10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2017

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from                      to                     

001-34809

Commission File Number

GLOBAL INDEMNITY LIMITED

(Exact name of registrant as specified in its charter)

Cayman Islands	98-1304287
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

27 HOSPITAL ROAD

GEORGE TOWN, GRAND CAYMAN

KY1-9008

CAYMAN ISLANDS

(Address of principal executive office including zip code)

Registrant’s telephone number, including area code: (345) 949-0100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit and post such files.).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐;	Accelerated filer	☒;
Non-accelerated filer	☐;	Smaller reporting company	☐;
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of October 31, 2017, the registrant had outstanding 13,462,999 A Ordinary Shares and 4,133,366 B Ordinary Shares.

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Consolidated Balance Sheets As of September  30, 2017 (Unaudited) and December 31, 2016		2
	Consolidated Statements of Operations Quarters and Nine Months Ended September 30, 2017 (Unaudited) and September 30, 2016 (Unaudited)		3
	Consolidated Statements of Comprehensive Income Quarters and Nine Months Ended September 30, 2017 (Unaudited) and September 30, 2016 (Unaudited)		4
	Consolidated Statements of Changes in Shareholders’ Equity Nine Months Ended September 30, 2017 (Unaudited) and Year Ended December 31, 2016		5
	Consolidated Statements of Cash Flows Nine Months Ended September  30, 2017 (Unaudited) and September 30, 2016 (Unaudited)		6
	Notes to Consolidated Financial Statements (Unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		37
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		55
Item 4.	Controls and Procedures		56
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings		57
Item 1A.	Risk Factors		57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		57
Item 3.	Defaults Upon Senior Securities		57
Item 4.	Mine Safety Disclosures		57
Item 5.	Other Information		57
Item 6.	Exhibits		58
Signature			59

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

GLOBAL INDEMNITY LIMITED

Consolidated Balance Sheets

(In thousands, except share amounts)

	(Unaudited) September 30, 2017			December 31, 2016
ASSETS
Fixed maturities:
Available for sale, at fair value (amortized cost: $1,355,690 and $1,241,339)	$	1,360,163		$	1,240,031
Equity securities:
Available for sale, at fair value (cost: $124,064 and $119,515)		133,462			120,557
Other invested assets		73,553			66,121
Total investments		1,567,178			1,426,709
Cash and cash equivalents		60,087			75,110
Premiums receivable, net		84,462			92,094
Reinsurance receivables, net		123,769			143,774
Funds held by ceding insurers		40,274			13,114
Receivable for securities sold		785
Deferred federal income taxes		50,549			40,957
Deferred acquisition costs		62,297			57,901
Intangible assets		22,682			23,079
Goodwill		6,521			6,521
Prepaid reinsurance premiums		30,827			42,583
Other assets		81,259			51,104
Total assets	$	2,130,690		$	1,972,946
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses	$	649,726		$	651,042
Unearned premiums		290,760			286,984
Federal income taxes payable		533			219
Ceded balances payable		12,867			14,675
Payable for securities purchased		—			3,717
Contingent commissions		5,552			9,454
Debt		298,935			163,143
Other liabilities		48,404			45,761
Total liabilities	$	1,306,777		$	1,174,995
Commitments and contingencies (Note 10)		—			—
Shareholders’ equity:
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 13,458,465 and 13,436,548 respectively; A ordinary shares outstanding: 13,428,914 and 13,436,548, respectively; B ordinary shares issued and outstanding: 4,133,366 and 4,133,366, respectively		2			2
Additional paid-in capital		433,254			430,283
Accumulated other comprehensive income, net of taxes		10,085			(618	)
Retained earnings		381,731			368,284
A ordinary shares in treasury, at cost: 29,551 and 0 shares, respectively		(1,159	)		—
Total shareholders’ equity		823,913			797,951
Total liabilities and shareholders’ equity	$	2,130,690		$	1,972,946

See accompanying notes to consolidated financial statements.

2

GLOBAL INDEMNITY LIMITED

Consolidated Statements of Operations

(In thousands, except shares and per share data)

	(Unaudited) Quarters Ended September 30,						(Unaudited) Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Gross premiums written	$	126,054		$	133,569		$	393,699		$	429,254
Net premiums written	$	109,045		$	115,051		$	344,348		$	357,233
Net premiums earned	$	108,619		$	119,553		$	328,818		$	358,993
Net investment income		10,134			8,795			27,618			25,103
Net realized investment gains (losses):
Other than temporary impairment losses on investments		(1,020	)		(2,214	)		(1,708	)		(4,481	)
Other net realized investment gains (losses)		57			4,142			858			(4,576	)
Total net realized investment gains (losses)		(963	)		1,928			(850	)		(9,057	)
Other income		2,294			7,852			5,444			9,603
Total revenues		120,084			138,128			361,030			384,642
Losses and Expenses:
Net losses and loss adjustment expenses		82,395			72,162			202,656			215,057
Acquisition costs and other underwriting expenses		45,002			48,129			135,010			148,761
Corporate and other operating expenses		4,630			5,006			11,045			13,064
Interest expense		4,836			2,233			12,065			6,677
Income (loss) before income taxes		(16,779	)		10,598			254			1,083
Income tax expense (benefit)		(7,855	)		1,063			(13,193	)		(10,412	)
Net income (loss)	$	(8,924	)	$	9,535		$	13,447		$	11,495
Per share data:
Net income (loss) (1)
Basic	$	(0.51	)	$	0.55		$	0.78		$	0.67
Diluted	$	(0.51	)	$	0.54		$	0.76		$	0.66
Weighted-average number of shares outstanding
Basic		17,343,292			17,254,843			17,331,840			17,241,040
Diluted		17,343,292			17,540,060			17,684,519			17,515,854

(1) For the quarter ended September 30, 2017, “diluted” loss per share is the same as “basic” loss per share since there was a net loss for the period.

See accompanying notes to consolidated financial statements.

3

GLOBAL INDEMNITY LIMITED

Consolidated Statements of Comprehensive Income

(In thousands)

	(Unaudited) Quarters Ended September 30,						(Unaudited) Nine Months Ended September 30,
	2017			2016			2017			2016
Net income (loss)	$	(8,924	)	$	9,535		$	13,447		$	11,495
Other comprehensive income, net of tax:
Unrealized holding gains		3,386			2,076			10,719			22,081
Portion of other-than-temporary impairment losses recognized in other comprehensive income		(1	)		(3	)		(2	)		(4	)
Reclassification adjustment for (gains) losses included in net income (loss)		441			(781	)		(788	)		(2,474	)
Unrealized foreign currency translation gains (losses)		273			(89	)		774			(402	)
Other comprehensive income, net of tax		4,099			1,203			10,703			19,201
Comprehensive income (loss), net of tax	$	(4,825	)	$	10,738		$	24,150		$	30,696

See accompanying notes to consolidated financial statements.

4

GLOBAL INDEMNITY LIMITED

Consolidated Statements of Changes in Shareholders’ Equity

(In thousands, except share amounts)

	(Unaudited) Nine Months Ended September 30, 2017			Year Ended December 31, 2016
Number of A ordinary shares issued:
Number at beginning of period		13,436,548			16,424,546
Ordinary shares issued under share incentive plans		2,204			115,711
Ordinary shares issued to directors		19,713			35,185
Reduction in treasury shares due to redomestication		—			(3,138,894	)
Number at end of period		13,458,465			13,436,548
Number of B ordinary shares issued:
Number at beginning and end of period		4,133,366			4,133,366
Par value of A ordinary shares:
Balance at beginning of period	$	1		$	2
Reduction in treasury shares due to redomestication		—			(1	)
Balance at end of period	$	1		$	1
Par value of B ordinary shares:
Balance at beginning and end of period	$	1		$	1
Additional paid-in capital:
Balance at beginning of period	$	430,283		$	529,872
Reduction in treasury shares due to redomestication		—			(103,248	)
Share compensation plans		2,971			3,532
Tax benefit on share-based compensation expense		—			127
Balance at end of period	$	433,254		$	430,283
Accumulated other comprehensive income, net of deferred income tax:
Balance at beginning of period	$	(618	)	$	4,078
Other comprehensive income (loss):
Change in unrealized holding gains (losses)		9,932			(4,751	)
Change in other than temporary impairment losses recognized in other comprehensive income		(3	)		(3	)
Unrealized foreign currency translation gains		774			58
Other comprehensive income (loss)		10,703			(4,696	)
Balance at end of period	$	10,085		$	(618	)
Retained earnings:
Balance at beginning of period	$	368,284		$	318,416
Net income		13,447			49,868
Balance at end of period	$	381,731		$	368,284
Number of treasury shares:
Number at beginning of period		—			3,110,795
A ordinary shares purchased		29,551			28,099
Reduction in treasury shares due to redomestication		—			(3,138,894	)
Number at end of period		29,551			—
Treasury shares, at cost:
Balance at beginning of period	$	—		$	(102,443	)
A ordinary shares purchased, at cost		(1,159	)		(805	)
Reduction in treasury shares due to redomestication		—			103,248
Balance at end of period	$	(1,159	)		—
Total shareholders’ equity	$	823,913		$	797,951

See accompanying notes to consolidated financial statements.

5

GLOBAL INDEMNITY LIMITED

Consolidated Statements of Cash Flows

(In thousands)

	(Unaudited) Nine Months Ended September 30,
	2017			2016
Cash flows from operating activities:
Net income	$	13,447		$	11,495
Adjustments to reconcile net income to net cash used for operating activities:
Amortization and depreciation		4,813			4,757
Amortization of debt issuance costs		166			92
Restricted stock and stock option expense		2,971			2,499
Deferred federal income taxes		(13,611	)		(10,847	)
Amortization of bond premium and discount, net		6,137			7,398
Net realized investment gains		850			9,057
Gain on disposition of subsidiary		—			(6,872	)
Equity in the earnings of equity method limited liability investments		(2,423	)		(3,749	)
Changes in:
Premiums receivable, net		7,632			2,776
Reinsurance receivables, net		20,005			7,142
Funds held by ceding insurers		(26,576	)		(3,319	)
Unpaid losses and loss adjustment expenses		(1,316	)		(15,665	)
Unearned premiums		3,776			(7,724	)
Ceded balances payable		(1,808	)		7,129
Other assets and liabilities, net		(31,442	)		(19,348	)
Contingent commissions		(3,902	)		(1,677	)
Federal income tax receivable/payable		314			172
Deferred acquisition costs, net		(4,396	)		1,376
Prepaid reinsurance premiums		11,756			5,962
Net cash used for operating activities		(13,607	)		(9,346	)
Cash flows from investing activities:
Proceeds from sale of fixed maturities		742,229			279,659
Proceeds from sale of equity securities		24,483			34,976
Proceeds from maturity of fixed maturities		112,620			61,437
Proceeds from limited partnerships		12,990			6,350
Proceeds from disposition of subsidiary, net of cash and cash equivalents disposed of $1,269		—			16,937
Amounts paid in connection with derivatives		(2,500	)		(11,527	)
Purchases of fixed maturities		(979,074	)		(344,514	)
Purchases of equity securities		(28,631	)		(34,945	)
Purchases of other invested assets		(18,000	)		(2,643	)
Net cash provided by (used for) investing activities		(135,883	)		5,730
Cash flows from financing activities:
Net borrowings under margin borrowing facility		9,872			1,050
Proceeds from issuance of subordinated notes		130,000			—
Debt issuance cost		(4,246	)		(14	)
Tax benefit on share-based compensation expense		—			127
Purchase of A ordinary shares		(1,159	)		(805	)
Net cash provided by financing activities		134,467			358
Net change in cash and cash equivalents		(15,023	)		(3,258	)
Cash and cash equivalents at beginning of period		75,110			67,037
Cash and cash equivalents at end of period	$	60,087		$	63,779

See accompanying notes to consolidated financial statements.

6

GLOBAL INDEMNITY LIMITED

1. Principles of Consolidation and Basis of Presentation

Global Indemnity Limited (“Global Indemnity” or “the Company”), incorporated on February 9, 2016, is domiciled in the Cayman Islands. On November 7, 2016, Global Indemnity replaced Global Indemnity plc as the ultimate parent company as a result of a redomestication transaction. The Company’s A ordinary shares are publicly traded on the NASDAQ Global Select Market under the ticker symbol GBLI. Please see Note 2 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2016 Annual Report on Form 10-K for more information on the Company’s redomestication.

The Company manages its business through three business segments: Commercial Lines, Personal Lines, and Reinsurance Operations. The Company’s Commercial Lines offers specialty property and casualty insurance products in the excess and surplus lines marketplace. The Company manages its Commercial Lines by differentiating them into four product classifications: Penn-America, which markets property and general liability products to small commercial businesses through a select network of wholesale general agents with specific binding authority; United National, which markets insurance products for targeted insured segments, including specialty products, such as property, general liability, and professional lines through program administrators with specific binding authority; Diamond State, which markets property, casualty, and professional lines products, which are developed by the Company’s underwriting department by individuals with expertise in those lines of business, through wholesale brokers and also markets through program administrators having specific binding authority; and Vacant Express, which insures dwellings which are currently vacant, undergoing renovation, or are under construction and is distributed through aggregators, brokers, and retail agents. These product classifications comprise the Company’s Commercial Lines business segment and are not considered individual business segments because each product has similar economic characteristics, distribution, and coverage. The Company’s Personal Lines segment offers specialty personal lines and agricultural coverage through general and specialty agents with specific binding authority on an admitted basis. Collectively, the Company’s U.S. insurance subsidiaries are licensed in all 50 states and the District of Columbia. The Commercial Lines and Personal Lines segments comprise the Company’s U.S. Insurance Operations (‘Insurance Operations”). The Company’s Reinsurance Operations consist solely of the operations of its Bermuda-based wholly-owned subsidiary, Global Indemnity Reinsurance Company, Ltd. (“Global Indemnity Reinsurance”). Global Indemnity Reinsurance is a treaty reinsurer of specialty property and casualty insurance and reinsurance companies. The Company’s Reinsurance Operations segment provides reinsurance solutions through brokers and primary writers including insurance and reinsurance companies.

