 | 0 | |||||||
Significant Other Observable Inputs (Level 2) | Fair value option | Other investments fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,026,543 | 1,108,017 | |||||||
Significant Unobservable Inputs (Level 3) | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 66,516 | 73,868 | |||||||
Liabilities measured at fair value | (111,670) | (96,048) | |||||||
Significant Unobservable Inputs (Level 3) | Contingent consideration liability | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | (111,670) | (96,048) | |||||||
Significant Unobservable Inputs (Level 3) | Securities sold but not yet purchased | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | [1] | 0 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 66,516 | 73,868 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 17,305 | 16,368 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 0 | 0 | ||||||
Significant Unobservable Inputs (Level 3) | Fixed maturities | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [2] | 49,211 | 57,500 | ||||||
Significant Unobservable Inputs (Level 3) | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Other investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Other investments at fair value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Significant Unobservable Inputs (Level 3) | Fair value option | Other investments fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 0 | 0 | |||||||
Estimated Fair Value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 16,005,194 | 15,264,735 | |||||||
Liabilities measured at fair value | (192,766) | (138,494) | |||||||
Estimated Fair Value | Contingent consideration liability | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | (111,670) | (96,048) | |||||||
Estimated Fair Value | Securities sold but not yet purchased | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | [1] | (54,668) | (30,583) | ||||||
Estimated Fair Value | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Liabilities measured at fair value | (26,428) | (11,863) | |||||||
Estimated Fair Value | Fixed maturities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 11,370,136 | 10,832,657 | |||||||
Estimated Fair Value | Fixed maturities | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 2,952,173 | 2,725,729 | |||||||
Estimated Fair Value | Fixed maturities | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 656,891 | 754,870 | |||||||
Estimated Fair Value | Fixed maturities | Municipal bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,897,128 | 1,626,281 | |||||||
Estimated Fair Value | Fixed maturities | Commercial mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 624,391 | 764,152 | |||||||
Estimated Fair Value | Fixed maturities | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 2,701,042 | 2,423,455 | |||||||
Estimated Fair Value | Fixed maturities | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,172,745 | 917,664 | |||||||
Estimated Fair Value | Fixed maturities | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,365,766 | 1,620,506 | |||||||
Estimated Fair Value | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 501,916 | 629,182 | |||||||
Estimated Fair Value | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 853,531 | 587,904 | |||||||
Estimated Fair Value | Other investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 182,957 | 300,476 | |||||||
Estimated Fair Value | Other investments at fair value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 79,174 | 99,159 | |||||||
Estimated Fair Value | Other investments measured at net asset value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [3] | 103,783 | 201,317 | ||||||
Estimated Fair Value | Derivative instruments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 30,625 | 20,022 | |||||||
Estimated Fair Value | Fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 3,066,029 | 2,894,494 | |||||||
Estimated Fair Value | Fair value option | Corporate bonds | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 754,034 | 771,733 | |||||||
Estimated Fair Value | Fair value option | Mortgage backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 17,560 | 57,687 | |||||||
Estimated Fair Value | Fair value option | US government and government agencies | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 151,726 | 114 | |||||||
Estimated Fair Value | Fair value option | Non-US government securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 101,492 | 81,824 | |||||||
Estimated Fair Value | Fair value option | Asset backed securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 22,850 | 25,444 | |||||||
Estimated Fair Value | Fair value option | Short-term investments | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 344,797 | 285,923 | |||||||
Estimated Fair Value | Fair value option | Equity securities | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 7,830 | 798 | |||||||
Estimated Fair Value | Fair value option | Other investments fair value option | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | 1,082,309 | 1,176,312 | |||||||
Estimated Fair Value | Fair value option | Other investments measured at net asset value | |||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||
Assets measured at fair value | [3] | $ 583,431 | $ 494,659 | ||||||
|
Fair Value - Rollforward of Level 3 assets and liabilities (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | $ 72,666 | $ 57,500 | $ 73,868 | $ 57,500 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | (1,137) | 0 | (2,339) | 0 | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 776 | 0 | 776 | 0 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | 0 | 0 | 0 | 0 | |||
