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:



	September 30, 2015				December 31, 2014
	Fair Value		Amortized Cost		Fair Value		Amortized Cost
U.S. government and government agencies	$	1,287,749	$	1,283,085	$	1,610,502	$	1,610,880
Non-U.S. government and government agencies	427,096		449,572		188,199		196,332
States, municipalities and political subdivisions	422,007		410,052		170,567		165,615
Corporate debt:
Financial institutions	1,052,636		1,049,451		1,024,667		1,018,777
Industrials	1,256,975		1,276,413		1,029,729		1,037,820
Utilities	118,167		120,856		110,997		111,599
Mortgage-backed	1,302,678		1,273,349		1,263,517		1,219,712
Asset-backed	679,685		692,970		670,832		674,505
Total fixed maturity investments	$	6,546,993	$	6,555,748	$	6,069,010	$	6,035,240



	September 30, 2015				December 31, 2014
	Fair Value		Original Cost		Fair Value		Original Cost
Equity securities	$	663,390	$	668,061	$	844,163	$	791,206
Other invested assets	845,167		762,792		812,543		725,069
	$	1,508,557	$	1,430,853	$	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 September 30, 2015 and December 31, 2014 were as follows:



Investment Type	Carrying Value as of September 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	$	221,862	$	221,862	2 - 8 Years	$	—			$	251,874
Mezzanine debt	194,512		194,512		5 - 9 Years	—				166,476
Distressed	5,845		5,845		3 Years	—				5,591
Real estate	—		—		9 Years	—				200,000
Total private equity	422,219		422,219			—				623,941
Distressed	216,993		47,775		2 Years	169,218		Monthly	60 Days	—
Equity long/short	58,655		—			58,655		Quarterly	45 Days	—
Relative value credit	119,100		—			119,100		Quarterly	60 Days	—
Total hedge funds	394,748		47,775			346,973				—
High yield loan fund	28,200		—			28,200		Monthly	30 Days	—
Total other invested assets at fair value	845,167		469,994			375,173				623,941
Other private securities	124,260		—			124,260				—
Total other invested assets	$	969,427	$	469,994		$	499,433			$	623,941



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			—		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, and lend to 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, opportunistic or real estate debt 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 September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Fixed maturity investments	$	42,801		$	38,762		$	120,264		$	110,998
Equity securities	3,115			3,711			11,540			12,876
Other invested assets: hedge funds and private equity	3,342			2,249			16,305			8,767
Other invested assets: other private securities	1,804			3,292			(1,119		)	7,291
Cash and cash equivalents	277			552			1,178			1,562
Expenses	(5,672		)	(5,154		)	(15,190		)	(13,670		)
Net investment income	$	45,667		$	43,412		$	132,978		$	127,824

The loss from other invested assets: other private securities for the nine months ended September 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.

d) Components of Realized Gains and Losses



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Gross realized gains on sale of invested assets	$	18,694		$	28,773		$	100,060		$	146,780
Gross realized losses on sale of invested assets	(34,735		)	(9,955		)	(57,798		)	(26,228		)
Net realized and unrealized (losses) gains on derivatives	(19,905		)	2,171			(17,616		)	(24,469		)
Mark-to-market (losses) gains:
Fixed maturity investments, trading	(15,270		)	(40,843		)	(42,441		)	18,039
Equity securities, trading	(62,853		)	(8,479		)	(57,761		)	(8,768		)
Other invested assets, trading	443			(6,803		)	(13,227		)	(1,068		)
Net realized investment (losses) gains	$	(113,626	)	$	(35,136	)	$	(88,783	)	$	104,286

e) Pledged Assets

As of September 30, 2015 and December 31, 2014, $2,975,115 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 September 30, 2015 and December 31, 2014, a further $570,363 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.