During the 1^st quarter of 2017, the Company re-evaluated its Commercial Lines and Personal Lines segments and determined that certain portions of business will be managed, operated and reported by including them in the other segment. As a result, the composition of the Company’s reportable segments changed slightly. Premium that is written through a wholly owned agency that mainly sells to individuals, which was previously included as part of the Commercial Lines segment, is now included within the Personal Lines segment. In addition, one of the small commercial programs written by American Reliable Insurance Company (“American Reliable”), which was previously included within the Personal Lines segment, is now aggregated within the Commercial Lines segment. Accordingly, the segment results for the quarter and nine months ended September 30, 2016 have been revised to reflect these changes. See Note 13 for additional information regarding segments.

The interim consolidated financial statements are unaudited, but have been prepared in conformity with United States of America generally accepted accounting principles (“GAAP”), which differs in certain respects from those principles followed in reports to insurance regulatory authorities. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The unaudited consolidated financial statements include all adjustments that are, in the opinion of management, of a normal recurring nature and are necessary for a fair statement of results for the interim periods. Results of operations for the quarters and nine months ended September 30, 2017 and 2016 are not necessarily indicative of the results of a full year. The accompanying notes to the unaudited consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in the Company’s 2016 Annual Report on Form 10-K.

The consolidated financial statements include the accounts of Global Indemnity and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

7

GLOBAL INDEMNITY LIMITED

2. Investments

The amortized cost and estimated fair value of investments were as follows as of September 30, 2017 and December 31, 2016:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Other than temporary impairments recognized in AOCI (1)
As of September 30, 2017
Fixed maturities:
U.S. treasury and agency obligations	$	117,596	$	665	$	(495	)	$	117,766	$	—
Obligations of states and political subdivisions		116,508		991		(256	)		117,243		—
Mortgage-backed securities		146,800		650		(562	)		146,888		—
Asset-backed securities		209,028		634		(142	)		209,520		(1	)
Commercial mortgage-backed securities		139,740		94		(741	)		139,093		—
Corporate bonds		485,580		3,851		(838	)		488,593		—
Foreign corporate bonds		140,438		810		(188	)		141,060		—
Total fixed maturities		1,355,690		7,695		(3,222	)		1,360,163		(1	)
Common stock		124,064		13,148		(3,750	)		133,462		—
Other invested assets		73,553		—		—			73,553		—
Total	$	1,553,307	$	20,843	$	(6,972	)	$	1,567,178	$	(1	)

(1) Represents the total amount of other than temporary impairment losses relating to factors other than credit losses recognized in accumulated other comprehensive income (“AOCI”).

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Other than temporary impairments recognized in AOCI (1)
As of December 31, 2016
Fixed maturities:
U.S. treasury and agency obligations	$	71,517	$	763	$	(233	)	$	72,047	$	—
Obligations of states and political subdivisions		155,402		1,423		(379	)		156,446		—
Mortgage-backed securities		88,131		895		(558	)		88,468		—
Asset-backed securities		233,890		684		(583	)		233,991		(4	)
Commercial mortgage-backed securities		184,821		118		(1,747	)		183,192		—
Corporate bonds		381,209		1,666		(2,848	)		380,027		—
Foreign corporate bonds		126,369		164		(673	)		125,860		—
Total fixed maturities		1,241,339		5,713		(7,021	)		1,240,031		(4	)
Common stock		119,515		3,445		(2,403	)		120,557		—
Other invested assets		66,121		—		—			66,121		—
Total	$	1,426,975	$	9,158	$	(9,424	)	$	1,426,709	$	(4	)

(1) Represents the total amount of other than temporary impairment losses relating to factors other than credit losses recognized in accumulated other comprehensive income (“AOCI”).

Excluding U.S. treasuries and agency bonds, the Company did not hold any debt or equity investments in a single issuer that was in excess of 4% and 5% of shareholders’ equity at September 30, 2017 and December 31, 2016, respectively.

8

GLOBAL INDEMNITY LIMITED

The amortized cost and estimated fair value of the Company’s fixed maturities portfolio classified as available for sale at September 30, 2017, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	86,480	$	86,515
Due in one year through five years		493,819		495,425
Due in five years through ten years		273,515		276,346
Due in ten years through fifteen years		592		598
Due after fifteen years		5,716		5,778
Mortgage-backed securities		146,800		146,888
Asset-backed securities		209,028		209,520
Commercial mortgage-backed securities		139,740		139,093
Total	$	1,355,690	$	1,360,163

The following table contains an analysis of the Company’s securities with gross unrealized losses, categorized by the period that the securities were in a continuous loss position as of September 30, 2017:

	Less than 12 months					12 months or longer (1)					Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities:
U.S. treasury and agency obligations	$	96,336	$	(489	)	$	594	$	(6	)	$	96,930	$	(495	)
Obligations of states and political subdivisions		27,806		(199	)		8,629		(57	)		36,435		(256	)
Mortgage-backed securities		105,162		(554	)		297		(8	)		105,459		(562	)
Asset-backed securities		41,719		(142	)		—		—			41,719		(142	)
Commercial mortgage-backed securities		97,191		(639	)		6,727		(102	)		103,918		(741	)
Corporate bonds		125,550		(600	)		17,493		(238	)		143,043		(838	)
Foreign corporate bonds		40,145		(87	)		10,446		(101	)		50,591		(188	)
Total fixed maturities		533,909		(2,710	)		44,186		(512	)		578,095		(3,222	)
Common stock		29,150		(3,750	)		—		—			29,150		(3,750	)
Total	$	563,059	$	(6,460	)	$	44,186	$	(512	)	$	607,245	$	(6,972	)

(1) Fixed maturities in a gross unrealized loss position for twelve months or longer are primarily comprised of non-credit losses on investment grade securities where management does not intend to sell, and it is more likely than not that the Company will not be forced to sell the security before recovery. The Company has analyzed these securities and has determined that they are not other than temporarily impaired.

9

GLOBAL INDEMNITY LIMITED

The following table contains an analysis of the Company’s securities with gross unrealized losses, categorized by the period that the securities were in a continuous loss position as of December 31, 2016:

	Less than 12 months					12 months or longer (1)					Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities:
U.S. treasury and agency obligations	$	39,570	$	(233	)	$	—	$	—		$	39,570	$	(233	)
Obligations of states and political subdivisions		46,861		(369	)		670		(10	)		47,531		(379	)
Mortgage-backed securities		52,780		(541	)		298		(17	)		53,078		(558	)
Asset-backed securities		62,737		(493	)		23,937		(90	)		86,674		(583	)
Commercial mortgage-backed securities		94,366		(1,090	)		69,747		(657	)		164,113		(1,747	)
Corporate bonds		171,621		(2,731	)		9,218		(117	)		180,839		(2,848	)
Foreign corporate bonds		76,036		(673	)		—		—			76,036		(673	)
Total fixed maturities		543,971		(6,130	)		103,870		(891	)		647,841		(7,021	)
Common stock		57,439		(2,403	)		—		—			57,439		(2,403	)
Total	$	601,410	$	(8,533	)	$	103,870	$	(891	)	$	705,280	$	(9,424	)

(1) Fixed maturities in a gross unrealized loss position for twelve months or longer are primarily comprised of non-credit losses on investment grade securities where management does not intend to sell, and it is more likely than not that the Company will not be forced to sell the security before recovery. The Company has analyzed these securities and has determined that they are not other than temporarily impaired.

The Company regularly performs various analytical valuation procedures with respect to its investments, including reviewing each fixed maturity security in an unrealized loss position to assess whether the security has a credit loss. Specifically, the Company considers credit rating, market price, and issuer specific financial information, among other factors, to assess the likelihood of collection of all principal and interest as contractually due. Securities for which the Company determines that a credit loss is likely are subjected to further analysis through discounted cash flow testing to estimate the credit loss to be recognized in earnings, if any. The specific methodologies and significant assumptions used by asset class are discussed below. Upon identification of such securities and periodically thereafter, a detailed review is performed to determine whether the decline is considered other than temporary. This review includes an analysis of several factors, including but not limited to, the credit ratings and cash flows of the securities and the magnitude and length of time that the fair value of such securities is below cost.

For fixed maturities, the factors considered in reaching the conclusion that a decline below cost is other than temporary include, among others, whether:

(1) the issuer is in financial distress;

(2) the investment is secured;

(3) a significant credit rating action occurred;

(4) scheduled interest payments were delayed or missed;

(5) changes in laws or regulations have affected an issuer or industry;

(6) the investment has an unrealized loss and was identified by the Company’s investment manager as an investment to be sold before recovery or maturity; and

(7) the investment failed cash flow projection testing to determine if anticipated principal and interest payments will be realized.

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According to accounting guidance for debt securities in an unrealized loss position, the Company is required to assess whether it has the intent to sell the debt security or more likely than not will be required to sell the debt security before the anticipated recovery. If either of these conditions is met the Company must recognize an other than temporary impairment with the entire unrealized loss being recorded through earnings. For debt securities in an unrealized loss position not meeting these conditions, the Company assesses whether the impairment of a security is other than temporary. If the impairment is deemed to be other than temporary, the Company must separate the other than temporary impairment into two components: the amount representing the credit loss and the amount related to all other factors, such as changes in interest rates. The credit loss represents the portion of the amortized book value in excess of the net present value of the projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. The credit loss component of the other than temporary impairment is recorded through earnings, whereas the amount relating to factors other than credit losses is recorded in other comprehensive income, net of taxes.

For equity securities, management carefully reviews all securities with unrealized losses to determine if a security should be impaired and further focuses on securities that have either:

(1) persisted with unrealized losses for more than twelve consecutive months or

(2) the value of the investment has been 20% or more below cost for six continuous months or more.

The amount of any write-down, including those that are deemed to be other than temporary, is included in earnings as a realized loss in the period in which the impairment arose.

The following is a description, by asset type, of the methodology and significant inputs that the Company used to measure the amount of credit loss recognized in earnings, if any:

U.S. treasury and agency obligations – As of September 30, 2017, gross unrealized losses related to U.S. treasury and agency obligations were $0.495 million. Of this amount, $0.006 million have been in an unrealized loss position for 12 months or greater and are rated AA+. Macroeconomic and market analysis is conducted in evaluating these securities. Consideration is given to the interest rate environment, duration and yield curve management of the portfolio, sector allocation and security selection.

Obligations of states and political subdivisions – As of September 30, 2017, gross unrealized losses related to obligations of states and political subdivisions were $0.256 million. Of this amount, $0.057 million have been in an unrealized loss position for twelve months or greater and are rated investment grade. All factors that influence performance of the municipal bond market are considered in evaluating these securities. The aforementioned factors include investor expectations, supply and demand patterns, and current versus historical yield and spread relationships. The analysis relies on the output of fixed income credit analysts, as well as dedicated municipal bond analysts who perform extensive in-house fundamental analysis on each issuer, regardless of their rating by the major agencies.

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Mortgage-backed securities (“MBS”) – As of September 30, 2017, gross unrealized losses related to mortgage-backed securities were $0.562 million. Of this amount, $0.008 million have been in an unrealized loss position for twelve months or greater. 75.9% of the unrealized losses for twelve months or greater are related to securities rated AA+. Mortgage-backed securities are modeled to project principal losses under downside, base, and upside scenarios for the economy and home prices. The primary assumption that drives the security and loan level modeling is the Home Price Index (“HPI”) projection. These forecasts incorporate not just national macro-economic trends, but also regional impacts to arrive at the most granular and accurate projections. These assumptions are incorporated into the model as a basis to generate delinquency probabilities, default curves, loss severity curves, and voluntary prepayment curves at the loan level within each deal. The model utilizes HPI-adjusted current LTV, payment history, loan terms, loan modification history, and borrower characteristics as inputs to generate expected cash flows and principal loss for each bond under various scenarios.

Asset-backed securities (“ABS”) - As of September 30, 2017, gross unrealized losses related to asset backed securities were $0.142 million. All unrealized losses have been in an unrealized loss position for less than 12 months. The weighted average credit enhancement for the Company’s asset backed portfolio is 22.5. This represents the percentage of pool losses that can occur before an asset backed security will incur its first dollar of principal losses. Every ABS transaction is analyzed on a stand-alone basis. This analysis involves a thorough review of the collateral, prepayment, and structural risk in each transaction. Additionally, the analysis includes an in-depth credit analysis of the originator and servicer of the collateral. The analysis projects an expected loss for a deal given a set of assumptions specific to the asset type. These assumptions are used to calculate at what level of losses the deal will incur its first dollar of principal loss. The major assumptions used to calculate this ratio are loss severities, recovery lags, and no advances on principal and interest.

Commercial mortgage-backed securities (“CMBS”) - As of September 30, 2017, gross unrealized losses related to the CMBS portfolio were $0.741 million. Of this amount, $0.102 million have been in an unrealized loss position for twelve months or greater and are rated AA+ or better. The weighted average credit enhancement for the Company’s CMBS portfolio is 25.6. This represents the percentage of pool losses that can occur before a mortgage-backed security will incur its first dollar of principal loss. For the Company’s CMBS portfolio, a loan level analysis is utilized where every underlying CMBS loan is re-underwritten based on a set of assumptions reflecting expectations for the future path of the economy. Each loan is analyzed over time using a series of tests to determine if a credit event will occur during the life of the loan. Inherent in this process are several economic scenarios and their corresponding rent/vacancy and capital market states. The five primary credit events that frame the analysis include loan modifications, term default, balloon default, extension, and ability to pay off at balloon. The resulting output is the expected loss adjusted cash flows for each bond under the base case and distressed scenarios.