Settlements | (5,789) | 0 | (5,789) | 0 | |||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 | |||
Balance at end of period | 66,516 | 57,500 | 66,516 | 57,500 | |||
Contingent consideration liability | |||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | (100,710) | (66,461) | (96,048) | (61,845) | |||
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | (10,923) | (4,795) | (16,121) | (8,343) | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | (37) | 0 | (37) | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 0 | 0 | 0 | 0 | |||
Issuances | 0 | 0 | 0 | (1,068) | |||
Sales | 0 | 0 | 0 | 0 | |||
Settlements | 0 | 0 | 536 | 0 | |||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 | |||
Balance at end of period | (111,670) | (71,256) | (111,670) | (71,256) | |||
Available for sale | Asset backed securities | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | 57,500 | 57,500 | 57,500 | 57,500 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | (2,500) | 0 | (2,500) | 0 | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 0 | 0 | 0 | 0 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | 0 | 0 | 0 | 0 | |||
Settlements | (5,789) | 0 | (5,789) | 0 | |||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 | |||
Balance at end of period | 49,211 | 57,500 | 49,211 | 57,500 | |||
Fair value option | Corporate bonds | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | 15,166 | 0 | 16,368 | 0 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 1,363 | 0 | 161 | 0 | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 776 | 0 | 776 | 0 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | 0 | 0 | 0 | 0 | |||
Settlements | 0 | 0 | 0 | 0 | |||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 | |||
Balance at end of period | $ 17,305 | $ 0 | $ 17,305 | $ 0 | |||
|
Fair Value - Narrative (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Total assets and liabilities measured at fair value | $ 16,200,000 | $ 15,400,000 |
Total assets and liabilities measured at fair value priced using non-binding broker quotes | $ 379,500 | $ 317,800 |
Total assets and liabilities measured at fair value priced using non-binding broker quotes (percentage) | 2.40% | 2.10% |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | $ 791,392 | $ 791,306 |
Reportable Legal Entities | ACGL (Parent Guarantor) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | 296,914 | 296,874 |
Estimated fair value of senior notes | 428,000 | |
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | 494,478 | $ 494,432 |
Estimated fair value of senior notes | $ 602,800 |
Derivative Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
||||||||||||
Derivative offsetting [Abstract] | ||||||||||||||||
Derivative assets subject to master netting agreements | $ 152,200 | $ 152,200 | $ 26,500 | |||||||||||||
Derivative liabilities subject to master netting agreements | 144,000 | 144,000 | 11,900 | |||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | [1] | 20,334 | $ (41,496) | 41,066 | $ (4,820) | |||||||||||
Not Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Asset derivatives - fair value | 152,385 | 152,385 | 26,547 | |||||||||||||
Liability derivatives - fair value | (144,101) | (144,101) | (11,863) | |||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | 20,334 | (41,496) | 41,066 | (4,820) | ||||||||||||
Not Designated as Hedging Instrument [Member] | Futures contracts | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Net derivatives - notional value | [2],[3] | 2,287,791 | 2,287,791 | 1,797,115 | ||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | 34,871 | (31,446) | 61,322 | (12,120) | ||||||||||||
Not Designated as Hedging Instrument [Member] | Futures contracts | Other assets | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Asset derivatives - fair value | 1,208 | [3] | 1,208 | [3] | 2,816 | |||||||||||
Not Designated as Hedging Instrument [Member] | Futures contracts | Other liabilities | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Liability derivatives - fair value | [3] | (1,673) | (1,673) | (1,202) | ||||||||||||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Net derivatives - notional value | [2],[3] | 1,436,006 | 1,436,006 | 773,619 | ||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | (13,782) | (8,724) | (18,534) | 8,095 | ||||||||||||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | Other assets | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Asset derivatives - fair value | [3] | 17,032 | 17,032 | 9,336 | ||||||||||||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | Other liabilities | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Liability derivatives - fair value | [3] | (18,718) | (18,718) | (6,344) | ||||||||||||
Not Designated as Hedging Instrument [Member] | TBAs | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Net derivatives - notional value | [2],[4] | 226,299 | 226,299 | 6,316 | ||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | 37 | (182) | 334 | 304 | ||||||||||||
Not Designated as Hedging Instrument [Member] | TBAs | Fixed maturities available for sale | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Asset derivatives - fair value | 121,760 | [4] | 121,760 | [4] | 6,525 | |||||||||||
Liability derivatives - fair value | [4] | (117,673) | (117,673) | 0 | ||||||||||||
Not Designated as Hedging Instrument [Member] | Other | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Net derivatives - notional value | [2],[3] | 1,938,497 | 1,938,497 | 1,694,935 | ||||||||||||
Net realized gains (losses) on derivative instruments | ||||||||||||||||
