Derivative Instruments

12 Months Ended

Dec. 31, 2012

Derivative Instruments [Abstract]

Derivative Instruments

4. DERIVATIVE INSTRUMENTS

As ofDecember 31, 2012 and 2011, none of the Company's derivatives were designated as hedges.The following table summarizes information on the location and amounts of derivative fair values on the consolidated balance sheets:

	December 31, 2012								December 31, 2011
	Asset				Liability				Asset				Liability
	Derivative		Asset		Derivative		Liability		Derivative		Asset		Derivative		Liability
	Notional		Derivative		Notional		Derivative		Notional		Derivative		Notional		Derivative
	Amount		Fair Value		Amount		Fair Value		Amount		Fair Value		Amount		Fair Value
Derivatives not designated as hedging instruments
Put options(1)	$	5,152	$	532	$	0	$	0	$	4,461	$	336	$	0	$	0
Foreign exchange contracts(2)		127,712		1,713		194,566		2,656		91,162		2,030		339,533		8,934
Interest rate futures(2)		0		0		0		0		680,650		977		292,000		3,467
Total derivatives	$	132,864	$	2,245	$	194,566	$	2,656	$	776,273	$	3,343	$	631,533	$	12,401

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(1)       Asset and liability derivatives relating to the put options are classified within “equity securities trading, at fair value” on the consolidated balance sheets.

(2)       All other asset and liability derivatives are classified within “other assets” or “accounts payable and accrued liabilities” on the consolidated balance sheets.

The following table provides the net realized and unrealized losseson derivatives not designated as hedges recorded on the consolidated income statements:

	Year Ended December 31,
	2012		2011		2010
Foreign exchange contracts	$	(749)	$	(6,005)	$	3,403
Total included in foreign exchange loss		(749)		(6,005)		3,403
Put options		(2,222)		(4,125)		0
Foreign exchange contracts		(1,024)		(6,242)		0
Interest rate futures		(362)		(59,723)		0
Treasury yield hedge		0		0		(3,958)
Total included in net realized investment gains		(3,608)		(70,090)		(3,958)
Total realized and unrealized losses on derivatives	$	(4,357)	$	(76,095)	$	(555)

Derivative Instruments Not Designated as Hedging Instruments

The Company is exposed to foreign currency risk in its investment portfolio. Accordingly, the fair values of the Company's investment portfolio are partially influenced by the change in foreign exchange rates. The Company entered into foreign currency forward contracts to manage the effect of this foreign currency risk. These foreign currency hedging activities have not been designated as specific hedges for financial reporting purposes.

The Company's insurance and reinsurance subsidiaries and branches operate in various foreign countries and consequently the Company's underwriting portfolio is exposed to foreign currency risk. The Company manages foreign currency risk by seeking to match liabilities under the insurance policies and reinsurance contracts that it writes and that are payable in foreign currencies with cash and investments that are denominated in such currencies. When necessary, the Company may also use derivatives to economically hedge un-matched foreign currency exposures, specifically forward contracts and currency options.

The Company also purchases and sells interest rate future contracts to actively manage the duration and yield curve positioning of its fixed income portfolio. Interest rate futures can efficiently increase or decrease the overall duration of the portfolio. Additionally, interest rate future contracts can be utilized to obtain the desired position along the yield curve in order to protect against certain future yield curve shapes.

The Company also purchases options to actively manage the Company's equity portfolio.