Commitments and contingencies


(a)	Concentrations of credit risk

The Company underwrites a significant amount of its reinsurance business through three particular brokers as set out below. There is credit risk associated with payments of insurance and reinsurance balances to the Company if these brokers are unable to fulfill their contractual obligations. These companies are large, well established, and there are no indications they are financially distressed. There was no other broker or party insured or reinsured that accounted for more than 10% of gross premiums written for the periods mentioned.

The following table shows the percentage of gross premiums written by broker for the years ended December 31, 2016, 2015 and 2014:



	Years Ended December 31,
	2016		2015		2014
Marsh & McLennan Companies, Inc.	28.8	%	28.2	%	28.5	%
Aon Benfield Group Ltd.	16.2	%	15.5	%	20.0	%
Willis Towers Watson plc	14.1	%	14.3	%	18.0	%


(b)	Employment agreements

The Company has entered into employment agreements with certain individuals that provide for executive benefits and severance payments under certain circumstances.


(c)	Operating leases

The Company leases office space and office equipment under operating leases. Total rent expense with respect to these operating leases for the year ended December 31, 2016 was approximately $9,761 (2015: $10,143, 2014: $10,540). Future minimum lease commitments are as follows:



	December 31, 2016
2017	$	11,878
2018	12,214
2019	11,958
2020	11,059
2021	10,316
2022 and thereafter	46,418
Total	$	103,843


(d)	Funds at Lloyd’s

Talbot operates in Lloyd’s through a corporate member, Talbot 2002 Underwriting Capital Ltd (“T02”), which is the sole participant in Syndicate 1183. Lloyd’s sets T02’s required capital annually based on Syndicate 1183’s business plan, rating environment and reserving environment together with input arising from Lloyd’s discussions with, inter alia, regulatory and rating agencies. Such capital, called Funds at Lloyd’s (“FAL”), comprises cash and investments. The Company provided FAL in the amount of $583,600 for the 2017 underwriting year (2016: $617,000).

The amounts which are provided as FAL are not available for distribution to the Company for the payment of dividends. Talbot’s corporate member may also be required to maintain funds under the control of Lloyd’s in excess of its capital requirement and such funds also may not be available for distribution to the Company for the payment of dividends.


(e)	Lloyd’s Central Fund

Whenever a member of Lloyd’s is unable to pay its debts to policyholders, such debts may be payable by the Lloyd’s Central Fund. If Lloyd’s determines that the Central Fund needs to be increased, it has the power to assess premium levies on current Lloyd’s members up to 3% of a member’s underwriting capacity in any one year. The Company does not believe that any assessment is likely in the foreseeable future and has not provided any allowance for such an assessment. However, based on the Company’s 2017 estimated premium income at Lloyd’s of £600,000, at December 31, 2016 exchange rate of £1 equals $1.23 and assuming the maximum 3% assessment, the Company would be assessed approximately $22,140.


(f)	Investment affiliate commitments

As discussed in Note 7, “Investments,” on December 20, 2011 the Company entered into an Assignment and Assumption Agreement with Aquiline Capital Partners LLC, pursuant to which it assumed total capital commitments of $50,000. The Company’s remaining commitment at December 31, 2016 was $1,700 (December 31, 2015: $3,413).

On October 2, 2014, the Company assumed an additional investment in Aquiline Capital Partners II GP (Offshore) Ltd. as part of the Western World acquisition representing a total capital commitment of $10,000. The Company’s remaining capital commitment at December 31, 2016 was $340 (December 31, 2015: $683).

On November 7, 2014, the Company entered into a Subscription Agreement with Aquiline Capital Partners III GP (Offshore) Ltd., pursuant to which it assumed total capital commitments of $100,000 in respect of Limited Partnership Interests in Aquiline Financial Services Fund III L.P. (the “Fund”). The Company’s remaining commitment at December 31, 2016 was $62,031 (December 31, 2015: $86,110).


(g)	AlphaCat commitments

On December 29, 2014, the Company entered into an agreement with an AlphaCat ILS fund pursuant to which it assumed total capital commitments of $20,000. On December 29, 2015, the Company assumed an additional capital commitment of $20,000. The Company’s remaining unfunded capital commitment at December 31, 2016 was $nil (December 31, 2015: $10,000).

On December 30, 2015, the Company entered into an agreement with another AlphaCat ILS fund pursuant to which it assumed total capital commitments of $25,000. The Company’s remaining unfunded capital commitment at December 31, 2016 was $nil (December 31, 2015: $9,536). On December 30, 2016, a portion of the Company’s initial investment was returned and the Company assumed an additional capital commitment of $25,000. The Company’s remaining unfunded capital commitment on the additional investment at December 31, 2016 was $10,000.


(h)	Fixed maturity commitments

At December 31, 2016, the Company had an outstanding commitment to participate in certain secured loan facilities through participation agreements with an established loan originator. The undrawn amount under the revolver facility participations as at December 31, 2016 was $28,499 (December 31, 2015: $34,888).


(i)	Other investment commitments

At December 31, 2016, the Company had capital commitments in certain other investments of $308,000 (December 31, 2015: $263,000). The Company’s remaining unfunded capital commitment to these investments at December 31, 2016 was $156,134 (December 31, 2015: $185,548).


(j)	Structured settlements

As at December 31, 2016, the Company is contingently liable for the present value of amounts not yet due under annuities purchased by Western World where the claimant is the payee for the amount of $3,186 (December 31, 2015: $3,108).