Net realized gains (losses) on derivative instruments | (792) | $ (1,144) | (2,056) | $ (1,099) | ||||||||||||
Not Designated as Hedging Instrument [Member] | Other | Other assets | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Asset derivatives - fair value | [3] | 12,385 | 12,385 | 7,870 | ||||||||||||
Not Designated as Hedging Instrument [Member] | Other | Other liabilities | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Liability derivatives - fair value | [3] | $ (6,037) | $ (6,037) | $ (4,317) | ||||||||||||
|
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Line of Credit Facility [Abstract] | ||
Revolving credit agreement borrowings | $ 397,830 | $ 530,434 |
Unfunded Investment Commitments [Abstract] | ||
Investment commitments | 1,350,000 | 1,110,000 |
LOC Facilities [Member] | ||
Line of Credit Facility [Abstract] | ||
Letters of credit outstanding, amount | 416,900 | |
Investments pledged as collateral | 473,900 | |
Other secured letter of credit facilities | ||
Line of Credit Facility [Abstract] | ||
Letters of credit outstanding, amount | $ 242,400 | |
Credit Agreement | ||
Line of Credit Facility [Abstract] | ||
Credit facility expiration date | Jun. 30, 2019 | |
Revolving credit agreement borrowings | $ 100,000 | |
Unsecured revolving loan and letter of credit facility | ||
Line of Credit Facility [Abstract] | ||
Maximum borrowing capacity | 300,000 | |
Secured letter of credit facility | ||
Line of Credit Facility [Abstract] | ||
Maximum borrowing capacity | 500,000 | |
Letters of credit outstanding, amount | 174,600 | |
Remaining borrowing capacity | 325,400 | |
Unsecured letter of credit | ||
Line of Credit Facility [Abstract] | ||
Maximum borrowing capacity | 100,000 | |
Watford Re | Line of credit | ||
Line of Credit Facility [Abstract] | ||
Maximum borrowing capacity | $ 100,000 | |
Credit facility expiration date | May 19, 2017 | |
Letters of credit outstanding, amount | $ 198,000 | |
Watford Re | Letter of credit | ||
Line of Credit Facility [Abstract] | ||
Maximum borrowing capacity | 400,000 | |
Watford Re | Other secured letter of credit facilities | ||
Line of Credit Facility [Abstract] | ||
Maximum borrowing capacity | $ 800,000 | |
Credit facility expiration date | Jun. 04, 2018 | |
Variable Interest Entity, Primary Beneficiary | Watford Re | ||
Line of Credit Facility [Abstract] | ||
Revolving credit agreement borrowings | $ 297,830 | $ 430,434 |
Share Transactions - Share repurchases (Details) - Common shares - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Class of Stock [Line Items] | |||
Cumulative number of shares acquired since inception of share repurchase program | 125.2 | ||
Aggregate purchase price of shares acquired since inception of share repurchase program | $ 3,680.0 | ||
Treasury stock, shares acquired (shares) | 3.2 | 1.1 | 5.9 |
Treasury stock, value of shares acquired | $ 199.0 | $ 75.3 | $ 361.9 |
Remaining authorized repurchase amount | $ 446.5 |
Share Transactions - Share-based compensation (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Stock appreciation rights and stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grants in period, shares | 427,379 | 534,267 |
Weighted average grant date fair value | $ 17.46 | $ 16.09 |
Restricted shares and units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grants in period, shares | 456,217 | 559,332 |
Weighted average grant date fair value | $ 71.61 | $ 62.51 |
Other Comprehensive Income (Loss) - Amounts reclassified from accumulated other comprehensive income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Other-than-temporary impairment losses | $ (5,395) | $ (1,126) | $ (13,132) | $ (8,373) |
Income before income taxes | 263,488 | 132,599 | 455,425 | 454,034 |
Income tax expense | (14,131) | (6,780) | (30,441) | (19,458) |
Net of tax | 211,055 | 115,790 | 365,853 | 399,126 |
Reclassification out of accumulated other comprehensive income | Unrealized appreciation on available-for-sale investments | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net realized gains (losses) | 31,404 | 23,259 | 76,091 | 65,690 |
Other-than-temporary impairment losses | (5,395) | (1,126) | (13,132) | (8,373) |
Income before income taxes | 26,009 | 22,133 | 62,959 | 57,317 |
Income tax expense | (3,915) | (919) | (8,642) | (5,171) |
Net of tax | $ 22,094 | $ 21,214 | $ 54,317 | $ 52,146 |
Other Comprehensive Income (Loss) - Components of other comprehensive income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Before tax amount: | ||||
Unrealized holding gains (losses) arising during period, before tax | $ 117,904 | $ (96,630) | $ 270,078 | $ (2,243) |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), before tax | (52) | (13) | (150) | (1,461) |
Less reclassification of net realized gains included in net income, before tax | 26,009 | 22,133 | 62,959 | 57,317 |
Foreign currency translation adjustments, before tax | (18,186) | 11,697 | (326) | (11,929) |
Other comprehensive income (loss), before tax | 73,657 | (107,079) | 206,643 | (72,950) |
Tax expense (benefit): | ||||
Unrealized holding gains (losses) arising during period, tax | 15,444 | (14,695) | 34,637 | (4,612) |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), tax | 0 | 0 | 0 | 0 |
Less reclassification of net realized gains included in net income, tax | 3,915 | 919 | 8,642 | 5,171 |
Foreign currency translation adjustments, tax | (35) | 117 | 512 | (752) |
Other comprehensive income (loss), tax | 11,494 | (15,497) | 26,507 | (10,535) |
Net of tax amount: | ||||
Unrealized holding gains (losses) arising during period, net of tax | 102,460 | (81,935) | 235,441 | 2,369 |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), net of tax | (52) | (13) | (150) | (1,461) |