Corporate bonds - As of September 30, 2017, gross unrealized losses related to corporate bonds were $0.838 million. Of this amount, $0.238 million have been in an unrealized loss position for twelve months or greater and are rated A- or better. The analysis for this asset class includes maintaining detailed financial models that include a projection of each issuer’s future financial performance, including prospective debt servicing capabilities, capital structure composition, and the value of the collateral. The analysis incorporates the macroeconomic environment, industry conditions in which the issuer operates, the issuer’s current competitive position, its vulnerability to changes in the competitive and regulatory environment, issuer liquidity, issuer commitment to bondholders, issuer creditworthiness, and asset protection. Part of the process also includes running downside scenarios to evaluate the expected likelihood of default as well as potential losses in the event of default.

Foreign bonds – As of September 30, 2017, gross unrealized losses related to foreign bonds were $0.188 million. Of this amount, $0.101 million have been in an unrealized loss position for twelve months or greater and are rated investment grade. For this asset class, detailed financial models are maintained that include a projection of each issuer’s future financial performance, including prospective debt servicing capabilities, capital structure composition, and the value of the collateral. The analysis incorporates the macroeconomic environment, industry conditions in which the issuer operates, the issuer’s current competitive position, its vulnerability to changes in the competitive and regulatory environment, issuer liquidity, issuer commitment to bondholders, issuer creditworthiness, and asset protection. Part of the process also includes running downside scenarios to evaluate the expected likelihood of default as well as potential losses in the event of default.

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Common stock – As of September 30, 2017, gross unrealized losses related to common stock were $3.750 million. All unrealized losses have been in an unrealized loss position for less than twelve months. To determine if an other-than-temporary impairment of an equity security has occurred, the Company considers, among other things, the severity and duration of the decline in fair value of the equity security. The Company also examines other factors to determine if the equity security could recover its value in a reasonable period of time.

The Company recorded the following other than temporary impairments (“OTTI”) on its investment portfolio for the quarters and nine months ended September 30, 2017 and 2016:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Fixed maturities:
OTTI losses, gross	$	—		$	(108	)	$	(31	)	$	(201	)
Portion of loss recognized in other comprehensive income (pre-tax)		—			—			—			—
Net impairment losses on fixed maturities recognized in earnings		—			(108	)		(31	)		(201	)
Equity securities		(1,020	)		(2,106	)		(1,677	)		(4,280	)
Total	$	(1,020	)	$	(2,214	)	$	(1,708	)	$	(4,481	)

The following table is an analysis of the credit losses recognized in earnings on fixed maturities held by the Company for the quarters and nine months ended September 30, 2017 and 2016 for which a portion of the OTTI loss was recognized in other comprehensive income.

	Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands)	2017			2016		2017			2016
Balance at beginning of period	$	16		$	31	$	31		$	31
Additions where no OTTI was previously recorded		—			—		—			—
Additions where an OTTI was previously recorded		—			—		—			—
Reductions for securities for which the company intends to sell or more likely than not will be required to sell before recovery		—			—		—			—
Reductions reflecting increases in expected cash flows to be collected		—			—		—			—
Reductions for securities sold during the period		(3	)		—		(18	)		—
Balance at end of period	$	13		$	31	$	13		$	31

Accumulated Other Comprehensive Income, Net of Tax

Accumulated other comprehensive income, net of tax, as of September 30, 2017 and December 31, 2016 was as follows:

(Dollars in thousands)	September 30, 2017			December 31, 2016
Net unrealized gains (losses)from:
Fixed maturities	$	4,473		$	(1,308	)
Common stock		9,398			1,042
Foreign currency fluctuations		584			—
Deferred taxes		(4,370	)		(352	)
Accumulated other comprehensive income, net of tax	$	10,085		$	(618	)

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The following tables present the changes in accumulated other comprehensive income, net of tax, by component for the quarters and nine months ended September 30, 2017 and 2016:

Quarter Ended September 30, 2017 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax		Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	5,549	$	437		$	5,986
Other comprehensive income (loss) before reclassification		3,173		485			3,658
Amounts reclassified from accumulated other comprehensive income (loss)		653		(212	)		441
Other comprehensive income (loss)		3,826		273			4,099
Ending balance	$	9,375	$	710		$	10,085

Quarter Ended September 30, 2016 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax			Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	22,511		$	(435	)	$	22,076
Other comprehensive income (loss) before reclassification		2,073			(89	)		1,984
Amounts reclassified from accumulated other Comprehensive loss		(781	)		—			(781	)
Other comprehensive income (loss)		1,292			(89	)		1,203
Ending balance	$	23,803		$	(524	)	$	23,279

Nine Months Ended September 30, 2017 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax			Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	(554	)	$	(64	)	$	(618	)
Other comprehensive income (loss) before reclassification		10,498			993			11,491
Amounts reclassified from accumulated other comprehensive income (loss)		(569	)		(219	)		(788	)
Other comprehensive income (loss)		9,929			774			10,703
Ending balance	$	9,375		$	710		$	10,085

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Nine Months Ended September 30, 2016 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax			Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	4,200		$	(122	)	$	4,078
Other comprehensive income (loss) before reclassification		22,075			(400	)		21,675
Amounts reclassified from accumulated other comprehensive loss		(2,472	)		(2	)		(2,474	)
Other comprehensive income (loss)		19,603			(402	)		19,201
Ending balance	$	23,803		$	(524	)	$	23,279

The reclassifications out of accumulated other comprehensive income for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

(Dollars in thousands)		Amounts Reclassified from Accumulated Other Comprehensive Income Quarters Ended September 30,
Details about Accumulated Other Comprehensive Income Components	Affected Line Item in the Consolidated Statements of Operations	2017			2016
Unrealized gains and losses on available for sale securities	Other net realized investment gains	$	(97	)	$	(3,384	)
	Other than temporary impairment losses on investments		1,020			2,214
	Total before tax		923			(1,170	)
	Income tax expense		(270	)		389
	Unrealized gains and losses on available for sale securities, net of tax	$	653		$	(781	)
Foreign currency items	Other net realized investment gains	$	(326	)	$	—
	Income tax expense		114			—
	Foreign currency items, net of tax	$	(212	)	$	—
Total reclassifications	Total reclassifications, net of tax	$	441		$	(781	)

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(Dollars in thousands)		Amounts Reclassified from Accumulated Other Comprehensive Income Nine Months Ended September 30,
Details about Accumulated Other Comprehensive Income Components	Affected Line Item in the Consolidated Statements of Operations	2017			2016
Unrealized gains and losses on available for sale securities	Other net realized investment gains	$	(2,538	)	$	(8,214	)
	Other than temporary impairment losses on investments		1,708			4,481
	Total before tax		(830	)		(3,733	)
	Income tax expense		261			1,261
	Unrealized gains and losses on available for sale securities, net of tax	$	(569	)	$	(2,472	)
Foreign currency items	Other net realized investment gains	$	(336	)	$	(4	)
	Income tax expense		117			2
	Foreign currency items, net of tax	$	(219	)	$	(2	)
Total reclassifications	Total reclassifications, net of tax	$	(788	)	$	(2,474	)

Net Realized Investment Gains (Losses)

The components of net realized investment gains (losses) for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Fixed maturities:
Gross realized gains	$	434		$	434		$	3,122		$	1,252
Gross realized losses		(300	)		(147	)		(2,358	)		(291	)
Net realized gains		134			287			764			961
Common stock:
Gross realized gains		917			3,345			2,711			8,068
Gross realized losses		(1,648	)		(2,462	)		(2,309	)		(5,292	)
Net realized gains		(731	)		883			402			2,776
Derivatives:
Gross realized gains		486			1,955			822			—
Gross realized losses		(852	)		(1,197	)		(2,838	)		(12,794	)
Net realized gains (losses) (1)		(366	)		758			(2,016	)		(12,794	)
Total net realized investment gains (losses)	$	(963	)	$	1,928		$	(850	)	$	(9,057	)

(1) Includes periodic net interest settlements related to the derivatives of $0.9 million and $1.2 million for the quarters ended September 30, 2017 and 2016, respectively, and $2.8 million and $3.7 million for the nine months ended September 30, 2017 and 2016, respectively.

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The proceeds from sales and redemptions of available-for-sale securities resulting in net realized investment gains for the nine months ended September 30, 2017 and 2016 were as follows:

	Nine Months Ended September 30,
(Dollars in thousands)	2017		2016
Fixed maturities	$	742,229	$	279,659
Equity securities		24,483		34,976

Net Investment Income

The sources of net investment income for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Fixed maturities	$	9,020		$	8,131		$	24,032		$	22,729
Equity securities		906			698			2,740			2,647
Cash and cash equivalents		226			44			621			111
Other invested assets		655			909			2,423			3,806
Total investment income		10,807			9,782			29,816			29,293
Investment expense (1)		(673	)		(987	)		(2,198	)		(4,190	)
Net investment income	$	10,134		$	8,795		$	27,618		$	25,103

(1) Investment expense for the nine months ended September 30, 2016 includes $1.5 million in upfront fees necessary to enter into a new investment. See Note 9 for additional information on the Company’s $40 million commitment related to this investment.

The Company’s total investment return on a pre-tax basis for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Net investment income	$	10,134		$	8,795		$	27,618		$	25,103
Net realized investment gains (losses)		(963	)		1,928			(850	)		(9,057	)
Change in unrealized holding gains and losses		5,631			2,061			14,721			25,398
Net realized and unrealized investment returns		4,668			3,989			13,871			16,341
Total investment return	$	14,802		$	12,784		$	41,489		$	41,444
Total investment return % (1)		0.9	%		0.8	%		2.6	%		2.7	%
Average investment portfolio	$	1,629,989		$	1,530,599		$	1,587,645		$	1,522,247

(1) Not annualized.

Insurance Enhanced Asset Backed and Credit Securities

As of September 30, 2017, the Company held insurance enhanced asset-backed, commercial mortgage-backed, and credit securities with a market value of approximately $37.9 million. Approximately $4.2 million of these securities were tax free municipal bonds, which represented approximately 0.3% of the Company’s total cash and invested assets, net of payable/receivable for securities purchased and sold. These securities had an average rating of “AA-.” Approximately $1.5 million of these bonds are pre-refunded with U.S. treasury securities. None of the remaining $2.7 million of tax free insurance enhanced municipal bonds, would have carried a lower credit rating had they not been insured.

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A summary of the Company’s insurance enhanced municipal bonds that are backed by financial guarantors, including the pre-refunded bonds that are escrowed in U.S. government obligations, as of September 30, 2017, is as follows:

(Dollars in thousands) Financial Guarantor	Total		Pre-refunded Securities		Government Guaranteed Securities		Exposure Net of Pre-refunded &  Government Guaranteed Securities
Ambac Financial Group	$	1,029	$	—	$	—	$	1,029
Municipal Bond Insurance Association		1,191		—		—		1,191
Gov’t National Housing Association		440		—		440		—
Total backed by financial guarantors		2,660		—		440		2,220
Other credit enhanced municipal bonds		1,523		1,523		—		—
Total	$	4,183	$	1,523	$	440	$	2,220

In addition to the tax-free municipal bonds, the Company held $33.7 million of insurance enhanced bonds, which represented approximately 2.1% of the Company’s total invested assets, net of receivable/payable for securities purchased and sold. The insurance enhanced bonds are comprised of $23.2 million of taxable municipal bonds, $10.4 million of commercial mortgage-backed securities, and $0.1 million of asset-backed securities. The financial guarantors of the Company’s $33.7 million of insurance enhanced asset-backed, commercial-mortgage-backed, and taxable municipal securities include Municipal Bond Insurance Association ($7.0 million), Assured Guaranty Corporation ($16.3 million), and Federal Home Loan Mortgage Corporation ($10.4 million).

The Company had no direct investments in the entities that have provided financial guarantees or other credit support to any security held by the Company at September 30, 2017.

Bonds Held on Deposit

Certain cash balances, cash equivalents, equity securities and bonds available for sale were deposited with various governmental authorities in accordance with statutory requirements, were held as collateral pursuant to borrowing arrangements, or were held in trust pursuant to intercompany reinsurance agreements. The fair values were as follows as of September 30, 2017 and December 31, 2016:

	Estimated Fair Value
(Dollars in thousands)	September 30, 2017		December 31, 2016
On deposit with governmental authorities	$	28,489	$	29,079
Intercompany trusts held for the benefit of U.S. policyholders		335,444		351,002
Held in trust pursuant to third party requirements		80,820		88,178
Letter of credit held for third party requirements		4,028		4,871
Securities held as collateral for borrowing arrangements (1)		93,736		85,939
Total	$	542,517	$	559,069

(1) Amount required to collateralize margin borrowing facility.

Variable Interest Entities

A Variable Interest Entity (VIE) refers to an investment in which an investor holds a controlling interest that is not based on the majority of voting rights. Under the VIE model, the party that has the power to exercise significant management influence and maintain a controlling financial interest in the entity’s economics is said to be the primary beneficiary, and is required to consolidate the entity within their results. Other entities that participate in a VIE, for which their financial interests fluctuate with changes in the fair value of the investment entity’s net assets but do not have significant management influence and the ability to direct the VIE’s significant economic activities are said to have a variable interest in the VIE but do not consolidate the VIE in their financial results.

