ABIR CY 2011 Global Underwriting Results; Risk Spreading, Pooling and Diversification Work

ABIR's International (Re) Insurers' Global Underwriting Report

Twelve Months Ended December 31, 2011

Prepared April 13, 2012

International (Re)Insurers' Global Underwriting Report

(IN THOUSANDS)

Net 

Gross

Direct

Net

Net

Net

 Losses &

Commission

Other

Net

Net

Realized

 Premiums

Premiums

Premiums

Premiums

Premiums

 Loss Adj.

and

Underwriting

Underwriting

Investment

Gain (Loss) 

Other

Other

Net

Total

Written

Written

Written

Written

Earned

 Expenses

Loss

Brokerage

Expense

Expense

Combined

Profit/(Loss)

Income

Securities

Revenue

Expense

Income

Equity

Reinsurer

Dec-11

Dec-11

Dec-11

Dec-10

Dec-11

Dec-11

Ratio

Dec-11

Dec-11

  Ratio

Ratio

Dec-11

Dec-11

Dec-11

Dec-11

Dec-11

Dec-11

Dec-11

ACE Limited (1)

20,831,000

17,626,000

15,372,000

13,708,000

15,387,000

9,921,000

65.7%

2,447,000

2,052,000

28.9%

94.6%

967,000

2,242,000

(795,000)

0

323,000

1,585,000

24,516,000

Allied World Assurance Company Holdings, AG

1,939,521

1,369,017

1,533,766

1,392,455

1,456,992

959,156

65.8%

167,295

271,656

30.1%

95.9%

58,885

195,948

10,077

101,744

61,126

274,548

3,149,022

Alterra Capital Holdings Limited (2)

1,904,066

827,899

1,431,989

1,039,568

1,424,974

1,004,975

66.5%

261,102

190,519

31.7%

98.2%

(31,622)

234,846

(41,284)

5,396

111,555

65,282

2,809,235

Arch Capital Group Ltd. (3)

3,436,456

2,402,153

2,673,326

2,511,040

2,631,815

1,727,553

65.6%

459,508

400,100

32.7%

98.3%

44,654

338,198

110,646

(20,781)

45,705

436,358

4,628,486

Argo Group International Holdings Ltd. (4)

1,544,800

1,261,300

1,071,700

1,095,700

1,082,000

863,100

79.9%

426,700

5,900

40.0%

119.9%

(213,700)

125,800

49,200

1,400

25,600

(82,400)

1,479,000

Ariel Holdings Limited (5)

583,092

155,207

525,557

559,015

517,698

320,191

61.9%

100,352

75,669

36.3%

98.2%

42,799

44,446

(9,314)

21,313

19,678

57,739

1,261,478

Aspen Insurance Holdings Limited (6)

2,207,800

1,020,300

1,929,100

1,891,100

1,888,500

1,556,000

82.4%

347,000

235,500

33.2%

115.6%

(250,000)

225,600

(34,100)

(6,800)

77,700

(105,800)

3,172,000

Assured Guaranty Ltd. (7)

313,804

373,013

304,251

526,571

1,104,676

400,554

36.3%

27,551

181,971

19.0%

55.3%

494,600

391,017

(17,992)

276,845

110,008

775,620

4,718,436

Axis Capital Holdings Limited (8)

4,096,153

2,121,829

3,419,434

3,147,540

3,314,961

2,675,052

80.7%

587,469

382,062

31.6%

112.3%

(327,227)

362,430

121,439

2,396

95,105

46,305

5,444,080

Catlin Group Limited (9)

4,513,285

2,834,253

3,835,013

3,317,753

3,611,623

2,528,807

70.0%

758,874

420,122

32.6%

102.6%

(96,180)

147,410

100,290

4,286

85,235

81,897

3,297,741

Endurance Specialty Holdings Ltd. (10)

2,467,114

1,469,798

1,979,821

1,763,744

1,931,393

1,632,666

84.6%

282,911

264,152

28.3%

112.9%

(248,336)

147,037

28,151

7,422

51,014

(93,734)

2,611,165

Flagstone Reinsurance Holdings, S.A. (11)

789,697

0

558,432

668,729

571,478

676,535

118.4%

115,325

85,817

35.2%

153.6%

(306,199)

34,312

(18,276)

5,434

41,455

(326,133)

789,048

Hardy Underwriting Bermuda Limited (12)

416,091

180,209

293,739

323,992

295,312

227,852

77.2%

105,256

35,543

47.7%

124.9%

(73,338)

10,597

(3,187)

631

0

(53,619)

166,637

Hiscox Ltd. (13)