Less reclassification of net realized gains included in net income, net of tax | 22,094 | 21,214 | 54,317 | 52,146 |
Foreign currency translation adjustments, net of tax | (18,151) | 11,580 | (838) | (11,177) |
Net current period other comprehensive income (loss) | $ 62,163 | $ (91,582) | $ 180,136 | $ (62,415) |
Guarantor Financial Information - Condensed consolidating balance sheet (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Assets | ||||
Total investments | $ 16,667,888 | $ 15,842,941 | ||
Cash | 516,591 | 553,326 | $ 525,074 | $ 485,702 |
Investments in subsidiaries | 0 | 0 | ||
Due from subsidiaries and affiliates | 0 | 0 | ||
Premiums receivable | 1,260,607 | 983,443 | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 2,034,970 | 1,867,373 | ||
Contractholder receivables | 1,600,426 | 1,486,296 | ||
Prepaid reinsurance premiums | 540,954 | 427,609 | ||
Deferred acquisition costs, net | 462,906 | 433,477 | ||
Other assets | 1,327,575 | 1,582,805 | ||
Total assets | 24,411,917 | 23,177,270 | ||
Liabilities | ||||
Reserve for losses and loss adjustment expenses | 9,471,647 | 9,125,250 | ||
Unearned premiums | 2,618,359 | 2,333,932 | ||
Reinsurance balances payable | 295,987 | 224,120 | ||
Contractholder payables | 1,600,426 | 1,486,296 | ||
Collateral held for insured obligations | 261,228 | 248,982 | ||
Deposit accounting liabilities | 22,325 | 260,364 | ||
Senior notes | 791,392 | 791,306 | ||
Revolving credit agreement borrowings | 397,830 | 530,434 | ||
Due to subsidiaries and affiliates | 0 | 0 | ||
Other liabilities | 1,254,846 | 1,027,692 | ||
Total liabilities | 16,714,040 | 16,028,376 | ||
Redeemable noncontrolling interests | 205,366 | 205,182 | ||
Shareholders' Equity | ||||
Total shareholders’ equity available to Arch | 6,703,922 | 6,204,881 | 6,137,515 | |
Non-redeemable noncontrolling interests | 788,589 | 738,831 | 794,880 | |
Total shareholders’ equity | 7,492,511 | 6,943,712 | 6,932,395 | |
Total liabilities, noncontrolling interests and shareholders’ equity | 24,411,917 | 23,177,270 | ||
Reportable Legal Entities | ACGL (Parent Guarantor) | ||||
Assets | ||||
Total investments | 126 | 50 | ||
Cash | 7,212 | 6,809 | 10,864 | 3,218 |
Investments in subsidiaries | 7,092,328 | 6,609,174 | ||
Due from subsidiaries and affiliates | 27 | 23 | ||
Premiums receivable | 0 | 0 | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 0 | 0 | ||
Contractholder receivables | 0 | 0 | ||
Prepaid reinsurance premiums | 0 | 0 | ||
Deferred acquisition costs, net | 0 | 0 | ||
Other assets | 13,911 | 4,138 | ||
Total assets | 7,113,604 | 6,620,194 | ||
Liabilities | ||||
Reserve for losses and loss adjustment expenses | 0 | 0 | ||
Unearned premiums | 0 | 0 | ||
Reinsurance balances payable | 0 | 0 | ||
Contractholder payables | 0 | 0 | ||
Collateral held for insured obligations | 0 | 0 | ||
Deposit accounting liabilities | 0 | 0 | ||
Senior notes | 296,914 | 296,874 | ||
Revolving credit agreement borrowings | 100,000 | 100,000 | ||
Due to subsidiaries and affiliates | 1 | 26 | ||
Other liabilities | 12,767 | 18,413 | ||
Total liabilities | 409,682 | 415,313 | ||
Redeemable noncontrolling interests | 0 | 0 | ||
Shareholders' Equity | ||||
Total shareholders’ equity available to Arch | 6,703,922 | 6,204,881 | ||
Non-redeemable noncontrolling interests | 0 | 0 | ||
Total shareholders’ equity | 6,703,922 | 6,204,881 | ||
Total liabilities, noncontrolling interests and shareholders’ equity | 7,113,604 | 6,620,194 | ||
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||||
Assets | ||||
Total investments | 54,433 | 42,210 | ||
Cash | 15,726 | 17,023 | 6,928 | 2,787 |
Investments in subsidiaries | 1,802,240 | 1,712,757 | ||
Due from subsidiaries and affiliates | 50,563 | 48,811 | ||
Premiums receivable | 0 | 0 | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 0 | 0 | ||
Contractholder receivables | 0 | 0 | ||
Prepaid reinsurance premiums | 0 | 0 | ||
Deferred acquisition costs, net | 0 | 0 | ||
Other assets | 46,982 | 45,522 | ||
Total assets | 1,969,944 | 1,866,323 | ||
Liabilities | ||||
Reserve for losses and loss adjustment expenses | 0 | 0 | ||
Unearned premiums | 0 | 0 | ||
Reinsurance balances payable | 0 | 0 | ||
Contractholder payables | 0 | 0 | ||
Collateral held for insured obligations | 0 | 0 | ||
Deposit accounting liabilities | 0 | 0 | ||
Senior notes | 494,478 | 494,432 | ||
Revolving credit agreement borrowings | 0 | 0 | ||
Due to subsidiaries and affiliates | 35,003 | 35,000 | ||
Other liabilities | 48,023 | 50,890 | ||
Total liabilities | 577,504 | 580,322 | ||
Redeemable noncontrolling interests | 0 | 0 | ||
Shareholders' Equity | ||||
Total shareholders’ equity available to Arch | 1,392,440 | 1,286,001 | ||
Non-redeemable noncontrolling interests | 0 | 0 | ||
Total shareholders’ equity | 1,392,440 | 1,286,001 | ||
Total liabilities, noncontrolling interests and shareholders’ equity | $ 1,969,944 | 1,866,323 | ||
Percentage Ownership of Subsidiary | 100.00% | |||
Reportable Legal Entities | Other ACGL Subsidiaries | ||||
Assets | ||||
Total investments | $ 16,628,029 | 15,815,381 | ||
Cash | 493,653 | 529,494 | 507,282 | 479,697 |
Investments in subsidiaries | 0 | 0 | ||
Due from subsidiaries and affiliates | 388,302 | 384,469 | ||
Premiums receivable | 1,775,867 | 1,376,310 | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 5,993,929 | 5,783,452 | ||
Contractholder receivables | 1,600,426 | 1,486,296 | ||
Prepaid reinsurance premiums | 1,690,278 | 1,511,795 | ||
Deferred acquisition costs, net | 462,906 | 433,477 | ||
Other assets | 1,417,947 | 2,119,279 | ||
Total assets | 30,451,337 | 29,439,953 | ||