The Company has variable interests in three VIE’s for which it is not the primary beneficiary. These investments are accounted for under the equity method of accounting as their ownership interest exceeds 3% of their respective investments. The fair value of one of the Company’s VIE’s, which invests in distressed securities and assets, was $29.8 million and $32.9 million as of September 30, 2017

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and December 31, 2016, respectively. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $44.0 million at September 30, 2017 and $48.6 million at December 31, 2016. The fair value of a second VIE that provides financing for middle market companies, was $26.8 million at September 30, 2017 and $33.2 million at December 31, 2016. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $38.6 million at September 30, 2017 and $42.3 million at December 31, 2016. During the 2^nd quarter of 2017, the Company invested in a new limited partnership that also invests in distressed securities and assets and is considered a VIE. The Company’s investment in this partnership has a fair value of $16.9 million as of September 30, 2017. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $50.4 million at September 30, 2017. The Company’s investment in VIEs is included in other invested assets on the consolidated balance sheet with changes in fair value recorded in the consolidated statements of operations.

3. Derivative Instruments

Interest rate swaps are used by the Company primarily to reduce risks from changes in interest rates. Under the terms of the interest rate swaps, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount.

The Company accounts for the interest rate swaps as non-hedge instruments and recognizes the fair value of the interest rate swaps in other assets or other liabilities on the consolidated balance sheets with the changes in fair value recognized as net realized investment gains (losses) in the consolidated statements of operations. The Company is ultimately responsible for the valuation of the interest rate swaps. To aid in determining the estimated fair value of the interest rate swaps, the Company relies on the forward interest rate curve and information obtained from a third party financial institution.

The following table summarizes information on the location and the gross amount of the derivatives’ fair value on the consolidated balance sheets as of September 30, 2017 and December 31, 2016:

(Dollars in thousands)		September 30, 2017					December 31, 2016
Derivatives Not Designated as Hedging Instruments under ASC  815	Balance Sheet Location	Notional Amount		Fair Value			Notional Amount		Fair Value
Interest rate swap agreements	Other liabilities	$	200,000	$	(10,702	)	$	200,000	$	(11,524	)

The following table summarizes the net gain (loss) included in the consolidated statements of operations for changes in the fair value of the derivatives and the periodic net interest settlements under the derivatives for the quarters and nine months ended September 30, 2017 and 2016:

		Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands)	Consolidated Statement of Operations Line	2017			2016		2017			2016
Interest rate swap agreements	Net realized investment gains (losses)	$	(366	)	$	758	$	(2,016	)	$	(12,794	)

As of September 30, 2017 and December 31, 2016, the Company is due $3.3 million and $5.3 million, respectively, for funds it needed to post to execute the swap transaction and $14.2 million and $12.6 million, respectively, for margin calls made in connection with the interest rate swaps. These amounts are included in other assets on the consolidated balance sheets.

4. Fair Value Measurements

The accounting standards related to fair value measurements define fair value, establish a framework for measuring fair value, outline a fair value hierarchy based on inputs used to measure fair value, and enhance disclosure requirements for fair value measurements. These standards do not change existing guidance as to whether or not an instrument is carried at fair value. The Company has determined that its fair value measurements are in accordance with the requirements of these accounting standards.

The Company’s invested assets and derivative instruments are carried at their fair value and are categorized based upon a fair value hierarchy:

• Level 1 - inputs utilize quoted prices (unadjusted) in active markets for identical assets that the Company has the ability to access at the measurement date.

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• Level 2 - inputs utilize other than quoted prices included in Level 1 that are observable for similar assets, either directly or indirectly.

• Level 3 - inputs are unobservable for the asset, and include situations where there is little, if any, market activity for the asset.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset.

The following table presents information about the Company’s invested assets and derivative instruments measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

As of September 30, 2017	Fair Value Measurements
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
U.S. treasury and agency obligations	$	117,766	$	—	$	—	$	117,766
Obligations of states and political subdivisions		—		117,243		—		117,243
Mortgage-backed securities		—		146,888		—		146,888
Commercial mortgage-backed securities		—		139,093		—		139,093
Asset-backed securities		—		209,520		—		209,520
Corporate bonds		—		488,593		—		488,593
Foreign corporate bonds		—		141,060		—		141,060
Total fixed maturities		117,766		1,242,397		—		1,360,163
Common stock		133,462		—		—		133,462
Total assets measured at fair value (1)	$	251,228	$	1,242,397	$	—	$	1,493,625
Liabilities:
Derivative instruments	$	—	$	10,702	$	—	$	10,702
Total liabilities measured at fair value	$	—	$	10,702	$	—	$	10,702

(1) Excluded from the table above are limited partnerships of $73.6 million at September 30, 2017 whose fair value is based on net asset value as a practical expedient.

As of December 31, 2016	Fair Value Measurements
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
U.S. treasury and agency obligations	$	72,047	$	—	$	—	$	72,047
Obligations of states and political subdivisions		—		156,446		—		156,446
Mortgage-backed securities		—		88,468		—		88,468
Commercial mortgage-backed securities		—		183,192		—		183,192
Asset-backed securities		—		233,991		—		233,991
Corporate bonds		—		380,027		—		380,027
Foreign corporate bonds		—		125,860		—		125,860
Total fixed maturities		72,047		1,167,984		—		1,240,031
Common stock		120,557		—		—		120,557
Total assets measured at fair value (1)	$	192,604	$	1,167,984	$	—	$	1,360,588
Liabilities:
Derivative instruments	$	—	$	11,524	$	—	$	11,524
Total liabilities measured at fair value	$	—	$	11,524	$	—	$	11,524

(1) Excluded from the table above are limited partnerships of $66.1 million at December 31, 2016 whose fair value is based on net asset value as a practical expedient.

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The securities classified as Level 1 in the above table consist of U.S. Treasuries and equity securities actively traded on an exchange.

The securities classified as Level 2 in the above table consist primarily of fixed maturity securities and derivative instruments. Based on the typical trading volumes and the lack of quoted market prices for fixed maturities, security prices are derived through recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. If there are no recent reported trades, matrix or model processes are used to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Included in the pricing of asset-backed securities, collateralized mortgage obligations, and mortgage-backed securities are estimates of the rate of future prepayments of principal over the remaining life of the securities. Such estimates are derived based on the characteristics of the underlying structure and prepayment speeds previously experienced at the interest rate levels projected for the underlying collateral. The estimated fair value of the derivative instruments, consisting of interest rate swaps, is obtained from a third party financial institution that utilizes observable inputs such as the forward interest rate curve.

For the Company’s material debt arrangements, the current fair value of the Company’s debt at September 30, 2017 and December 31, 2016 was as follows:

	September 30, 2017				December 31, 2016
(Dollars in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Margin Borrowing Facility	$	76,518	$	76,518	$	66,646	$	66,646
7.75% Subordinated Notes due 2045 (1)		96,588		100,448		96,497		95,697
7.875% Subordinated Notes due 2047 (2)		125,829		130,009		—		—
Total	$	298,935	$	306,975	$	163,143	$	162,343

(1) As of September 30, 2017 and December 31, 2016, the carrying value and fair value of the 7.75% Subordinated Notes due 2045 are net of unamortized debt issuance cost of $3.4 million and $3.5 million, respectively.

(2) As of September 30, 2017, the carrying value and fair value of the 7.875% Subordinated Notes due 2047 are net of unamortized debt issuance cost of $4.2 million.

The fair value of the margin borrowing facility approximates its carrying value due to the facility being due on demand. The subordinated notes due 2045 and 2047 are publicly traded instruments and are classified as Level 1 in the fair value hierarchy.

There were no transfers between Level 1 and Level 2 during the quarters ended September 30, 2017 and 2016.

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Fair Value of Alternative Investments

Other invested assets consist of limited liability partnerships whose fair value is based on net asset value per share as a practical expedient. The following table provides the fair value and future funding commitments related to these investments at September 30, 2017 and December 31, 2016.

	September 30, 2017				December 31, 2016
(Dollars in thousands)	Fair Value		Future Funding Commitment		Fair Value		Future Funding Commitment
Real Estate Fund, LP (1)	$	—	$	—	$	—	$	—
European Non-Performing Loan Fund, LP (2)		29,795		14,214		32,922		15,714
Private Middle Market Loan Fund, LP (3)		26,824		11,776		33,199		9,054
Distressed Debt Fund, LP (4)		16,934		33,500		—		—
Total	$	73,553	$	59,490	$	66,121	$	24,768

(1) This limited partnership invests in real estate assets through a combination of direct or indirect investments in partnerships, limited liability companies, mortgage loans, and lines of credit. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company continues to hold an investment in this limited partnership and has written the fair value down to zero.

(2) This limited partnership invests in distressed securities and assets through senior and subordinated, secured and unsecured debt and equity, in both public and private large-cap and middle-market companies. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the partnership agreement, the Company anticipates its interest in this partnership to be redeemed by 2020.

(3) This limited partnership provides financing for middle market companies. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the investment management agreement, the Company anticipates its interest to be redeemed no later than 2024.

(4) This limited partnership invests in stressed and distressed debt instruments. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the partnership agreement, the Company anticipates its interest to be redeemed no later than 2027.

Limited Liability Companies and Limited Partnerships with ownership interest exceeding 3%

The Company uses the equity method to account for investments in limited liability companies and limited partnerships where its ownership interest exceeds 3%. The equity method of accounting for an investment in a limited liability company and limited partnership requires that its cost basis be updated to account for the income or loss earned on the investment. The investment income or loss associated with these limited liability companies or limited partnerships, which is reflected in the consolidated statements of operations, was $0.7 million and $0.9 million during the quarters end September 30, 2017 and 2016, respectively, and $2.4 million and $3.7 million during the nine months ended September 30, 2017 and 2016, respectively.

Pricing

The Company’s pricing vendors provide prices for all investment categories except for investments in limited partnerships whose fair value is based on net asset values as a practical expedient. Two primary vendors are utilized to provide prices for equity and fixed maturity securities.

The following is a description of the valuation methodologies used by the Company’s pricing vendors for investment securities carried at fair value:

• Common stock prices are received from all primary and secondary exchanges.

• Corporate and agency bonds are evaluated by utilizing a multi-dimensional relational model. For bonds with early redemption options, an option adjusted spread model is utilized. Both asset classes use standard inputs and incorporate security set up, defined sector breakdown, benchmark yields, apply base spreads, yield to maturity, and adjust for corporate actions.

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• Data from commercial vendors is aggregated with market information, then converted into a prepayment/spread/LIBOR curve model used for commercial mortgage obligations (“CMO”). CMOs are categorized with mortgage-backed securities in the tables listed above. For asset-backed securities, data derived from market information along with trustee and servicer reports is converted into spreads to interpolated swap yield curve. For both asset classes, evaluations utilize standard inputs plus new issue data, monthly payment information, and collateral performance. The evaluated pricing models incorporate discount rates, loan level information, prepayment speeds, treasury benchmarks, and LIBOR and swap curves.

• For obligations of state and political subdivisions, a multi-dimensional relational model is used to evaluate securities. The pricing models incorporate security set-up, benchmark yields, apply base spreads, yield to worst or market convention, ratings updates, prepayment schedules and adjustments for material events notices.

• U.S. treasuries are evaluated by obtaining feeds from a number of live data sources including active market makers and inter-dealer brokers.

• For mortgage-backed securities, a matrix model correlation to a forward MBS trade or benchmarking is utilized to value a security.

The Company performs certain procedures to validate whether the pricing information received from the pricing vendors is reasonable, to ensure that the fair value determination is consistent with accounting guidance, and to ensure that its assets are properly classified in the fair value hierarchy. The Company’s procedures include, but are not limited to:

• Reviewing periodic reports provided by the Investment Manager that provides information regarding rating changes and securities placed on watch. This procedure allows the Company to understand why a particular security’s market value may have changed or may potentially change.

• Understanding and periodically evaluating the various pricing methods and procedures used by the Company’s pricing vendors to ensure that investments are properly classified within the fair value hierarchy.

• On a quarterly basis, the Company corroborates investment security prices received from its pricing vendors by obtaining pricing from a second pricing vendor for a sample of securities.

During the quarters and nine months ended September 30, 2017 and 2016, the Company has not adjusted quotes or prices obtained from the pricing vendors.

5. Income Taxes

The statutory income tax rates of the countries where the Company conducts or conducted business are 35% in the United States, 0% in Bermuda, 0% in the Cayman Islands, 0% in Gibraltar, 27.08% in the Duchy of Luxembourg, 0.25% to 2.5% in Barbados, and 25% on non-trading income, 33% on capital gains and 12.5% on trading income in the Republic of Ireland. The statutory income tax rate of each country is applied against the expected annual taxable income of the Company in each country to estimate the annual income tax expense. Generally, during interim periods, the Company will divide total estimated annual income tax expense by total estimated annual pre-tax income to determine the expected annual income tax rate used to compute the income tax provision. The expected annual income tax rate is then applied against interim pre-tax income, excluding net realized gains and losses and limited partnership distributions, and that amount is then added to the actual income taxes on net realized gains and losses, discrete items and limited partnership distributions. However, when there is significant volatility in the expected effective tax rate, the Company records its actual income tax provision in lieu of the estimated effective income tax rate.

