INVESTMENTS

a) Trading Securities

Securities accounted for at fair value with changes in fair value recognized in the consolidated income statements by category are as follows:



	June 30, 2015				December 31, 2014
	Fair Value		Amortized Cost		Fair Value		Amortized Cost
U.S. government and government agencies	$	1,280,844	$	1,277,547	$	1,610,502	$	1,610,880
Non-U.S. government and government agencies	411,550		421,778		188,199		196,332
States, municipalities and political subdivisions	348,823		348,288		170,567		165,615
Corporate debt:
Financial institutions	1,055,836		1,053,576		1,024,667		1,018,777
Industrials	1,226,827		1,238,948		1,029,729		1,037,820
Utilities	121,571		122,793		110,997		111,599
Mortgage-backed	1,263,019		1,234,126		1,263,517		1,219,712
Asset-backed	723,073		727,919		670,832		674,505
Total fixed maturity investments	$	6,431,543	$	6,424,975	$	6,069,010	$	6,035,240



	June 30, 2015				December 31, 2014
	Fair Value		Original Cost		Fair Value		Original Cost
Equity securities	$	815,641	$	757,592	$	844,163	$	791,206
Other invested assets	769,173		685,897		812,543		725,069
	$	1,584,814	$	1,443,489	$	1,656,706	$	1,516,275

Other invested assets, included in the table above, include investments in private equity funds, hedge funds and a high yield loan fund that are accounted for at fair value, but excludes other private securities described below in Note 5(b) that are accounted for using the equity method of accounting.

b) Other Invested Assets

Details regarding the carrying value, redemption characteristics and unfunded investment commitments of the other invested assets portfolio as of June 30, 2015 and December 31, 2014 were as follows:



Investment Type	Carrying Value as of June 30, 2015		Investments with Redemption Restrictions		Estimated Remaining Restriction Period	Investments without Redemption Restrictions		Redemption Frequency(1)	Redemption Notice Period(1)	Unfunded Commitments
Private equity	$	198,302	$	198,302	2 - 8 Years	$	—			$	180,988
Mezzanine debt	183,002		183,002		5 - 9 Years	—				255,333
Distressed	6,088		6,088		3 Years	—				5,561
Real estate	—		—		9 Years	—				150,000
Total private equity	387,392		387,392			—				591,882
Distressed	170,858		—			—		Based on net asset value	60 Days	—
Equity long/short	60,103		—			60,103		Quarterly	30 -60 Days	—
Relative value credit	120,939		—			120,939		Quarterly	60 Days	—
Total hedge funds	351,900		—			181,042				—
High yield loan fund	29,881		—			29,881		Monthly	30 days	—
Total other invested assets at fair value	769,173		387,392			210,923				591,882
Other private securities	127,617		—			127,617				—
Total other invested assets	$	896,790	$	387,392		$	338,540			$	591,882



Investment Type	Carrying Value as of December 31, 2014		Investments with Redemption Restrictions		Estimated Remaining Restriction Period	Investments without Redemption Restrictions		Redemption Frequency(1)	Redemption Notice Period(1)	Unfunded Commitments
Private equity	$	184,576	$	184,576	2 - 8 Years	$	—			$	223,802
Mezzanine debt	166,905		166,905		5 - 9 Years	—				204,232
Distressed	5,869		5,869		3 Years	—				5,180
Real estate	—		—		9 Years	—				50,000
Total private equity	357,350		357,350			—				483,214
Distressed	170,169		170,169		1 Year	—		Based on net asset value	60 Days	—
Equity long/short	84,198		—			84,198		Quarterly	30 -60 Days	—
Multi-strategy	51,507		—			51,507		Quarterly	45 -90 Days	—
Relative value credit	119,156		—			119,156		Quarterly	60 Days	—
Total hedge funds	425,030		170,169			254,861				—
High yield loan fund	30,163		—			30,163		Monthly	30 days	—
Total other invested assets at fair value	812,543		527,519			285,024				483,214
Other private securities	142,966		—			142,966				—
Total other invested assets	$	955,509	$	527,519		$	427,990			$	483,214

_______________________


(1)	The redemption frequency and notice periods only apply to the investments without redemption restrictions. Some or all of these investments may be subject to a gate as described below.

In general, the Company has invested in hedge funds that require at least 30 days’ notice of redemption and may be redeemed on a monthly, quarterly, semi-annual, annual or longer basis, depending on the fund. Certain hedge funds have lock-up periods ranging from one to three years from initial investment. A lock-up period refers to the initial amount of time an investor is contractually required to invest before having the ability to redeem. Funds that provide for periodic redemptions may, depending on the funds’ governing documents, have the ability to deny or delay a redemption request, called a “gate.” The fund may implement this restriction because the aggregate amount of redemption requests as of a particular date exceeds a specified level, generally ranging from 15% to 25% of the fund’s net assets. The gate is a method for executing an orderly redemption process to reduce the possibility of adversely affecting investors in the fund. Typically, the imposition of a gate delays a portion of the requested redemption, with the remaining portion settled in cash sometime after the redemption date. Certain funds may impose a redemption fee on early redemptions. Interests in private equity funds cannot be redeemed because the investments include restrictions that do not allow for redemption until termination of the fund.