Liabilities | ||||
Reserve for losses and loss adjustment expenses | 13,402,389 | 13,010,608 | ||
Unearned premiums | 3,767,683 | 3,418,118 | ||
Reinsurance balances payable | 811,247 | 603,586 | ||
Contractholder payables | 1,600,426 | 1,486,296 | ||
Collateral held for insured obligations | 261,228 | 248,982 | ||
Deposit accounting liabilities | 22,325 | 463,507 | ||
Senior notes | 0 | 0 | ||
Revolving credit agreement borrowings | 297,830 | 430,434 | ||
Due to subsidiaries and affiliates | 403,888 | 398,277 | ||
Other liabilities | 1,373,538 | 1,385,500 | ||
Total liabilities | 21,940,554 | 21,445,308 | ||
Redeemable noncontrolling interests | 220,066 | 219,882 | ||
Shareholders' Equity | ||||
Total shareholders’ equity available to Arch | 7,502,128 | 7,035,932 | ||
Non-redeemable noncontrolling interests | 788,589 | 738,831 | ||
Total shareholders’ equity | 8,290,717 | 7,774,763 | ||
Total liabilities, noncontrolling interests and shareholders’ equity | 30,451,337 | 29,439,953 | ||
Consolidating Adjustments and Eliminations | ||||
Assets | ||||
Total investments | (14,700) | (14,700) | ||
Cash | 0 | 0 | $ 0 | $ 0 |
Investments in subsidiaries | (8,894,568) | (8,321,931) | ||
Due from subsidiaries and affiliates | (438,892) | (433,303) | ||
Premiums receivable | (515,260) | (392,867) | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | (3,958,959) | (3,916,079) | ||
Contractholder receivables | 0 | 0 | ||
Prepaid reinsurance premiums | (1,149,324) | (1,084,186) | ||
Deferred acquisition costs, net | 0 | 0 | ||
Other assets | (151,265) | (586,134) | ||
Total assets | (15,122,968) | (14,749,200) | ||
Liabilities | ||||
Reserve for losses and loss adjustment expenses | (3,930,742) | (3,885,358) | ||
Unearned premiums | (1,149,324) | (1,084,186) | ||
Reinsurance balances payable | (515,260) | (379,466) | ||
Contractholder payables | 0 | 0 | ||
Collateral held for insured obligations | 0 | |||
Deposit accounting liabilities | 0 | (203,143) | ||
Senior notes | 0 | 0 | ||
Revolving credit agreement borrowings | 0 | 0 | ||
Due to subsidiaries and affiliates | (438,892) | (433,303) | ||
Other liabilities | (179,482) | (427,111) | ||
Total liabilities | (6,213,700) | (6,412,567) | ||
Redeemable noncontrolling interests | (14,700) | (14,700) | ||
Shareholders' Equity | ||||
Total shareholders’ equity available to Arch | (8,894,568) | (8,321,933) | ||
Non-redeemable noncontrolling interests | 0 | 0 | ||
Total shareholders’ equity | (8,894,568) | (8,321,933) | ||
Total liabilities, noncontrolling interests and shareholders’ equity | $ (15,122,968) | $ (14,749,200) |
Guarantor Financial Information - Condensed consolidating statement of income and comprehensive income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Revenues | ||||
Net premiums earned | $ 1,005,985 | $ 943,438 | $ 1,957,564 | $ 1,853,702 |
Net investment income | 88,338 | 86,963 | 182,073 | 165,957 |
Net realized gains (losses) | 68,218 | (35,725) | 105,542 | 47,623 |
Net impairment losses recognized in earnings | (5,343) | (1,113) | (12,982) | (6,912) |
Other underwriting income | 25,224 | 7,717 | 30,271 | 19,253 |
Equity in net income (loss) of investment funds accounted for using the equity method | 8,737 | 16,167 | 15,392 | 22,056 |
Other income (loss) | (7) | 2,205 | (32) | 317 |
Total revenues | 1,191,152 | 1,019,652 | 2,277,828 | 2,101,996 |
Expenses | ||||
Losses and loss adjustment expenses | 584,592 | 519,426 | 1,107,541 | 1,013,142 |
Acquisition expenses | 175,281 | 175,425 | 345,746 | 338,501 |
Other operating expenses | 159,590 | 151,190 | 311,859 | 299,727 |
Corporate expenses | 17,200 | 17,418 | 26,583 | 26,763 |
Interest expense | 15,663 | 4,011 | 31,770 | 16,747 |
Net foreign exchange (gains) losses | (24,662) | 19,583 | (1,096) | (46,918) |
Total expenses | 927,664 | 887,053 | 1,822,403 | 1,647,962 |
Income (loss) before income taxes | 263,488 | 132,599 | 455,425 | 454,034 |
Income tax (expense) benefit | (14,131) | (6,780) | (30,441) | (19,458) |
Income (loss) before equity in net income of subsidiaries | 249,357 | 125,819 | 424,984 | 434,576 |
Equity in net income of subsidiaries | 0 | 0 | 0 | 0 |
Net income | 249,357 | 125,819 | 424,984 | 434,576 |
Net (income) loss attributable to noncontrolling interests | (38,302) | (10,029) | (59,131) | (35,450) |
Net income available to Arch | 211,055 | 115,790 | 365,853 | 399,126 |
Preferred dividends | (5,485) | (5,485) | (10,969) | (10,969) |
Net income (loss) available to Arch common shareholders | 205,570 | 110,305 | 354,884 | 388,157 |
Comprehensive income (loss) available to Arch | 273,260 | 24,208 | 546,189 | 336,711 |
Reportable Legal Entities | ACGL (Parent Guarantor) | ||||
Revenues | ||||
Net premiums earned | 0 | 0 | 0 | 0 |
Net investment income | 0 | 0 | 1 | 0 |
Net realized gains (losses) | 0 | 0 | 0 | 0 |
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 |
Other underwriting income | 0 | 0 | 0 | 0 |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 |
Other income (loss) | (7) | 0 | 199 | 0 |
Total revenues | (7) | 0 | 200 | 0 |
Expenses | ||||
Losses and loss adjustment expenses | 0 | 0 | 0 | 0 |
Acquisition expenses | 0 | 0 | 0 | 0 |
Other operating expenses | 0 | 0 | 0 | 0 |
Corporate expenses | 17,441 | 16,900 | 26,796 | 25,532 |
Interest expense | 5,929 | 5,862 | 11,863 | 11,718 |
Net foreign exchange (gains) losses | 0 | 0 | 0 | 0 |
Total expenses | 23,370 | 22,762 | 38,659 | 37,250 |
Income (loss) before income taxes | (23,377) | (22,762) | (38,459) | (37,250) |
Income tax (expense) benefit | 0 | 0 | 0 | 0 |
Income (loss) before equity in net income of subsidiaries | (23,377) | (22,762) | (38,459) | (37,250) |
