Losses and Loss Adjustment Expenses (Tables)

3 Months Ended

Mar. 31, 2014

Losses and Loss Adjustment Expenses

	March 31, 2014								December 31, 2013
	Non-life Run-off			Active Underwriting		Total			Non-life Run-off			Active Underwriting		Total
Outstanding	$	2,445,619		$	78,755	$	2,524,374		$	2,541,934		$	79,826	$	2,621,760
Incurred but not reported		1,625,177			104,514		1,729,691			1,717,870			98,583		1,816,453
Fair value adjustment		(248,918	)		36,983		(211,935	)		(255,291	)		36,983		(218,308	)
	$	3,821,878		$	220,252	$	4,042,130		$	4,004,513		$	215,392	$	4,219,905

Net (Reduction) Increase in Ultimate Losses and Loss Adjustment Expense Liabilities

The total net (reduction) increase in ultimate losses and loss adjustment expense liabilities by the Company’s non-life run-off and active underwriting segments for the three months ended March 31, 2014 and 2013 was as follows:

	Three Months Ended March 31,
	2014								2013
	Non-life Run-off			Active Underwriting		Total			Non-life Run-off			Active Underwriting		Total
Net losses paid	$	87,687		$	12,835	$	100,522		$	83,674		$	—	$	83,674
Net change in case and LAE reserves		(62,398	)		775		(61,623	)		(57,500	)		—		(57,500	)
Net change in IBNR reserves		(37,348	)		3,469		(33,879	)		(2,702	)		—		(2,702	)
(Reduction) increase in estimates of net ultimate losses		(12,059	)		17,079		(5,020	)		23,472			—		23,472
Reduction in provisions for unallocated loss adjustment expense liabilities		(13,359	)		52		(13,307	)		(16,404	)		—		(16,404	)
Amortization of fair value adjustments		(3,764	)		—		(3,764	)		2,093			—		2,093
Net (reduction) increase in ultimate losses and loss adjustment expense liabilities	$	(29,182	)	$	17,131	$	(12,051	)	$	9,161		$	—	$	9,161

Non-Life Run-Off Segment [Member]

Net (Reduction) Increase in Ultimate Losses and Loss Adjustment Expense Liabilities

The net (reduction) increase in ultimate losses and loss adjustment expense liabilities in the non-life run-off segment for the three months ended March 31, 2014 and 2013 was as follows:

	Non-Life Run-off
	Three Months Ended March 31,
	2014								2013
	Prior Period			Current Period		Total			Prior Period			Current Period		Total
Net losses paid	$	87,155		$	532	$	87,687		$	81,134		$	2,540	$	83,674
Net change in case and LAE reserves		(63,249	)		851		(62,398	)		(62,745	)		5,245		(57,500	)
Net change in IBNR reserves		(37,397	)		49		(37,348	)		(23,450	)		20,748		(2,702	)
(Reduction) increase in estimates of net ultimate losses		(13,491	)		1,432		(12,059	)		(5,061	)		28,533		23,472
Reduction in provisions for unallocated loss adjustment expense liabilities		(13,359	)		—		(13,359	)		(16,404	)		—		(16,404	)
Amortization of fair value adjustments		(3,764	)		—		(3,764	)		2,093			—		2,093
Net (reduction) increase in ultimate losses and loss adjustment expense liabilities	$	(30,614	)	$	1,432	$	(29,182	)	$	(19,372	)	$	28,533	$	9,161

Losses Incurred and Paid Reflected Net of Reinsurance Recoverables

The table below provides a reconciliation of the beginning and ending reserves for losses and loss adjustment expenses for the three months ended March 31, 2014 and 2013 of the non-life run-off segment (losses incurred and paid are reflected net of reinsurance recoverables):

	Non-Life Run-off
	Three Months Ended March 31,
	2014			2013
Balance as at January 1(1)	$	4,004,513		$	3,650,127
Less: total reinsurance reserves recoverable		1,121,533			876,220
		2,882,980			2,773,907
Net (reduction) increase in ultimate losses and loss adjustment expense liabilities:
Current period		1,432			28,533
Prior periods		(30,614	)		(19,372	)
Total net (reduction) increase in ultimate losses and loss adjustment expense liabilities		(29,182	)		9,161
Net losses paid:
Current period		(532	)		(2,540	)
Prior periods		(87,155	)		(81,134	)
Total net losses paid		(87,687	)		(83,674	)
Effect of exchange rate movement		(1,025	)		(25,952	)
Acquired on purchase of subsidiaries		—			479,982
Assumed business		28,630			42,624
Net balance as at March 31		2,793,716			3,196,048
Plus: total reinsurance reserves recoverable		1,028,162			947,750
Balance as at March 31	$	3,821,878		$	4,143,798

(1) The Company has reclassified outstanding losses and loss adjustment expenses of $11.0 million to policy benefits for life and annuity contracts as at January 1, 2013 to conform to the current period presentation. This amount is associated with Laguna, which now forms part of the Company’s life and annuities segment that was established following the acquisition of the Pavonia companies.

Active Underwriting [Member]

Net (Reduction) Increase in Ultimate Losses and Loss Adjustment Expense Liabilities

The net (reduction) increase in ultimate losses and loss adjustment expense liabilities in the active underwriting segment for the three months ended March 31, 2014 was as follows:

	Active Underwriting
	Three Months Ended March 31, 2014
	Prior Period			Current Period		Total
Net losses paid	$	8,151		$	4,684	$	12,835
Net change in case and LAE reserves		(3,985	)		4,760		775
Net change in IBNR reserves		(8,401	)		11,870		3,469
(Reduction) increase in estimates of net ultimate losses		(4,235	)		21,314		17,079
Reduction in provisions for unallocated loss adjustment expense liabilities		52			—		52
Net (reduction) increase in ultimate losses and loss adjustment expense liabilities	$	(4,183	)	$	21,314	$	17,131

Losses Incurred and Paid Reflected Net of Reinsurance Recoverables

The table below provides a reconciliation of the beginning and ending reserves for losses and loss adjustment expenses of the active underwriting segment for the three months ended March 31, 2014 (losses incurred and paid are reflected net of reinsurance recoverables):

	Active Underwriting
	Three Months Ended March 31, 2014
Balance as at January 1	$	215,392
Less: total reinsurance reserves recoverable		25,055
		190,337
Net increase (reduction) in ultimate losses and loss adjustment expense liabilities:
Current period		21,314
Prior periods		(4,183	)
Total net increase in ultimate losses and loss adjustment expense liabilities		17,131
Net losses paid:
Current period		(4,684	)
Prior periods		(8,151	)
Total net losses paid		(12,835	)
Effect of Exchange rate movement		(7	)
Net balance as at March 31		194,626
Plus: total reinsurance reserves recoverable		25,626
Balance as at March 31	$	220,252