The following describes each investment type:

•

Private equity funds: Primary funds may invest in companies and general partnership interests. Secondary funds buy limited partnership interests from existing limited partners of primary private equity funds. As owners of private equity funds seek liquidity, they can sell their existing investments, plus any remaining commitment, to secondary market participants. These funds cannot be redeemed because the investments include restrictions that do not allow for redemption until termination of the fund.

•

Mezzanine debt funds: Mezzanine debt funds primarily focus on providing capital to upper middle market and middle market companies and private equity sponsors, in connection with leveraged buyouts, mergers and acquisitions, recapitalizations, growth financings and other corporate transactions. The most common position in the capital structure will be between the senior secured debt holder and the equity; however, the funds will utilize a flexible approach when structuring investments, which may include secured debt, subordinated debt, preferred stock and/or private equity. These funds cannot be redeemed because the investments include restrictions that do not allow for redemption until termination of the fund.

•

Distressed funds: In distressed debt investing, managers take positions in the debt of companies experiencing significant financial difficulties, including bankruptcy, or in certain positions of the capital structure of structured securities. The manager relies on the fundamental analysis of these securities, including the claims on the assets and the likely return to bondholders. Certain funds cannot be redeemed because the investments include restrictions that do not allow for redemption until termination of the fund.

•

Real estate funds: Private real estate funds invest directly in commercial real estate (multifamily units, industrial buildings, office spaces and retail stores) and some residential property. Real estate managers have diversified portfolios that generally follow core, core-plus, value-added or opportunistic strategies. These funds cannot be redeemed because the investments include restrictions that do not allow for redemption until termination of the fund.


•	Equity long/short funds: In equity long/short funds, managers take long positions in companies they deem to be undervalued and short positions in companies they deem to be overvalued. Long/short managers may invest in countries, regions or sectors and vary by their use of leverage and by their targeted net long position.


•	Relative value credit funds: These funds seek to take exposure to credit-sensitive securities, long and/or short, based upon credit analysis of issuers and securities and credit market views.


•	Multi-strategy funds: These funds may utilize many strategies employed by specialized funds including distressed investing, equity long/short, merger arbitrage, convertible arbitrage, fixed income arbitrage and macro trading.


•	High yield loan fund: A long-only private mutual fund that invests in high yield fixed income securities.


•	Other private securities: These securities include strategic non-controlling minority investments in private asset management companies and other insurance related investments that are accounted for using the equity method of accounting.

c) Net Investment Income



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Fixed maturity investments	$	41,205		$	35,936		$	77,463		$	72,235
Equity securities	4,862			5,912			8,425			9,165
Other invested assets: hedge funds and private equity	4,583			2,527			12,963			6,519
Other invested assets: other private securities	(3,789		)	(3,417		)	(2,923		)	3,999
Cash and cash equivalents	439			571			901			1,010
Expenses	(4,540		)	(4,736		)	(9,518		)	(8,516		)
Net investment income	$	42,760		$	36,793		$	87,311		$	84,412

The loss from other invested assets: other private securities for the three months ended June 30, 2015 included an other-than-temporary impairment of $6,261 related to one of the Company's equity method investments. The Company recorded the other-than-temporary impairment as the fair value of this investment was below its carrying value. The loss from other invested assets: other private securities for the three months ended June 30, 2014 was due to a loss of $9,348 recorded for the same equity method investment due to impairment charges that it recorded. At the time, the Company determined the fair value of this investment and concluded that the fair value exceeded the Company's carrying value and as such no other-than-temporary impairment was recorded.

d) Components of Realized Gains and Losses



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Gross realized gains on sale of invested assets	$	36,079		$	55,714		$	81,368		$	118,006
Gross realized losses on sale of invested assets	(10,059		)	(4,025		)	(23,063		)	(16,273		)
Net realized and unrealized gains (losses) on derivatives	13,920			(13,720		)	2,288			(26,640		)
Mark-to-market (losses) gains:
Fixed maturity investments, trading	(52,688		)	36,426			(27,171		)	58,882
Equity securities, trading	(329		)	21,316			5,091			(289		)
Other invested assets, trading	(7,105		)	(10,494		)	(13,670		)	5,736
Net realized investment (losses) gains	$	(20,182	)	$	85,217		$	24,843		$	139,422

e) Pledged Assets

As of June 30, 2015 and December 31, 2014, $2,936,338 and $3,585,792, respectively, of cash and cash equivalents and investments were deposited, pledged or held in trust accounts in favor of ceding companies and other counterparties or government authorities to comply with reinsurance contract provisions, insurance laws and other contract provisions.

In addition, as of June 30, 2015 and December 31, 2014, a further $577,508 and $571,750, respectively, of cash and cash equivalents and investments were pledged as collateral for the Company’s letter of credit facilities. See Note 10(f) to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 for details on the Company’s credit facilities.