Equity in net income of subsidiaries | 234,432 | 138,552 | 404,312 | 436,376 |
Net income | 211,055 | 115,790 | 365,853 | 399,126 |
Net (income) loss attributable to noncontrolling interests | 0 | 0 | 0 | 0 |
Net income available to Arch | 211,055 | 115,790 | 365,853 | 399,126 |
Preferred dividends | (5,485) | (5,485) | (10,969) | (10,969) |
Net income (loss) available to Arch common shareholders | 205,570 | 110,305 | 354,884 | 388,157 |
Comprehensive income (loss) available to Arch | 273,260 | 24,208 | 546,189 | 336,711 |
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||||
Revenues | ||||
Net premiums earned | 0 | 0 | 0 | 0 |
Net investment income | 775 | 800 | 1,548 | 805 |
Net realized gains (losses) | 0 | 1 | 0 | 1 |
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 |
Other underwriting income | 0 | 0 | 0 | 0 |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 |
Other income (loss) | 0 | 0 | 0 | 0 |
Total revenues | 775 | 801 | 1,548 | 806 |
Expenses | ||||
Losses and loss adjustment expenses | 0 | 0 | 0 | 0 |
Acquisition expenses | 0 | 0 | 0 | 0 |
Other operating expenses | 0 | 0 | 0 | 0 |
Corporate expenses | 359 | 1,012 | 941 | 2,271 |
Interest expense | 6,647 | 6,769 | 13,319 | 13,135 |
Net foreign exchange (gains) losses | 0 | 0 | 0 | 0 |
Total expenses | 7,006 | 7,781 | 14,260 | 15,406 |
Income (loss) before income taxes | (6,231) | (6,980) | (12,712) | (14,600) |
Income tax (expense) benefit | 2,086 | 3,697 | 4,330 | 5,110 |
Income (loss) before equity in net income of subsidiaries | (4,145) | (3,283) | (8,382) | (9,490) |
Equity in net income of subsidiaries | 19,873 | 14,077 | 42,739 | 28,572 |
Net income | 15,728 | 10,794 | 34,357 | 19,082 |
Net (income) loss attributable to noncontrolling interests | 0 | 0 | 0 | 0 |
Net income available to Arch | 15,728 | 10,794 | 34,357 | 19,082 |
Preferred dividends | 0 | 0 | 0 | 0 |
Net income (loss) available to Arch common shareholders | 15,728 | 10,794 | 34,357 | 19,082 |
Comprehensive income (loss) available to Arch | 28,536 | (13,505) | 87,185 | (1,755) |
Reportable Legal Entities | Other ACGL Subsidiaries | ||||
Revenues | ||||
Net premiums earned | 1,005,985 | 943,438 | 1,957,564 | 1,853,702 |
Net investment income | 94,097 | 87,154 | 194,358 | 173,164 |
Net realized gains (losses) | 68,218 | (35,726) | 105,542 | 47,622 |
Net impairment losses recognized in earnings | (5,343) | (1,113) | (12,982) | (6,912) |
Other underwriting income | 41,450 | 7,717 | 46,769 | 19,253 |
Equity in net income (loss) of investment funds accounted for using the equity method | 8,737 | 16,167 | 15,392 | 22,056 |
Other income (loss) | 0 | 2,205 | (231) | 317 |
Total revenues | 1,213,144 | 1,019,842 | 2,306,412 | 2,109,202 |
Expenses | ||||
Losses and loss adjustment expenses | 584,592 | 519,426 | 1,107,541 | 1,013,142 |
Acquisition expenses | 175,281 | 175,425 | 345,746 | 338,501 |
Other operating expenses | 159,590 | 151,190 | 311,859 | 299,727 |
Corporate expenses | (600) | (494) | (1,154) | (1,040) |
Interest expense | 25,527 | (7,793) | 36,279 | (258) |
Net foreign exchange (gains) losses | (14,125) | 6,942 | 2,370 | (32,688) |
Total expenses | 930,265 | 844,696 | 1,802,641 | 1,617,384 |
Income (loss) before income taxes | 282,879 | 175,146 | 503,771 | 491,818 |
Income tax (expense) benefit | (16,217) | (10,477) | (34,771) | (24,568) |
Income (loss) before equity in net income of subsidiaries | 266,662 | 164,669 | 469,000 | 467,250 |
Equity in net income of subsidiaries | 0 | 0 | 0 | 0 |
Net income | 266,662 | 164,669 | 469,000 | 467,250 |
Net (income) loss attributable to noncontrolling interests | (38,623) | (10,193) | (59,773) | (35,614) |
Net income available to Arch | 228,039 | 154,476 | 409,227 | 431,636 |
Preferred dividends | 0 | 0 | 0 | 0 |
Net income (loss) available to Arch common shareholders | 228,039 | 154,476 | 409,227 | 431,636 |
Comprehensive income (loss) available to Arch | 300,542 | 50,249 | 592,793 | 383,442 |
Consolidating Adjustments and Eliminations | ||||
Revenues | ||||
Net premiums earned | 0 | 0 | 0 | 0 |
Net investment income | (6,534) | (991) | (13,834) | (8,012) |
Net realized gains (losses) | 0 | 0 | 0 | 0 |
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 |
Other underwriting income | (16,226) | 0 | (16,498) | 0 |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 |
Other income (loss) | 0 | 0 | 0 | 0 |
Total revenues | (22,760) | (991) | (30,332) | (8,012) |
Expenses | ||||
Losses and loss adjustment expenses | 0 | 0 | 0 | 0 |
Acquisition expenses | 0 | 0 | 0 | 0 |
Other operating expenses | 0 | 0 | 0 | 0 |
Corporate expenses | 0 | 0 | 0 | 0 |
Interest expense | (22,440) | (827) | (29,691) | (7,848) |
Net foreign exchange (gains) losses | (10,537) | 12,641 | (3,466) | (14,230) |
Total expenses | (32,977) | 11,814 | (33,157) | (22,078) |
Income (loss) before income taxes | 10,217 | (12,805) | 2,825 | 14,066 |
Income tax (expense) benefit | 0 | 0 | 0 | 0 |
Income (loss) before equity in net income of subsidiaries | 10,217 | (12,805) | 2,825 | 14,066 |
Equity in net income of subsidiaries | (254,305) | (152,629) | (447,051) | (464,948) |
Net income | (244,088) | (165,434) | (444,226) | (450,882) |
Net (income) loss attributable to noncontrolling interests | 321 | 164 | 642 | 164 |
Net income available to Arch | (243,767) | (165,270) | (443,584) | (450,718) |
Preferred dividends | 0 | 0 | 0 | 0 |
Net income (loss) available to Arch common shareholders | (243,767) | (165,270) | (443,584) | (450,718) |
Comprehensive income (loss) available to Arch | $ (329,078) | $ (36,744) | $ (679,978) | $ (381,687) |
Guarantor Financial Information - Condensed consolidating statement of cash flows (Details) - USD ($) $ in Thousands |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