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GLOBAL INDEMNITY LIMITED

The Company’s income before income taxes from its non-U.S. subsidiaries and U.S. subsidiaries, including the results of the quota share agreements between Global Indemnity Reinsurance and the Insurance Operations, for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

Quarter Ended September 30, 2017: (Dollars in thousands)	Non-U.S. Subsidiaries			U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	50,812		$	114,076		$	(38,834	)	$	126,054
Net premiums written	$	50,800		$	58,245		$	—		$	109,045
Net premiums earned	$	50,392		$	58,227		$	—		$	108,619
Net investment income		14,631			6,584			(11,081	)		10,134
Net realized investment losses		(150	)		(813	)		—			(963	)
Other income		40			2,254			—			2,294
Total revenues		64,913			66,252			(11,081	)		120,084
Losses and Expenses:
Net losses and loss adjustment expenses		31,044			51,351			—			82,395
Acquisition costs and other underwriting expenses		21,922			23,080			—			45,002
Corporate and other operating expenses		1,807			2,823			—			4,630
Interest expense		4,679			11,238			(11,081	)		4,836
Income (loss) before income taxes	$	5,461		$	(22,240	)	$	—		$	(16,779	)
Quarter Ended September 30, 2016: (Dollars in thousands)	Non-U.S. Subsidiaries			U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	51,900		$	123,770		$	(42,101	)	$	133,569
Net premiums written	$	51,900		$	63,151		$	—		$	115,051
Net premiums earned	$	54,155		$	65,398		$	—		$	119,553
Net investment income		11,556			5,828			(8,589	)		8,795
Net realized investment gains		58			1,870			—			1,928
Other income (loss)		(10	)		7,862			—			7,852
Total revenues		65,759			80,958			(8,589	)		138,128
Losses and Expenses:
Net losses and loss adjustment expenses		27,932			44,230			—			72,162
Acquisition costs and other underwriting expenses		24,651			23,478			—			48,129
Corporate and other operating expenses		2,906			2,100			—			5,006
Interest expense		2,081			8,741			(8,589	)		2,233
Income before income taxes	$	8,189		$	2,409		$	—		$	10,598
Nine Months Ended September 30, 2017: (Dollars in thousands)	Non-U.S. Subsidiaries			U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	164,975		$	348,331		$	(119,607	)	$	393,699
Net premiums written	$	164,947		$	179,401		$	—		$	344,348
Net premiums earned	$	150,384		$	178,434		$	—		$	328,818
Net investment income		41,519			16,786			(30,687	)		27,618
Net realized investment gains (losses)		87			(937	)		—			(850	)
Other income		213			5,231			—			5,444
Total revenues		192,203			199,514			(30,687	)		361,030
Losses and Expenses:
Net losses and loss adjustment expenses		74,780			127,876			—			202,656
Acquisition costs and other underwriting expenses		65,544			69,466			—			135,010
Corporate and other operating expenses		4,137			6,908			—			11,045
Interest expense		11,653			31,099			(30,687	)		12,065
Income (loss) before income taxes	$	36,089		$	(35,835	)	$	—		$	254

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GLOBAL INDEMNITY LIMITED

Nine Months Ended September 30, 2016: (Dollars in thousands)	Non-U.S. Subsidiaries		U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	141,297	$	394,312		$	(106,355	)	$	429,254
Net premiums written	$	141,283	$	215,950		$	—		$	357,233
Net premiums earned	$	162,594	$	196,399		$	—		$	358,993
Net investment income		36,791		13,888			(25,576	)		25,103
Net realized investment gains (losses)		128		(9,185	)		—			(9,057	)
Other income		17		9,586			—			9,603
Total revenues		199,530		210,688			(25,576	)		384,642
Losses and Expenses:
Net losses and loss adjustment expenses		84,154		130,903			—			215,057
Acquisition costs and other underwriting expenses		71,758		77,003			—			148,761
Corporate and other operating expenses		7,181		5,883			—			13,064
Interest expense		6,233		26,020			(25,576	)		6,677
Income (loss) before income taxes	$	30,204	$	(29,121	)	$	—		$	1,083

The following table summarizes the components of income tax benefit:

	Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands)	2017			2016		2017			2016
Current income tax expense:
Foreign	$	107		$	84	$	290		$	289
U.S. Federal		128			146		128			146
Total current income tax expense		235			230		418			435
Deferred income tax expense (benefit):
U.S. Federal		(8,090	)		833		(13,611	)		(10,847	)
Total deferred income tax expense (benefit)		(8,090	)		833		(13,611	)		(10,847	)
Total income tax expense (benefit)	$	(7,855	)	$	1,063	$	(13,193	)	$	(10,412	)

The weighted average expected tax provision has been calculated using income before income taxes in each jurisdiction multiplied by that jurisdiction’s applicable statutory tax rate.

The following table summarizes the differences between the tax provision for financial statement purposes and the expected tax provision at the weighted average tax rate:

	Quarters Ended September 30,
(Dollars in thousands)	2017						2016
	Amount			% of Pre- Tax Income			Amount			% of Pre- Tax Income
Expected tax provision at weighted average rate	$	(7,678	)		(45.8	%)	$	933			8.8	%
Adjustments:
Tax exempt interest		(40	)		(0.2	)		(101	)		(1.0	)
Dividend exclusion		(144	)		(0.9	)		(3	)		0.0
Other		7			0.1			234			2.2
Actual tax on continuing operations	$	(7,855	)		(46.8	%)	$	1,063			10.0	%

The effective income tax benefit rate for the quarter ended September 30, 2017 was 46.8%, compared with an effective income tax rate of 10.0% for the quarter ended September 30, 2016. The increase in the income tax benefit rate is primarily due to losses incurred in the Company’s U.S. operations for the quarter ended September 30, 2017 as compared to a gain in 2016. Taxes were computed using a discrete period computation because a reliable estimate of an effective tax rate could not be made.

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	Nine Months Ended September 30,
(Dollars in thousands)	2017						2016
	Amount			% of Pre- Tax Income			Amount			% of Pre- Tax Income
Expected tax provision at weighted average rate	$	(12,252	)		(4,823.6	%)	$	(9,896	)		(913.8	%)
Adjustments:
Tax exempt interest		(191	)		(75.2	)		(304	)		(28.1	)
Dividend exclusion		(410	)		(161.4	)		(480	)		(44.3	)
Other		(340	)		(133.9	)		268			24.8
Actual tax on continuing operations	$	(13,193	)		(5,194.1	%)	$	(10,412	)		(961.4	%)

The effective income tax benefit rate for the nine months ended September 30, 2017 was 5,194.1%, compared with an effective income tax benefit rate of 961.4% for the nine months ended September 30, 2016. The increase in the income tax benefit rate is primarily due to higher losses incurred in the Company’s U.S. operations for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. Taxes were computed using a discrete period computation because a reliable estimate of an effective tax rate could not be made.

The Company has an alternative minimum tax (“AMT”) credit carryforward of $11.0 million as of September 30, 2017 and December 31, 2016, which can be carried forward indefinitely. The Company has a net operating loss (“NOL”) carryforward of $21.8 million as of September 30, 2017, which begins to expire in 2035 based on when the original NOL was generated, and a NOL carryforward of $3.2 million as of December 31, 2016. The Company has a Section 163(j) (“163(j)”) carryforward of $6.0 million and $8.1 million as of September 30, 2017 and December 31, 2016, respectively, which can be carried forward indefinitely. The 163(j) carryforward is for disqualified interest paid or accrued to a related entity that is not subject to U.S. tax.

6. Liability for Unpaid Losses and Loss Adjustment Expenses

Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Balance at beginning of period	$	615,763		$	683,850		$	651,042		$	680,047
Less: Ceded reinsurance receivables		104,245			111,579			130,439			108,130
Net balance at beginning of period		511,518			572,271			520,603			571,917
Purchased reserves, gross		9,063			1,410			18,024			1,410
Purchased reserves ceded		63			641			573			641
Purchased reserves, net of third party reinsurance		9,126			2,051			18,597			2,051
Incurred losses and loss adjustment expenses related to:
Current year		91,766			81,579			237,460			239,991
Prior years		(9,371	)		(9,417	)		(34,804	)		(24,934	)
Total incurred losses and loss adjustment expenses		82,395			72,162			202,656			215,057
Paid losses and loss adjustment expenses related to:
Current year		45,193			49,704			115,927			113,090
Prior years		25,190			35,147			93,273			114,302
Total paid losses and loss adjustment expenses		70,383			84,851			209,200			227,392
Net balance at end of period		532,656			561,633			532,656			561,633
Plus: Ceded reinsurance receivables		117,070			102,749			117,070			102,749
Balance at end of period	$	649,726		$	664,382		$	649,726		$	664,382

When analyzing loss reserves and prior year development, the Company considers many factors, including the frequency and severity of claims, loss trends, case reserve settlements that may have resulted in significant development, and any other additional or pertinent factors that may impact reserve estimates.

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In the third quarter of 2017, the Company reduced its prior accident year loss reserves by $9.4 million, which consisted of a $7.3 million decrease related to Commercial Lines, a $1.3 million decrease related to Personal Lines, and a $0.8 million decrease related to Reinsurance Operations.

The $7.3 million reduction of prior accident year loss reserves related to Commercial Lines primarily consisted of the following:

• General Liability: A $6.9 million reduction in aggregate with $1.0 million of favorable development in the construction defect reserve category and $5.9 million of favorable development in the other general liability reserve categories. The favorable development in the construction defect reserve category recognizes lower than anticipated claims frequency and severity which led to reductions primarily in the 2005 through 2009 accident years. For the other general liability reserve categories, lower than expected claims severity was the primary driver of the favorable development mainly in accident years 2008 through 2016.

• Professional Liability: A $0.2 million decrease in aggregate primarily reflects lower than expected claims severity in the 2010 through 2012 accident years which was partially offset by unfavorable development in the 2013 accident year.

The $1.3 million reduction of prior accident year loss reserves related to Personal Lines reflects $1.3 million in subrogation recoveries involving the 2015 wildfire.

The $0.8 million reduction related to Reinsurance Operations was from the property lines. Ultimate losses were lowered primarily in the 2015 accident year and partially offset by an increase in the 2016 accident year based on a review of the experience reported from cedants.

In the third quarter of 2016, the Company reduced its prior accident year loss reserves by $9.4 million, which consisted of a $6.5 million decrease related to Commercial Lines and a $2.9 million decrease related to Reinsurance Operations.

The $6.5 million reduction of prior accident year loss reserves related to Commercial Lines primarily consisted of the following:

• General Liability: A $9.0 million reduction in aggregate with $3.2 million of favorable development in the construction defect reserve category and $6.0 million of favorable development in the other general liability reserve categories. The favorable development in the construction defect reserve category reflects the lower than expected claims frequency and severity which led to a reduction in the 2005 through 2015 accident years. For the other general liability reserve categories, lower than anticipated claims severity was the driver of the favorable development mainly in accident years 2004 through 2012.

• Property: A $2.1 million increase was due to higher than expected case incurred emergence in the property brokerage segment excluding catastrophe experience in the 2011 through 2015 accident years.

The $2.9 million reduction related to Reinsurance Operations was from the property lines. Ultimate losses were lowered in the 2014 and 2015 accident years based on a review of the experience reported from cedants.

During the first nine months of 2017, the Company reduced its prior accident year loss reserves by $34.8 million, which consisted of a $26.2 million decrease related to Commercial Lines, a $4.5 million decrease related to Personal Lines, and a $4.1 million decrease related to Reinsurance Operations.

The $26.2 million reduction of prior accident year loss reserves related to Commercial Lines primarily consisted of the following:

• General Liability: A $17.1 million reduction in aggregate with $6.0 million of favorable development in the construction defect reserve category and $11.1 million of favorable development in the other general liability reserve categories. The favorable development in the construction defect reserve category recognizes lower than anticipated claims frequency and severity which led to reductions primarily in the 2005 through 2010 and 2012 through 2016 accident years. For the other general liability reserve categories, lower than expected claims severity was the primary driver of the favorable development mainly in the 2005 through 2014 accident years.

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• Professional Liability: A $3.7 million decrease in aggregate primarily reflects lower than expected claims severity in the 2006 through 2008 and 2011 through 2012 accident years.

• Property: A $5.4 million reduction in aggregate with $3.2 million of favorable development in the property excluding catastrophe reserve categories and $2.2 million of favorable development in the property catastrophe reserve categories. The favorable development in the reserve categories excluding catastrophe experience reflects lower than expected claims frequency and severity in the 2011 through 2015 accident years. For the property catastrophe reserve categories, lower than anticipated claims severity was the driver of the favorable development in the 2011 through 2016 accident years.

The $4.5 million reduction of prior accident year loss reserves related to Personal Lines primarily consisted of the following:

• Property: A $3.9 million reduction in the property reserve categories, both including and excluding catastrophes. The decrease reflects lower than expected case incurred emergence, primarily in the 2016 accident year and the aforementioned $1.3 million favorable development from the 2015 wildfire.

• General Liability: A $0.6 million reduction in the agriculture reserve categories. The favorable development was primarily due to lower than expected case incurred emergence in the 2016 accident year partially offset by higher than expected development in the dwelling liability reserve category for the 2015 accident year.

The $4.1 million reduction of prior accident year loss reserve related to Reinsurance Operations was from the property lines. Ultimate losses were lowered in the 2013 through 2015 accident years and partially offset by an increase in the 2016 accident year based on a review of the experience reported from cedants.

In the first nine months of 2016, the Company decreased its prior accident year loss reserves by $24.9 million, which consisted of an $18.8 million decrease related to Commercial Lines and a $6.1 million decrease related to Reinsurance Operations.

The $18.8 million decrease related to Commercial Lines primarily consisted of the following:

• General Liability: A $21.1 million reduction in aggregate with $4.8 million of favorable development in the construction defect reserve category and $16.3 million of favorable development in the other general liability reserve categories. The favorable development in the construction defect reserve category reflects the lower than expected claims frequency and severity which led to a reduction in the 2005 through 2015 accident years. For the other general liability reserve categories, lower than anticipated claims severity was the driver of the favorable development mainly in accident years 2004 through 2012.

• Property: A $0.8 million increase in aggregate with a $0.5 million increase in the non-catastrophe segments and a $0.3 million increase in the catastrophe segments. The increases reflect higher than expected case incurred emergence primarily in the 2012 through 2015 accident years.

The $6.1 million reduction related to Reinsurance Operations was from the property lines. Ultimate losses were lowered for the 2013 through 2015 accident years due to lower than expected emergence of catastrophe losses.