2,325,996

1,711,501

1,884,288

1,749,869

1,837,736

1,120,126

60.2%

433,016

278,936

39.3%

99.5%

5,658

80,784

(41,470)

345

17,597

34,142

1,934,084

Lancashire Holdings Limited (14)

632,312

484,895

565,088

649,818

574,508

182,314

31.7%

108,362

4,036

32.0%

63.7%

279,796

42,690

(1,997)

869

113,364

201,583

1,326,798

Montpelier Re Holdings Ltd. (15)

725,494

166,237

624,045

668,772

622,672

612,056

98.3%

105,430

98,602

32.8%

131.1%

(193,416)

68,661

26,181

3,334

20,606

(115,214)

1,549,349

PartnerRe Ltd. (16)

4,633,054

0

4,486,329

4,705,116

4,647,754

4,372,570

96.7%

938,361

336,355

28.7%

125.4%

(999,532)

629,148

66,692

7,915

155,542

(520,291)

6,467,542

Platinum Underwriters Holdings, Ltd. (17)

687,296

0

651,514

760,589

689,452

805,437

116.8%

133,177

47,564

26.2%

143.0%

(296,726)

125,863

(18,436)

1,118

39,016

(224,064)

1,690,859

RenaissanceRe Holdings Ltd. (18)

1,434,976

29,725

1,012,773

848,965

951,049

861,179

90.6%

97,376

169,666

28.0%

118.6%

(177,172)

118,000

70,116

(44,129)

59,365

(92,235)

3,608,533

Validus Holdings Ltd. (19)

2,124,691

510,200

1,835,450

1,761,084

1,802,143

1,244,401

69.1%

314,184

231,793

30.3%

99.4%

11,765

112,296

8,541

5,718

116,167

21,329

3,448,425

XL Group  plc (20)

7,292,839

4,814,925

5,795,750

5,381,863

5,690,130

4,613,465

76.6%

826,411

869,292

30.9%

107.5%

(619,038)

1,137,769

(199,097)

144,787

879,474

(474,760)

10,769,410

Total Results

64,899,537

39,358,461

51,783,365

48,471,283

52,033,866

38,304,989

73.6%

9,042,660

6,637,255

30.1%

103.7%

(1,927,329)

6,814,852

(588,820)

519,243

2,448,312

1,491,553

88,837,328

(1)  The results are on a consolidated U.S. GAAP basis and include the results of ACE Limited, ACE Bermuda, ACE Global Markets, ACE Tempest Life Re (including ACE Tempest Re Bermuda) and ACE Group Holdings, Inc. The underwriting ratios are for the consolidated business, excluding the life segment.

(2)  Results include the major business units of Alterra Bermuda, Alterra Re USA, Alterra Europe, Alterra Specialty, and Alterra at Lloyd's.  Loss ratio, expense ratio  and combined ratio are calculated based on property and casualty business only,  and exclude life and annuity business.  Net underwriting profit includes life and annuity business.

(3)  Arch Capital Group Ltd. is a Bermuda public limited liability company which provides insurance and reinsurance on a worldwide basis through its wholly-owned subsidiaries.  

(4)  Consolidated Group includes: The Argo Foundation PXRE Capital Statutory Trust II PXRE Capital Trust III PXRE Capital Statutory Trust V PXRE Capital Trust VI Argonaut Services GmbH Argo Re, Ltd. Argo Irish Holdings I, Ltd. Argo Irish Holdings II Argo Brasil Participacoes Ltd. PXRE Reinsurance (Barbados), Ltd. Mid Atlantic Risk Systems, Ltd. Argo Re DIFC, Ltd. Argo International Holdings, Ltd. Argo Underwriting Agency, Ltd. Argo Management Services, Ltd. Argo Management Holdings, Ltd. Argo Managing Agency, Ltd. Argo Direct, Ltd. Argo (No. 604), Ltd. Argo (No. 616), Ltd. Argo (No. 607), Ltd. Argo (No. 617), Ltd. Argo (No. 703), Ltd. Argo (No. 704), Ltd. Argo (Alpha), Ltd. Argo (Beta), Ltd. Argo (Chi), Ltd. ArgoGlobal Holdings (Malta) Ltd ArgoGlobal SE Argo Financial Holding, Ltd. (Ireland) Argo Solutions, SA Argo Financial Holding (Brazil) Limited Argo Seguras Brasil, SA Argo Group US, Inc. PXRE Capital Trust I Argonaut Group Statutory Trust Argonaut Group Statutory Trust III Argonaut Group Statutory Trust IV Argonaut Group Statutory Trust V Argonaut Group Statutory Trust VI Argonaut Group Statutory Trust VII Argonaut Group Statutory Trust VIII Argonaut Group Statutory Trust IX Argonaut Group Statutory Trust X Argonaut Management Services, Inc. Argus Reinsurance Intermediaries, Inc. Argonaut Fund to Secure the Future Alteris, Inc Trident Insurance Services, LLC Alteris Insurance Services, Inc. Canterbury Claims Services, Inc. Colony Management Services, Inc. Colony Agency Services, Inc. Argonaut Claims Management, LLC Argonaut Claims Services, Ltd. Colony Insurance Company Colony Specialty Insurance Company Colony National Insurance Company Argonaut Insurance Company Argonaut-Midwest Insurance Company Argonaut-Southwest Insurance Company Argonaut Great Central Insurance Company Insight Insurance Services, Inc. Select Markets Insurance Company Argonaut Limited Risk Insurance Company Central Insurance Management, Inc. Grocers Insurance Agency, Inc. AGI Properties, Inc. Rockwood Casualty Insurance Company Somerset Casualty Insurance Company Mid-State Insurance Underwriters, Inc. Coal Operators Indemnity Company ARIS Title Insurance Corporation.