||||
Operating Activities | |||||
Net Cash Provided by (Used in) Operating Activities | $ 541,224 | $ 385,199 | |||
Investing Activities | |||||
Purchases of fixed maturity investments | (17,541,731) | (14,641,391) | |||
Purchases of equity securities | (212,678) | (288,535) | |||
Purchases of other investments | (650,613) | (779,678) | |||
Proceeds from sales of fixed maturity investments | 16,978,549 | 14,333,436 | |||
Proceeds from sales of equity securities | 337,619 | 272,343 | |||
Proceeds from sales, redemptions and maturities of other investments | 636,535 | 587,650 | |||
Proceeds from redemptions and maturities of fixed maturity investments | 370,980 | 474,984 | |||
Net settlements of derivative instruments | 45,174 | 19,006 | |||
Proceeds from investment in joint venture | 0 | 40,000 | |||
Net (purchases) sales of short-term investments | (304,460) | 3,707 | |||
Change in cash collateral related to securities lending | (18,715) | (18,329) | |||
Contributions to subsidiaries | 0 | 0 | |||
Intercompany loans issued | 0 | 0 | |||
Purchase of business, net of cash acquired | (1,460) | 818 | |||
Purchases of fixed assets | (8,284) | (6,396) | |||
Change in other assets | 13,416 | (36,769) | |||
Net Cash Provided By (Used For) Investing Activities | (355,668) | (39,154) | |||
Financing Activities | |||||
Purchases of common shares under share repurchase program | (75,256) | (361,877) | |||
Proceeds from common shares issued, net | (1,487) | 2,178 | |||
Proceeds from borrowings | 46,000 | 0 | |||
Proceeds from intercompany borrowings | 0 | ||||
Repayments of borrowings | (179,171) | 0 | |||
Change in cash collateral related to securities lending | 18,715 | 18,329 | |||
Dividends paid to redeemable noncontrolling interests | (8,994) | (9,313) | |||
Dividends paid to parent | [1] | 0 | 0 | ||
Other | (2,223) | 55,018 | |||
Preferred dividends paid | (10,969) | (10,969) | |||
Net Cash Provided By (Used For) Financing Activities | (213,385) | (306,634) | |||
Effects of exchange rate changes on foreign currency cash | (8,906) | (39) | |||
Increase (decrease) in cash | (36,735) | 39,372 | |||
Cash beginning of year | 553,326 | 485,702 | |||
Cash end of period | 516,591 | 525,074 | |||
Reportable Legal Entities | ACGL (Parent Guarantor) | |||||
Operating Activities | |||||
Net Cash Provided by (Used in) Operating Activities | 89,499 | 378,703 | |||
Investing Activities | |||||
Purchases of fixed maturity investments | 0 | 0 | |||
Purchases of equity securities | 0 | 0 | |||
Purchases of other investments | 0 | 0 | |||
Proceeds from sales of fixed maturity investments | 0 | 0 | |||
Proceeds from sales of equity securities | 0 | 0 | |||
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | |||
Proceeds from redemptions and maturities of fixed maturity investments | 0 | 0 | |||
Net settlements of derivative instruments | 0 | 0 | |||
Proceeds from investment in joint venture | 0 | ||||
Net (purchases) sales of short-term investments | (76) | (365) | |||
Change in cash collateral related to securities lending | 0 | 0 | |||
Contributions to subsidiaries | (3,300) | 0 | |||
Intercompany loans issued | 0 | 0 | |||
Purchase of business, net of cash acquired | 0 | 0 | |||
Purchases of fixed assets | (8) | (24) | |||
Change in other assets | 2,000 | 0 | |||
Net Cash Provided By (Used For) Investing Activities | (1,384) | (389) | |||
Financing Activities | |||||
Purchases of common shares under share repurchase program | (75,256) | (361,877) | |||
Proceeds from common shares issued, net | (1,487) | 2,178 | |||
Proceeds from borrowings | 0 | ||||
Proceeds from intercompany borrowings | 0 | ||||
Repayments of borrowings | 0 | ||||
Change in cash collateral related to securities lending | 0 | 0 | |||
Dividends paid to redeemable noncontrolling interests | 0 | 0 | |||
Dividends paid to parent | [1] | 0 | 0 | ||
Other | 0 | 0 | |||
Preferred dividends paid | (10,969) | (10,969) | |||
Net Cash Provided By (Used For) Financing Activities | (87,712) | (370,668) | |||
Effects of exchange rate changes on foreign currency cash | 0 | 0 | |||
Increase (decrease) in cash | 403 | 7,646 | |||
Cash beginning of year | 6,809 | 3,218 | |||
Cash end of period | 7,212 | 10,864 | |||
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | |||||
Operating Activities | |||||
Net Cash Provided by (Used in) Operating Activities | 10,732 | 8,282 | |||
Investing Activities | |||||
Purchases of fixed maturity investments | 0 | 0 | |||
Purchases of equity securities | 0 | 0 | |||
Purchases of other investments | 0 | 0 | |||
Proceeds from sales of fixed maturity investments | 0 | 20,002 | |||
Proceeds from sales of equity securities | 0 | 0 | |||
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | |||
Proceeds from redemptions and maturities of fixed maturity investments | 41,500 | 0 | |||
Net settlements of derivative instruments | 0 | 0 | |||
Proceeds from investment in joint venture | 0 | ||||
Net (purchases) sales of short-term investments | (53,729) | (12,171) | |||
Change in cash collateral related to securities lending | 0 | 0 | |||
Contributions to subsidiaries | 0 | 0 | |||
Intercompany loans issued | 0 | (39,500) | |||
Purchase of business, net of cash acquired | 0 | 0 | |||
Purchases of fixed assets | 0 | 0 | |||
Change in other assets | 0 | 0 | |||
Net Cash Provided By (Used For) Investing Activities | (12,229) | (31,669) | |||
Financing Activities | |||||
Purchases of common shares under share repurchase program | 0 | 0 | |||
Proceeds from common shares issued, net | 0 | 0 | |||
Proceeds from borrowings | 0 | ||||