7. Debt

7.875% Subordinated Notes due 2047

On March 23, 2017, the Company issued Subordinated Notes due in 2047 in the aggregate principal amount of $120.0 million through an underwritten public offering (the “2047 Notes”). Pursuant to the underwriting agreement, the Company granted the underwriters a 30 day option to purchase up to an additional $18 million aggregate principal amount of the 2047 Notes solely to cover over-allotments, if any. On March 30, 2017, the underwriters exercised their over-allotment option in the amount of $10 million principal amount of the 2047 Notes. As a result, the aggregate principal amount of the 2047 Notes increased to $130.0 million. The sale of the 2047 Notes pursuant to the over-allotment option closed on March 30, 2017.

The 2047 Notes bear interest at an annual rate equal to 7.875%, payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year, commencing July 15, 2017. The 2047 Notes mature on April 15, 2047. The Company has the right to redeem the 2047 Notes in $25 increments, in whole or in part, on and after April 15, 2022, or on any interest payment

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date thereafter, at a redemption price equal to 100% of the principal amount of the 2047 Notes being redeemed plus accrued and unpaid interest to, but not including, the date of redemption. If the Company redeems only a portion of the 2047 Notes on any date of redemption, the Company may subsequently redeem additional 2047 Notes.

The 2047 Notes are subordinated unsecured obligations and rank (i) senior to the Company’s existing and future capital stock, (ii) senior in right of payment to future junior subordinated debt, (iii) equally in right of payment with any existing unsecured, subordinated debt that the Company has issued or may issue in the future that ranks equally with the 2047 Notes, including the Company’s 7.75% subordinated notes for $100.0 million due 2045 and (iv) subordinate in right of payment to any of the Company’s future senior debt. In addition, the 2047 Notes are structurally subordinated to all existing and future indebtedness, liabilities and other obligations of the Company’s subsidiaries including the Company’s margin borrowing facilities.

The 2047 Notes do not require the maintenance of any financial ratios or specified levels of net worth or liquidity, and do not contain provisions that would afford holders of the 2047 Notes protection in the event of a sudden and dramatic decline in the Company’s credit quality resulting from any highly leveraged transaction, reorganization, restructuring, merger or similar transaction involving the Company that may adversely affect holders. The 2047 Notes do not restrict the Company in any way, now or in the future, from incurring additional indebtedness, including senior indebtedness that would rank senior in right of payment to the 2047 Notes. There is no right of acceleration of maturity of the 2047 Notes in the case of default in the payment of principal, premium, if any, or interest on, the 2047 Notes or in the performance of any other obligation of the Company under the notes or if the Company defaults on any other debt securities. Holders may accelerate payment of indebtedness on the 2047 Notes only upon the Company’s bankruptcy, insolvency or reorganization.

The Company incurred $4.2 million in deferred issuance costs associated with the 2047 Notes, which is being amortized over the term of the 2047 Notes. Interest expense, including amortization of deferred issuance costs, recognized on the 2047 Notes was $2.6 million and $5.4 million for the quarters and nine months ended September 30, 2017, respectively.

Please see Note 12 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2016 Annual Report on Form 10-K for information on the Company’s Margin Borrowing Facilities and the 7.75% Subordinated Notes due 2045.

8. Shareholders’ Equity

No A ordinary shares were repurchased during the quarters ended September 30, 2017 or 2016. During the nine months ended September 30, 2017 and 2016, the Company repurchased 29,551 shares and 28,099 shares, respectively, with an average price paid of $39.24 per share and $ 28.64 per share, respectively. The Company repurchased these shares from employees as payment for the tax liability incurred upon the vesting of the employee’s restricted stock in accordance with the Company’s Share Incentive Plan.

There were no B ordinary shares that were repurchased during the quarters ended September 30, 2017 or 2016.

Please see Note 13 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2016 Annual Report on Form 10-K for more information on the Company’s repurchase program.

9. Related Party Transactions

Fox Paine & Company (“Fox Paine”)

As of September 30, 2017, Fox Paine beneficially owned shares having approximately 84% of the Company’s total outstanding voting power. Fox Paine has the right to appoint a number of the Company’s Directors equal in aggregate to the pro rata percentage of the voting shares of the Company beneficially held by Fox Paine for so long as Fox Paine holds an aggregate of 25% or more of the voting power in the Company. Fox Paine controls the election of all of the Company’s Directors due to its controlling share ownership. The Company’s Chairman is a member of Fox Paine.

The Company relies on Fox Paine to provide management services and other services related to the operations of the Company, and Fox Paine may propose and negotiate transaction fees with the Company, subject to the provisions of the Company’s related party transaction policies including approval of the Company’s Audit Committee of the Board of Directors, for those services from time to time. The Company incurred management fees of $0.6 million and $0.5 million during the quarters ended September 30,

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2017 and 2016, respectively, and $1.6 million and $1.5 million during the nine months ended September 30, 2017 and 2016, respectively, as part of the annual management fee paid to Fox Paine. As of September 30, 2017 and December 31, 2016, unpaid management fees, which were included in other liabilities on the consolidated balance sheets, were $6.3 million and $4.6 million, respectively.

On September 17, 2017, the Company and Fox Paine entered into a confidentiality agreement whereby Fox Paine agrees to keep confidential proprietary information, as defined in the confidentiality agreement, it receives regarding the Company from time to time, including proprietary information it may receive from director or director nominees appointed by Fox Paine.

Crystal & Company

The Company incurred $0.1 million and $0.2 million in brokerage fees to Crystal & Company, an insurance broker, during the quarter and nine months ended September 30, 2016, respectively. James W. Crystal, the chairman and chief executive officer of Crystal & Company, was a member of the Company’s Board of Directors until he resigned on July 24, 2016.

10. Commitments and Contingencies

Legal Proceedings

The Company is, from time to time, involved in various legal proceedings in the ordinary course of business. The Company maintains insurance and reinsurance coverage for such risks in amounts that it considers adequate. However, there can be no assurance that the insurance and reinsurance coverage that the Company maintains is sufficient or will be available in adequate amounts or at a reasonable cost. The Company does not believe that the resolution of any currently pending legal proceedings, either individually or taken as a whole, will have a material adverse effect on its business, results of operations, cash flows, or financial condition.

There is a greater potential for disputes with reinsurers who are in runoff. Some of the Company’s reinsurers’ have operations that are in runoff, and therefore, the Company closely monitors those relationships. The Company anticipates that, similar to the rest of the insurance and reinsurance industry, it will continue to be subject to litigation and arbitration proceedings in the ordinary course of business.

Commitments

In 2014, the Company entered into a $50 million commitment to purchase an alternative investment vehicle which is comprised of European non-performing loans. As of September 30, 2017, the Company has funded $35.8 million of this commitment leaving $14.2 million as unfunded.

In 2016, the Company entered into a $40 million commitment with an investment manager that provides financing for middle market companies. As of September 30, 2017, the Company has funded $28.2 million of this commitment leaving $11.8 million as unfunded.

In 2017, the Company entered into a $50 million commitment to purchase an alternative investment vehicle comprised of stressed and distressed debt instruments. As of September 30, 2017, the Company has funded $16.5 million of this commitment leaving $33.5 million as unfunded.

11. Share-Based Compensation Plans

Effective January 1, 2017, the Company adopted new accounting guidance which changed several aspects of the accounting for share-based payment transactions. Under the new guidance, all excess tax benefits and tax deficiencies associated with share-based payment awards are required to be recognized as an income tax benefit or expense in net income with the corresponding cash flows recognized as an operating activity in the Consolidated Statement of Cash Flow as opposed to being reported separately as a financing activity. Excess tax benefits and deficiencies are no longer recognized in additional paid-in-capital. The new guidance removes the requirement to delay recognition of any excess tax benefit when there is no current taxes payable to which the benefit would be applied. The new guidance also allows an employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur, rather than estimating forfeitures upon issuance of the award.

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Upon adoption of this new accounting guidance, the Company elected to retain its policy of accruing the compensation cost based on the number of awards that are expected to vest. The adoption of this accounting guidance did not result in any cumulative adjustment or restatement. The provisions of this new guidance were adopted on a prospective basis and did not have a material impact on the Company’s financial position, results of operations or cash flows.

Options

No stock options were awarded during the quarters ended September 30, 2017 or 2016. No unvested stock options were forfeited during the quarters ended September 30, 2017 and 2016.

The Company did not award any stock options during the nine months ended September 30, 2017 or 2016. No unvested stock options were forfeited during the nine months ended September 30, 2017. 200,000 unvested stock options were forfeited during the nine months ended September 30, 2016.

Restricted Shares

No restricted shares were issued to employees during the quarters ended September 30, 2017 and 2016.

During the nine months ended September 30, 2017, the Company granted 22,503 A ordinary shares, with a weighted average grant date value of $38.21 per share, to key employees under the Plan.    These shares will vest as follows:

• 16.5%, 16.5%, and 17.0% of the granted stock vest on January 1, 2018, January 1, 2019, and January 1, 2020, respectively.

• Subject to Board approval, 50% of granted stock vests 100%, no later than March 15, 2020, following a re-measurement of 2016 results as of December 31, 2019.

During the nine months ended September 30, 2016, the Company granted 121,346 A ordinary shares, with a weighted average grant date value of $28.97 per share, to key employees under the Plan.    Of the shares granted during the nine months ended September 30, 2016, 11,199 were granted to the Company’s Chief Executive Officer and vest 33 1/3 on each subsequent anniversary date of the grant for a period of three years subject to a true-up of bonus year underwriting results as of the third anniversary of the grant. 5,309 were granted to another key employee and were due to vest 100% on February 7, 2019. These shares were forfeited during the nine months ended September 30, 2017 as the key employee is no longer employed by the company. 8,253 were issued to other key employees and vest 33% on the first and second anniversary of the grant and vest 34% on the third anniversary of the grant contingent on meeting certain performance objectives and subject to Board approval. The remaining 96,585 shares were granted to key employees and will vest as follows:

• 16.5% vested on January 1, 2017. 16.5% and 17.0% of the granted stock will vest on January 1, 2018 and January 1, 2019, respectively.

• Subject to Board approval 50% of granted stock vests 100%, no later than March 15, 2019, following a re-measurement of 2015 results as of December 31, 2018.

During the quarters ended September 30, 2017 and 2016, the Company granted 6,245 and 8,802 A ordinary shares, respectively, at a weighted average grant date value of $42.40 and $29.70 per share, respectively, to non-employee directors of the Company under the Plan. During the nine months ended September 30, 2017 and 2016, the Company granted 19,713 and 28,416 A ordinary shares, respectively, at a weighted average grant date value of $39.82 and $29.40 per share, respectively, to non-employee directors of the Company under the Plan. All of the shares granted to non-employee directors of the Company in 2017 and 2016 were fully vested but are subject to certain restrictions.

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12. Earnings Per Share

Earnings per share have been computed using the weighted average number of ordinary shares and ordinary share equivalents outstanding during the period.

The following table sets forth the computation of basic and diluted earnings per share:

	Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands, except share and per share data)	2017			2016		2017		2016
Net income (loss)	$	(8,924	)	$	9,535	$	13,447	$	11,495
Basic earnings per share:
Weighted average shares outstanding – basic		17,343,292			17,254,843		17,331,840		17,241,040
Net income (loss) per share	$	(0.51	)	$	0.55	$	0.78	$	0.67
Diluted earnings per share:
Weighted average shares outstanding – diluted (1)		17,343,292			17,540,060		17,684,519		17,515,854
Net income (loss) per share	$	(0.51	)	$	0.54	$	0.76	$	0 .66

(1) For the quarter ended September 30, 2017, “weighted average shares outstanding – basic” was used to calculate “diluted earnings per share” due to a net loss for the period.

A reconciliation of weighted average shares for basic earnings per share to weighted average shares for diluted earnings per share is as follows:

	Quarters Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Weighted average shares for basic earnings per share		17,343,292		17,254,843		17,331,840		17,241,040
Non-vested restricted stock		—		176,087		149,490		165,011
Options		—		109,130		203,189		109,803
Weighted average shares for diluted earnings per share		17,343,292		17,540,060		17,684,519		17,515,854

If the Company had not incurred a loss in the quarter ended September 30, 2017, 17,721,954 weighted average shares would have been used to compute the diluted loss per share calculation which would have included 164,693 shares of non-vested restricted stock and 213,969 share equivalents for options.

The weighted average shares outstanding used to determine dilutive earnings per share for the quarter and nine months ended September 30, 2016 do not include 300,000 shares which were deemed to be anti-dilutive. There were no anti-dilutive shares for the quarter or nine months ended September 30, 2017.

13. Segment Information

The Company manages its business through three business segments. Commercial Lines offers specialty property and casualty products designed for product lines such as Small Business Binding Authority, Property Brokerage, and Programs. Personal Lines offers specialty personal lines and agricultural coverage. Reinsurance Operations provides reinsurance solutions through brokers and primary writers including insurance and reinsurance companies.

During the 1^st quarter of 2017, the Company re-evaluated its Commercial Lines and Personal Lines segments and determined that certain portions of business will be managed, operated and reported by including them in the other segment. As a result, the composition of the Company’s reportable segments changed slightly. Premium that is written through a wholly owned agency that mainly sells to individuals, which was previously included as part of the Commercial Lines segment, is now included within the Personal Lines segment. In addition, one of the small commercial programs written by American Reliable Insurance Company, which was previously included within the Personal Lines segment, is now aggregated within the Commercial Lines segment. Accordingly, the segment results for the quarter and nine months ended September 30, 2016 have been revised to reflect these changes.

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The following are tabulations of business segment information for the quarters and nine months ended September 30, 2017 and 2016.