(5)  The results of Ariel Holdings Ltd. are on a consolidated U.S. GAAP basis and include the results of Ariel Reinsurance Company Ltd., and Atrium Underwriting Group Limited.  As Ariel has adopted FAS 159 we have included $12,468 of unrealized gains in realized gains and losses above.

(6) The business of Aspen Insurance Holdings Limited is conducted through its wholly-owned subsidiaries:   Aspen Insurance Limited (Bermuda Operating Company), Acorn Limited (Bermuda Company), Aspen Specialty Insurance Company (US Operating Company), Aspen American Insurance Company (US Operating Company), Aspen (UK) Holdings Limited (UK Holding Company), Aspen Managing Agency Limited (Managing Agent to Lloyd's Syndicate 4711) and Aspen Underwriting Limited (Lloyd's Corporate Member).

(7)  Reported results are for Assured Guaranty Ltd, a Bermuda based holding company,and include the results of it's principal operating subsidiaries, Assured Guaranty Corp, Assured Guaranty Municipal Corp and Assured Guaranty Re Ltd. and their respective subsidiaries.  

(8)  We are reporting on a consolidated basis, including the following subsidiaries:  Axis Specialty Ltd. (Bermuda),  Axis Reinsurance Co (NY), Axis Insurance Company (Illinois),  Axis Surplus Insurance Co (Illinois), Axis Specialty Insurance Co (Connecticut), Axis Reinsurance Europe Ltd. (Dublin), Axis Specialty Europe Ltd. (Dublin). 

(9)  Catlin Group Limited includes 4 reporting segments aligned to underwriting hubs, which correspond to where the business is written:  London/UK, Bermuda, US and International, which comprises the Group's Asia-Pacific, Europe and Canada underwriting hubs.  The Consolidated Results of Operations for the Group are presented on a US GAAP basis.  The expense ratio does not include financing and amortization charges, profit related bonuses, share option scheme costs and certain other Group corporate costs.

(10) These results are on a consolidated U.S. GAAP basis and include the accounts of: Endurance Specialty Insurance Ltd.; Endurance Worldwide Insurance Limited; Endurance Reinsurance Corporation of America, Endurance American Insurance Company; Endurance American Specialty Insurance Company; Endurance Risk Solutions Assurance Co.; American Agri-Business Insurance Company; and ARMtech Insurance Services, Inc.

(11) These results are on a consolidated U.S. GAAP basis and include the accounts of Flagstone Reinsurance Holdings, S.A. and its subsidiaries.  The results of our Lloyd's and Island Heritage former reporting segments are reported as discontinued operation and as such are included in above in Other Expense.

(12) This filing is on a group basis representing the following individual companies; The Company owns 100% of the ordinary share capital in the following subsidiaries. Hardy Underwriting Group Plc* UK holding company Hardy Re Limited* Bermudian reinsurance company Hardy Bermuda Limited* Bermudian managing general agent Hardy Underwriting Limited UK corporate member of Lloyd's Hardy Names Limited UK corporate member of Lloyd's Hardy IC Limited UK corporate member of Lloyd's Commenced for the 2012 underwriting year Hardy (Underwriting Agencies) Limited UK managing agent Hardy Insurance Services Limited UK service company Hardy Underwriting Asia Pte Ltd Singaporean service company Hardy Guernsey Limited* Guernsey insurance company * held directly The Company also owns 50% of the ordinary share capital in HAIM, a joint venture with Arig. HAIM, which was established in 2009 and is based in Bahrain, focuses on construction, property and onshore energy. Primarily HAIM writes business from the Middle East and North African regions but also considers business from other parts of Asia and Africa. Both Hardy and Arig have equal representation on the board of directors of HAIM. The income statement reflects foreign exchange gains or losses, including gains or losses on the retranslation of net non-monetary Items in the balance sheet, where the accounting convention is to recognise underwriting profit or losses at the average rate of exchange for the period, the balance sheet is converted at closing rates, the retranslation of the result for the period recognised at average rates to closing rates is recognised as a foreign exchange loss. The expense ratio as reported on the ABIR Return will differ to that reported in the Group accounts filed in Bermuda as the group accounts alocate known expenses at Segmental level only.