Proceeds from intercompany borrowings | 27,500 | ||||
Repayments of borrowings | 0 | ||||
Change in cash collateral related to securities lending | 0 | 0 | |||
Dividends paid to redeemable noncontrolling interests | 0 | 0 | |||
Dividends paid to parent | [1] | 0 | 0 | ||
Other | 200 | 28 | |||
Preferred dividends paid | 0 | 0 | |||
Net Cash Provided By (Used For) Financing Activities | 200 | 27,528 | |||
Effects of exchange rate changes on foreign currency cash | 0 | 0 | |||
Increase (decrease) in cash | (1,297) | 4,141 | |||
Cash beginning of year | 17,023 | 2,787 | |||
Cash end of period | 15,726 | 6,928 | |||
Reportable Legal Entities | Other ACGL Subsidiaries | |||||
Operating Activities | |||||
Net Cash Provided by (Used in) Operating Activities | 588,067 | 433,833 | |||
Investing Activities | |||||
Purchases of fixed maturity investments | (17,541,731) | (14,641,391) | |||
Purchases of equity securities | (212,678) | (288,535) | |||
Purchases of other investments | (650,613) | (779,678) | |||
Proceeds from sales of fixed maturity investments | 16,978,549 | 14,313,434 | |||
Proceeds from sales of equity securities | 337,619 | 272,343 | |||
Proceeds from sales, redemptions and maturities of other investments | 636,535 | 587,650 | |||
Proceeds from redemptions and maturities of fixed maturity investments | 329,480 | 474,984 | |||
Net settlements of derivative instruments | 45,174 | 19,006 | |||
Proceeds from investment in joint venture | 40,000 | ||||
Net (purchases) sales of short-term investments | (250,655) | 16,243 | |||
Change in cash collateral related to securities lending | (18,715) | (18,329) | |||
Contributions to subsidiaries | (2,779) | (9,290) | |||
Intercompany loans issued | 0 | (27,500) | |||
Purchase of business, net of cash acquired | (1,460) | 818 | |||
Purchases of fixed assets | (8,276) | (6,372) | |||
Change in other assets | 11,416 | (36,769) | |||
Net Cash Provided By (Used For) Investing Activities | (348,134) | (83,386) | |||
Financing Activities | |||||
Purchases of common shares under share repurchase program | 0 | 0 | |||
Proceeds from common shares issued, net | 6,079 | 9,290 | |||
Proceeds from borrowings | 46,000 | ||||
Proceeds from intercompany borrowings | 39,500 | ||||
Repayments of borrowings | (179,171) | ||||
Change in cash collateral related to securities lending | 18,715 | 18,329 | |||
Dividends paid to redeemable noncontrolling interests | (9,632) | (9,632) | |||
Dividends paid to parent | [1] | (146,436) | (435,300) | ||
Other | (2,423) | 54,990 | |||
Preferred dividends paid | 0 | 0 | |||
Net Cash Provided By (Used For) Financing Activities | (266,868) | (322,823) | |||
Effects of exchange rate changes on foreign currency cash | (8,906) | (39) | |||
Increase (decrease) in cash | (35,841) | 27,585 | |||
Cash beginning of year | 529,494 | 479,697 | |||
Cash end of period | 493,653 | 507,282 | |||
Consolidating Adjustments and Eliminations | |||||
Operating Activities | |||||
Net Cash Provided by (Used in) Operating Activities | (147,074) | (435,619) | |||
Investing Activities | |||||
Purchases of fixed maturity investments | 0 | 0 | |||
Purchases of equity securities | 0 | 0 | |||
Purchases of other investments | 0 | 0 | |||
Proceeds from sales of fixed maturity investments | 0 | 0 | |||
Proceeds from sales of equity securities | 0 | 0 | |||
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | |||
Proceeds from redemptions and maturities of fixed maturity investments | 0 | 0 | |||
Net settlements of derivative instruments | 0 | 0 | |||
Proceeds from investment in joint venture | 0 | ||||
Net (purchases) sales of short-term investments | 0 | 0 | |||
Change in cash collateral related to securities lending | 0 | 0 | |||
Contributions to subsidiaries | 6,079 | 9,290 | |||
Intercompany loans issued | 0 | 67,000 | |||
Purchase of business, net of cash acquired | 0 | 0 | |||
Purchases of fixed assets | 0 | 0 | |||
Change in other assets | 0 | 0 | |||
Net Cash Provided By (Used For) Investing Activities | 6,079 | 76,290 | |||
Financing Activities | |||||
Purchases of common shares under share repurchase program | 0 | 0 | |||
Proceeds from common shares issued, net | (6,079) | (9,290) | |||
Proceeds from borrowings | 0 | ||||
Proceeds from intercompany borrowings | (67,000) | ||||
Repayments of borrowings | 0 | ||||
Change in cash collateral related to securities lending | 0 | 0 | |||
Dividends paid to redeemable noncontrolling interests | 638 | 319 | |||
Dividends paid to parent | [1] | 146,436 | 435,300 | ||
Other | 0 | 0 | |||
Preferred dividends paid | 0 | 0 | |||
Net Cash Provided By (Used For) Financing Activities | 140,995 | 359,329 | |||
Effects of exchange rate changes on foreign currency cash | 0 | 0 | |||
Increase (decrease) in cash | 0 | 0 | |||
Cash beginning of year | 0 | 0 | |||
Cash end of period | $ 0 | $ 0 | |||
|
Income Taxes (Details) - USD ($) $ in Millions |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Effective tax rate on income before income taxes (percentage) | 6.70% | 4.30% | |
Net deferred tax assets | $ 113.0 | $ 135.7 | |
Income taxes paid | $ 26.6 | $ 26.0 |
Transactions with Related Parties (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Related Party Transaction [Line Items] | |||
Investment commitments | $ 1,350,000 | $ 1,110,000 | |
Purchases of other investments | 650,613 | $ 779,678 | |
Common director | The Carlyle Group | |||
Related Party Transaction [Line Items] | |||
Investment commitments | 770,900 | ||
Unfunded commitments | 513,100 | ||
Purchases of other investments | 56,600 | 25,600 | |
Aggregate cash distributions received | $ 13,800 | $ 19,800 |
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