Quarter Ended September 30, 2017: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	53,113		$	60,962	(6)	$	11,979		$	126,054
Net premiums written	$	46,471		$	50,607		$	11,967		$	109,045
Net premiums earned	$	44,778		$	52,268		$	11,573		$	108,619
Other income		—			2,254			40			2,294
Total revenues		44,778			54,522			11,613			110,913
Losses and Expenses:
Net losses and loss adjustment expenses		19,095			42,534			20,766			82,395
Acquisition costs and other underwriting expenses		18,237	(3)		22,689	(4)		4,076			45,002
Income (loss) from segments	$	7,446		$	(10,701	)	$	(13,229	)	$	(16,484	)
Unallocated Items:
Net investment income											10,134
Net realized investment loss											(963	)
Corporate and other operating expenses											(4,630	)
Interest expense											(4,836	)
Loss before income taxes											(16,779	)
Income tax benefit											7,855
Net loss											(8,924	)
Total assets	$	911,412		$	481,357		$	737,921	(5)	$	2,130,690

(1) Includes business ceded to the Company’s Reinsurance Operations.

(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $127 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $262 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes ($1,427) of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

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Quarter Ended September 30, 2016: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	49,505		$	74,266	(6)	$	9,798		$	133,569
Net premiums written	$	45,074		$	60,179		$	9,798		$	115,051
Net premiums earned	$	47,774		$	61,221		$	10,558		$	119,553
Other income (loss)		6,872			991			(11	)		7,852
Total revenues		54,646			62,212			10,547			127,405
Losses and Expenses:
Net losses and loss adjustment expenses		23,848			42,927			5,387			72,162
Acquisition costs and other underwriting expenses		20,048	(3)		24,411	(4)		3,670			48,129
Income (loss) from segments	$	10,750		$	(5,126	)	$	1,490		$	7,114
Unallocated Items:
Net investment income											8,795
Net realized investment gains											1,928
Corporate and other operating expenses											(5,006	)
Interest expense											(2,233	)
Income before income taxes											10,598
Income tax expense											(1,063	)
Net income											9,535
Total assets	$	770,255		$	499,202		$	712,358	(5)	$	1,981,815

(1) Includes business ceded to the Company’s Reinsurance Operations.

(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $130 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $306 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes $7,328 of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

Nine Months Ended September 30, 2017: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	155,776		$	192,551	(6)	$	45,372		$	393,699
Net premiums written	$	137,025		$	161,979		$	45,344		$	344,348
Net premiums earned	$	133,289		$	164,102		$	31,427		$	328,818
Other income		78			5,153			213			5,444
Total revenues		133,367			169,255			31,640			334,262
Losses and Expenses:
Net losses and loss adjustment expenses		53,688			120,410			28,558			202,656
Acquisition costs and other underwriting expenses		55,398	(3)		69,281	(4)		10,331			135,010
Income (loss) from segments	$	24,281		$	(20,436	)	$	(7,249	)	$	(3,404	)
Unallocated Items:
Net investment income											27,618
Net realized investment loss											(850	)
Corporate and other operating expenses											(11,045	)
Interest expense											(12,065	)
Income before income taxes											254
Income tax benefit											13,193
Net income											13,447
Total assets	$	911,412		$	481,357		$	737,921	(5)	$	2,130,690

(1) Includes business ceded to the Company’s Reinsurance Operations.

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(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $366 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $821 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes ($185) of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

Nine Months Ended September 30, 2016: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	155,686		$	238,627	(6)	$	34,941		$	429,254
Net premiums written	$	140,199		$	182,107		$	34,927		$	357,233
Net premiums earned	$	142,749		$	184,581		$	31,663		$	358,993
Other income		6,872			2,714			17			9,603
Total revenues		149,621			187,295			31,680			368,596
Losses and Expenses:
Net losses and loss adjustment expenses		78,813			122,540			13,704			215,057
Acquisition costs and other underwriting expenses		60,784	(3)		76,349	(4)		11,628			148,761
Income (loss) from segments	$	10,024		$	(11,594	)	$	6,348		$	4,778
Unallocated Items:
Net investment income											25,103
Net realized investment losses											(9,057	)
Corporate and other operating expenses											(13,064	)
Interest expense											(6,677	)
Income before income taxes											1,083
Income tax benefit											10,412
Net income											11,495
Total assets	$	770,255		$	499,202		$	712,358	(5)	$	1,981,815

(1) Includes business ceded to the Company’s Reinsurance Operations.

(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $386 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $923 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes $30,910 of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

14. New Accounting Pronouncements

In May, 2017, the Financial Accounting Standards Board (“FASB”) issued updated accounting guidance which clarifies whether changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. This guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. Although the Company is still evaluating the impact of this new guidance, the Company does not anticipate it will have a material impact on its financial condition, results of operations, or cash flows.

In March, 2017, the FASB issued new accounting guidance which amends the amortization period for certain purchased callable debt securities held at a premium. Under current generally accepted accounting principles, entities generally amortize the premium as an adjustment of yield over the contractual life of the instruments. Under the new guidance, the amortizations period would be shortened to the earliest call date. This guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is still evaluating the impact of this guidance on its financial condition, results of operations, and cash flows.

In January, 2017, the FASB issued updated guidance that simplifies how an entity is required to test goodwill for impairment by eliminating the requirement to calculate the implied fair value of goodwill (i.e. Step 2 of the current goodwill impairment test). Under

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the new amendments, an entity may still first assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment loss to be recognized, if any. A goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. This guidance is effective for public business entities’ annual or interim goodwill impairment testing in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Although the Company is still evaluating the impact of this new guidance, the Company does not anticipate it will have a material impact on its financial condition, results of operations, or cash flows.

In January, 2017, the FASB amended The Accounting Standards Codification to incorporate SEC Staff Announcements at the September 22, 2016 and November 17, 2016 Emerging Issues Task Force (EITF) Meetings. The announcement from September 22, 2016 specifically addresses Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606); ASU No. 2016-02, Leases (Topic 842); and ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and provides the SEC staff view that a registrant should evaluate ASUs that have not yet been adopted to determine the appropriate financial statement disclosures about the potential material effects of those ASUs on the financial statements when adopted. If a registrant does not know or cannot reasonably estimate the impact that adoption of the ASUs referenced in this announcement is expected to have on the financial statements, then in addition to making a statement to that effect, that registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact that the standard will have on the financial statements of the registrant when adopted. In this regard, the SEC staff expects the additional qualitative disclosures to include a description of the effect of the accounting policies that the registrant expects to apply, if determined, and a comparison to the registrant’s current accounting policies. Also, a registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. This guidance, which is effective immediately, has been adopted by the Company.

In February, 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new guidance increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This guidance is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Upon adoption, the Company expects to report higher assets and liabilities as a result of recognizing right-of-use assets and corresponding lease liabilities on the Consolidated Balance Sheets. The Company expects the new guidance to have minimal impact on the Consolidated Statement of Operations or Consolidated Statement of Cash Flows.

In June, 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). The new accounting guidance addresses the measurement of credit losses on financial instruments. For assets held at amortized cost basis, the new guidance replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of information for credit loss estimates. For available for sale debt securities, credit losses should be measured similar to current GAAP; however, the new guidance requires that credit losses be presented as an allowance rather than as a write-down and allows for the reversal of credit losses in the current period net income. This guidance is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early application of this new guidance is permitted as of the fiscal years beginning after December 15, 2018 including interim periods within those fiscal years. This guidance will be applied using a modified-retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is still evaluating the impact of this guidance on its financial condition, results of operations, and cash flows.

In May, 2014, the FASB issued (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Long and short duration insurance contracts, which comprise the majority of the Company’s revenues, are excluded from this accounting guidance. While insurance contracts are not within the scope of this guidance, the Company is currently still evaluating whether its revenue recognition policy for fee income will be impacted by this updated guidance. Fee income related to policies written by the Company was $0.6 million for the nine months ended September 30, 2017. This guidance is effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Although the Company is still evaluating the impact of this new guidance, the Company does not anticipate it will have a material impact on its financial condition, results of operations, or cash flows.

Please see Note 22 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2016 Annual Report on Form 10-K for more information on accounting pronouncements issued in 2016 which have not been implemented in 2017.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes of Global Indemnity included elsewhere in this report. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to the Company’s plans and strategy, constitutes forward-looking statements that involve risks and uncertainties. Please see “Cautionary Note Regarding Forward-Looking Statements” at the end of this Item 2 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained herein. For more information regarding the Company’s business and operations, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Recent Developments

On March 23, 2017, the Company issued Subordinated Notes due in 2047 in the aggregate principal amount of $120.0 million through an underwritten public offering. Pursuant to the underwriting agreement, the Company granted the underwriters a 30 day option to purchase up to an additional $18 million aggregate principal amount of the 2047 Notes solely to cover over-allotments, if any. On March 30, 2017, the underwriters exercised their over-allotment option in the amount of $10 million principal amount of the 2047 Notes. As a result, the aggregate principal amount of the 2047 Notes increased to $130.0 million. The sale of the 2047 Notes pursuant to the over-allotment option closed on March 30, 2017. See Note 7 of the notes to the consolidated financial statements in Item 1of Part I of this report for additional information on this debt issuance.

In April, 2017, the Company entered into a $50 million commitment to purchase an alternative investment vehicle comprised of stressed and distressed debt instruments. As of September 30, 2017, the Company has funded $16.5 million of this commitment leaving $33.5 million as unfunded.

Hurricanes Harvey, Irma, and Maria made landfall during the third quarter of 2017. The Company’s current estimate of net loss is approximately $30.6 million from Hurricanes Harvey, Irma, and Maria. Hurricanes Harvey, Irma and Maria impacted U.S. Insurance Operations by $12.9 million and Reinsurance Operations by $17.7 million. Actual losses from these events may vary materially from the Company’s current estimate due to the inherent uncertainties resulting from several factors, including the preliminary nature of the loss data available and potential inaccuracies and inadequacies of the data provided.

Effective September 16, 2017, David J.W. Bruce, Jason B. Hurwitz, and Arik Rashkes were appointed to the Company’s Board of Directors.

Overview

The Company’s Commercial Lines segment distribute property and casualty insurance products through a group of approximately 120 professional general agencies that have limited quoting and binding authority, as well as a number of wholesale insurance brokers who in turn sell the Company’s insurance products to insureds through retail insurance brokers. Commercial Lines operates predominantly in the excess and surplus lines marketplace. The Company manages its Commercial Lines segment via product classifications. These product classifications are: 1) Penn-America, which includes property and general liability products for small commercial businesses distributed through a select network of wholesale general agents with specific binding authority; 2) United National, which includes property, general liability, and professional lines products distributed through program administrators with specific binding authority; 3) Diamond State, which includes property, casualty, and professional lines products distributed through wholesale brokers and program administrators with specific binding authority; and 4) Vacant Express, which insures dwellings which are currently vacant, undergoing renovation, or are under construction and is distributed through aggregators, brokers, and retail agents.    

The Company’s Personal Lines segment, via American Reliable, offers specialty personal lines and agricultural coverage through a group of approximately 270 agents, primarily comprised of wholesale general agents, with specific binding authority in the admitted marketplace.

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The Company’s Reinsurance Operations consisting solely of the operations of Global Indemnity Reinsurance, provides reinsurance solutions through brokers and on a direct basis. Global Indemnity Reinsurance is a Bermuda based treaty reinsurer for specialty property and casualty insurance and reinsurance companies. Global Indemnity Reinsurance conducts business in Bermuda and is focused on using its capital capacity to write catastrophe-oriented placements and other niche or specialty-focused treaties meeting the Company’s risk tolerance and return thresholds.

The Company derives its revenues primarily from premiums paid on insurance policies that it writes and from income generated by its investment portfolio, net of fees paid for investment management services. The amount of insurance premiums that the Company receives is a function of the amount and type of policies it writes, as well as prevailing market prices.

The Company’s expenses include losses and loss adjustment expenses, acquisition costs and other underwriting expenses, corporate and other operating expenses, interest, investment expenses, and income taxes. Losses and loss adjustment expenses are estimated by management and reflect the Company’s best estimate of ultimate losses and costs arising during the reporting period and revisions of prior period estimates. The Company records its best estimate of losses and loss adjustment expenses considering both internal and external actuarial analyses of the estimated losses the Company expects to incur on the insurance policies it writes. The ultimate losses and loss adjustment expenses will depend on the actual costs to resolve claims. Acquisition costs consist principally of commissions and premium taxes that are typically a percentage of the premiums on the insurance policies the Company writes, net of ceding commissions earned from reinsurers. Other underwriting expenses consist primarily of personnel expenses and general operating expenses related to underwriting activities. Corporate and other operating expenses are comprised primarily of outside legal fees, other professional and accounting fees, directors’ fees, management fees and salaries and benefits for company personnel whose services relate to the support of corporate activities. Interest expense is primarily comprised of amounts due on outstanding debt.

Critical Accounting Estimates and Policies

The Company’s consolidated financial statements are prepared in conformity with GAAP, which require it to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.

The most critical accounting policies involve significant estimates and include those used in determining the liability for unpaid losses and loss adjustment expenses, recoverability of reinsurance receivables, investments, fair value measurements, goodwill and intangible assets, deferred acquisition costs, and taxation. For a detailed discussion on each of these policies, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There have been no significant changes to any of these policies or underlying methodologies during the current year.