(13) Results presented in accordance with IFRS and include the Hiscox Ltd. owned portion of Syndicate 33, Hiscox Insurance Company (Bermuda) Limited, Hiscox Insurance Company (Guernsey) Limited, Hiscox Insurance Company Limited and Hiscox USA.  Realized Loss On Securities includes $49,559 of net fair value losses on financial investments at fair value.  Ratios include foreign exchange gains, excluding foreign exchange impact expense ratio is 39.1% and combined ratio is 99.3%.  Converted from GBP at average rate relevant for the period. (2011 : 1.605 ; 2010 : 1.546).  Capital and surplus translated at closing USD rate of 1.54.

(14) The Group's consolidated financial information is prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS").  The amount shown as a realized gain/(loss) on securities contains ($10,634) which represents the net change in unrealized gains/losses on investments including tax expense of ($111) for the year ended  31 December 2011.    The information above includes Lancashire Holdings Limited and its five wholly owned  subsidiaries:  Lancashire Insurance Company Limited, Lancashire Insurance Holdings (UK) Limited ("LIHL"), Lancashire Insurance Marketing Services Limited, Lancashire Insurance Services Limited and Lancashire Marketing Services (Middle East) Limited ("LMEL").  LIHL is a holding company for a wholly owned operating subsidiary, Lancashire Insurance Company (UK) Limited. During 2011 the Group wound up LMEL.

(15)  Net unrealized losses total $8,376 for the year ended December 31, 2011.

(16) Results for PartnerRe Ltd. (PartnerRe) are on a U.S. GAAP basis and include the results of its principal wholly-owned subsidiaries, including Partner Reinsurance Company Ltd., Partner Reinsurance Europe Limited and Partner Reinsurance Company of the U.S.   Realized gains (losses) on securities for the year ended December 31, 2011 of $66,692 includes changes in unrealized losses on investments of $6,844 and realized gains on investments of $73,537.

(17) The results are presented on a consolidated U.S. GAAP basis.  Platinum Underwriters Holdings, Ltd. and its subsidiaries operate primarily through two licensed reinsurance subsidiaries:  Platinum Underwriters Bermuda, Ltd. and Platinum Underwriters Reinsurance, Inc.

(18) On November 18, 2010, RenaissanceRe Holdings Ltd. entered into a definitive stock purchase agreement (the "Stock Purchase Agreement") with QBE Holdings, Inc. ("QBE") to sell substantially all of its U.S.-based insurance operations, including its U.S. property and casualty business underwritten through managing general agents, its crop insurance business underwritten through Agro National Inc., its commercial property insurance operations and its claims operations. RenaissanceRe Holdings Ltd. has three reportable segments: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain property catastrophe and specialty joint ventures, (2) Lloyd's, which includes reinsurance and insurance business written through RenaissanceRe Syndicate 1458, and (3) Insurance, which includes the operations of the Company's former Insurance segment that were not sold pursuant to the Stock Purchase Agreement with QBE.  Included in Realized Gain (Loss) on Securities of $70,116 is realized gains on fixed maturity investments of $48,699; unrealized gains on fixed maturity investments of $19,404; unrealized gains on equity investments of $2,565; and net other-than-temporary impairments of $552.

(19)These numbers are on a consolidated basis and include the following companies:  Validus Reinsurance, Ltd. and Talbot Holdings, Ltd.  Realized gains (losses) on securities for the year ended December 31, 2011 of $8,541 include net realized gains of $28,532 and net unrealized losses of $(19,991). 

(20) XL Group plc, through it's operating subsidiaries, (collectively the "Company"), is a leading provider of insurance and reinsurance coverages to industrial, commercial, and professional firms, insurance companies and other enterprises on a worldwide basis. The Company operates in three business segments; Insurance, Reinsurance, and Life operations. These consolidated financial results include the accounts of the Company and all of its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for year end financial information. Other underwriting expenses exclude corporate operating expenses.Ratios are based on net premiums earned from property and casualty operations. The underwriting expense ratio excludes foreign exchange gains and losses.