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Results of Operations

The following table summarizes the Company’s results for the quarters and nine months ended September 30, 2017 and 2016:

	Quarters Ended September 30,						%			Nine Months Ended September 30,						%
(Dollars in thousands)	2017			2016			Change			2017			2016			Change
Gross premiums written	$	126,054		$	133,569			(5.6	%)	$	393,699		$	429,254			(8.3	%)
Net premiums written	$	109,045		$	115,051			(5.2	%)	$	344,348		$	357,233			(3.6	%)
Net premiums earned	$	108,619		$	119,553			(9.1	%)	$	328,818		$	358,993			(8.4	%)
Other income		2,294			7,852			(70.8	%)		5,444			9,603			(43.3	%)
Total revenues		110,913			127,405			(12.9	%)		334,262			368,596			(9.3	%)
Losses and expenses:
Net losses and loss adjustment expenses		82,395			72,162			14.2	%		202,656			215,057			(5.8	%)
Acquisition costs and other underwriting expenses		45,002			48,129			(6.5	%)		135,010			148,761			(9.2	%)
Underwriting income (loss)		(16,484	)		7,114			(331.7	%)		(3,404	)		4,778			(171.2	%)
Net investment income		10,134			8,795			15.2	%		27,618			25,103			10.0	%
Net realized investment gains (losses)		(963	)		1,928			(149.9	%)		(850	)		(9,057	)		(90.6	%)
Corporate and other operating expenses		(4,630	)		(5,006	)		(7.5	%)		(11,045	)		(13,064	)		(15.5	%)
Interest expense		(4,836	)		(2,233	)		116.6	%		(12,065	)		(6,677	)		80.7	%
Income (loss) before income taxes		(16,779	)		10,598			(258.3	%)		254			1,083			(76.5	%)
Income tax (expense) benefit		7,855			(1,063	)		NM			13,193			10,412			26.7	%
Net income (loss)	$	(8,924	)	$	9,535			(193.6	%)	$	13,447		$	11,495			17.0	%
Underwriting Ratios:
Loss ratio (1):		75.9	%		60.3	%					61.6	%		59.9	%
Expense ratio (2)		41.4	%		40.3	%					41.1	%		41.4	%
Combined ratio (3)		117.3	%		100.6	%					102.7	%		101.3	%

NM – not meaningful

(1) The loss ratio is a GAAP financial measure that is generally viewed in the insurance industry as an indicator of underwriting profitability and is calculated by dividing net losses and loss adjustment expenses by net premiums earned.

(2) The expense ratio is a GAAP financial measure that is calculated by dividing the sum of acquisition costs and other underwriting expenses by net premiums earned.

(3) The combined ratio is a GAAP financial measure and is the sum of the Company’s loss and expense ratios.

During the 1^st quarter of 2017, the Company re-evaluated its Commercial Lines and Personal Lines segments and determined that certain portions of business will be managed, operated and reported by including them in the other segment. As a result, the composition of the Company’s reportable segments changed slightly. Accordingly, the segment results, presented below, for the quarter and nine months ended September 30, 2016 have been revised to reflect these changes. See Note 13 for additional information regarding segments.

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Premiums

The following table summarizes the change in premium volume by business segment:

	Quarters Ended September 30,				%			Nine Months Ended September 30,				%
(Dollars in thousands)	2017		2016		Change			2017		2016		Change
Gross premiums written (1)
Personal Lines (3) (4)	$	60,962	$	74,266		(17.9	%)	$	192,551	$	238,627		(19.3	%)
Commercial Lines (4)		53,113		49,505		7.3	%		155,776		155,686		0.1	%
Reinsurance (5)		11,979		9,798		22.3	%		45,372		34,941		29.9	%
Total gross premiums written	$	126,054	$	133,569		(5.6	%)	$	393,699	$	429,254		(8.3	%)
Ceded premiums written
Personal Lines (4)	$	10,355	$	14,087		(26.5	%)	$	30,572	$	56,520		(45.9	%)
Commercial Lines (4)		6,642		4,431		49.9	%		18,751		15,487		21.1	%
Reinsurance (5)		12		—		0.0	%		28		14		100.0	%
Total ceded premiums written	$	17,009	$	18,518		(8.1	%)	$	49,351	$	72,021		(31.5	%)
Net premiums written (2)
Personal Lines (4)	$	50,607	$	60,179		(15.9	%)	$	161,979	$	182,107		(11.1	%)
Commercial Lines (4)		46,471		45,074		3.1	%		137,025		140,199		(2.3	%)
Reinsurance (5)		11,967		9,798		22.1	%		45,344		34,927		29.8	%
Total net premiums written	$	109,045	$	115,051		(5.2	%)	$	344,348	$	357,233		(3.6	%)
Net premiums earned
Personal Lines (4)	$	52,268	$	61,221		(14.6	%)	$	164,102	$	184,581		(11.1	%)
Commercial Lines (4)		44,778		47,774		(6.3	%)		133,289		142,749		(6.6	%)
Reinsurance (5)		11,573		10,558		9.6	%		31,427		31,663		(0.7	%)
Total net premiums earned	$	108,619	$	119,553		(9.1	%)	$	328,818	$	358,993		(8.4	%)

(1) Gross premiums written represent the amount received or to be received for insurance policies written without reduction for reinsurance costs or other deductions.

(2) Net premiums written equal gross premiums written less ceded premiums written.

(3) Includes business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement of ($1.4) million and $7.3 million during the quarters ended September 30, 2017 and 2016, respectively, and ($0.2) million and $30.9 million during the nine months ended September 30, 2017 and 2016, respectively.

(4) Includes business ceded to the Company’s Reinsurance Operations.

(5) External business only, excluding business assumed from affiliates.

Gross premiums written decreased by 5.6% and 8.3% for the quarter and nine months ended September 30, 2017, respectively, as compared to same periods in 2016. Gross premiums written include business written by American Reliable that is ceded to insurance entities owned by Assurant under a 100% quota share reinsurance agreement in the amount of ($1.4) million and $7.3 million for the quarters ended September 30, 2017 and 2016, respectively, and ($0.2) million and $30.9 million for the nine months ended September 30, 2017 and 2016, respectively. Excluding the business that is ceded 100% to insurance entities owned by Assurant, gross premiums written increased by 1.0% for the quarter ended September 30, 2017 as compared to same period in 2016. The growth in gross premiums written is mainly due to increased production within one of the Company’s Commercial Lines programs as a result of providing additional commission incentives for increased business, the introduction of a new program within the Company’s Commercial Lines, and increased gross premiums written within the Company’s Reinsurance Operations due to a new mortgage insurance treaty written in the fourth quarter of 2016. This increase was partially offset by declines in gross written premiums due to the discontinuance of one unprofitable program within the Company’s Commercial Lines, a targeted reduction of catastrophe exposed business within the Company’s Personal Lines, and underwriting actions taken within the Company’s Personal Lines to improve profitability.

Excluding the business that is ceded 100% to insurance entities owned by Assurant, gross premiums written decreased by 1.1% for the nine months ended September 30, 2017 as compared to the same period in 2016. The decline is mainly due to the discontinuance of one unprofitable program within the Company’s Commercial Lines, a targeted reduction of catastrophe exposed business within the Company’s Personal Lines, and underwriting actions taken within the Company’s Personal Lines to improve profitability. This decline was partially offset by an increase in gross premiums written within the Company’s

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Reinsurance Operations due to a new mortgage insurance treaty written in the fourth quarter of 2016, the introduction of a new program within the Company’s Commercial Lines, and increased production within two of the Company’s Commercial Lines programs as a result of providing additional commission incentives for increased business.

Net Retention

The ratio of net premiums written to gross premiums written is referred to as the Company’s net premium retention. The Company’s net premium retention is summarized by segments as follows:

	Quarters Ended September 30,									Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			Change			2017			2016			Change
Personal Lines (1)		81.1	%		89.9	%		(8.8	)		84.0	%		87.7	%		(3.6	)
Commercial Lines		87.5	%		91.0	%		(3.6	)		88.0	%		90.1	%		(2.1	)
Reinsurance		99.9	%		100.0	%		(0.1	)		99.9	%		100.0	%		0.0
Total (1)		85.5	%		91.1	%		(5.6	)		87.4	%		89.7	%		(2.3	)

(1) Excludes business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement ($1.4) million and $7.3 million during the quarters ended September 30, 2017 and 2016, respectively, and ($0.2) million and $30.9 million during the nine months ended September 30, 2017 and 2016, respectively.

The net premium retention for the quarter and nine months ended September 30, 2017 decreased by 8.8 points and 3.6 points, respectively, for Personal Lines and decreased by 3.6 points and 2.1 points, respectively, for Commercial Lines as compared to the same period in 2016 primarily due to the Property Catastrophe Quota Share Treaty that became effective on April 15, 2017. Please see the Liquidity and Capital Resource section in Item 2 of Part I of this report for additional information on the Property Catastrophe Quota Share.

Net Premiums Earned

Net premiums earned within the Personal Lines segment decreased by 14.6% and 11.1% for the quarter and nine months ended September 30, 2017, respectively, as compared to the same period in 2016 primarily due to a decline in gross premiums written as well as the ceding of additional premiums under the property catastrophe treaties. Property net premiums earned were $44.3 million and $52.3 million for the quarters ended September 30, 2017 and 2016, respectively, and $139.5 million and $158.9 million for the nine months ended September 30, 2017 and 2016, respectively. Casualty net premiums earned were $8.0 million and $8.9 million for the quarters ended September 30, 2017 and 2016, respectively, and $24.6 million and $25.7 million for the nine months ended September 30, 2017 and 2016, respectively.

Net premiums earned within the Commercial Lines segment decreased by 6.3% and 6.6% for the quarter and nine months ended September 30, 2017, respectively, as compared to the same period in 2016. The decline in net premiums earned was primarily due to the Company discontinuing one of its programs within the Commercial Lines as well as the Company ceding additional premiums under the new Property Catastrophe Quota Share Treaty which was effective April 15, 2017. In addition, the net premiums earned during the nine months ended September 30, 2017 were also impacted by a slight decline in gross premiums written within the Commercial Lines’ small business program experienced in 2016. Property net premiums earned were $22.0 million and $25.7 million for the quarters ended September 30, 2017 and 2016, respectively, and $67.6 million and $77.8 million for the nine months ended September 30, 2017 and 2016, respectively. Casualty net premiums earned were $22.8 million and $22.1 million for the quarters ended September 30, 2017 and 2016, respectively, and $65.7 million and $64.9 million for the nine months ended September 30, 2017 and 2016, respectively.

Net premiums earned within the Reinsurance Operations segment increased by 9.6% for the quarter ended September 30, 2017 as compared to the same period in 2016. This increase was primarily due to a new mortgage treaty written in the fourth quarter of 2016 which is expected to earn out over an eight year period. This new mortgage insurance treaty will not be renewed. Net premiums earned within the Reinsurance Operations segment decreased by 0.7% for the nine months ended September 30, 2017 as compared to the same period in 2016 primarily due to reduced levels of property writings due to a competitive marketplace partially offset by the new mortgage treaty. Property net premiums earned were $10.4 million and $9.5 million for the quarters ended September 30, 2017 and 2016, respectively, and $27.8 million and $28.9 million for the nine months ended September 30, 2017 and 2016, respectively. Casualty net premiums earned were $1.2 million and $1.0 million for the quarters ended September 30, 2017 and 2016, respectively, and $3.6 million and $2.8 million for the nine months ended September 30, 2017 and 2016, respectively.

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Reserves

Management’s best estimate at September 30, 2017 was recorded as the loss reserve. Management’s best estimate is as of a particular point in time and is based upon known facts, the Company’s actuarial analyses, current law, and the Company’s judgment. This resulted in carried gross and net reserves of $649.7 million and $532.7 million, respectively, as of September 30, 2017. A breakout of the Company’s gross and net reserves, excluding the effects of the Company’s intercompany pooling arrangements and intercompany stop loss and quota share reinsurance agreements, as of September 30, 2017 is as follows:

	Gross Reserves
(Dollars in thousands)	Case		IBNR (1)		Total
Personal Lines	$	49,576	$	79,577	$	129,153
Commercial Lines		110,757		323,000		433,757
Reinsurance Operations		17,512		69,304		86,816
Total	$	177,845	$	471,881	$	649,726
	Net Reserves (2)
(Dollars in thousands)	Case		IBNR (1)		Total
Personal Lines	$	32,469	$	63,087	$	95,556
Commercial Lines		85,980		264,468		350,448
Reinsurance Operations		17,512		69,140		86,652
Total	$	135,961	$	396,695	$	532,656

(1) Losses incurred but not reported, including the expected future emergence of case reserves.

(2) Does not include reinsurance receivable on paid losses.

Each reserve category has an implicit frequency and severity for each accident year as a result of the various assumptions made. If the actual levels of loss frequency and severity are higher or lower than expected, the ultimate losses will be different than management’s best estimate. For most of its reserve categories, the Company believes that frequency can be predicted with greater accuracy than severity. Therefore, the Company believes management’s best estimate is more likely influenced by changes in severity than frequency. The following table, which the Company believes reflects a reasonable range of variability around its best estimate based on historical loss experience and management’s judgment, reflects the impact of changes (which could be favorable or unfavorable) in frequency and severity on the Company’s current accident year net loss estimate of $237.5 million for claims occurring during the nine months ended September 30, 2017:

			Severity Change
(Dollars in thousands)			-10%			-5%			0%			5%			10%
Frequency Change	-5	%	$	(34,438	)	$	(23,156	)	$	(11,875	)	$	(594	)	$	10,688
	-3	%		(30,163	)		(18,644	)		(7,125	)		4,394			15,913
	-2	%		(28,025	)		(16,388	)		(4,750	)		6,887			18,525
	-1	%		(25,888	)		(14,131	)		(2,375	)		9,381			21,138
	0	%		(23,750	)		(11,875	)		0			11,875			23,750
	1	%		(21,613	)		(9,619	)		2,375			14,369			26,363
	2	%		(19,475	)		(7,363	)		4,750			16,863			28,975
	3	%		(17,338	)		(5,106	)		7,125			19,356			31,588
	5	%		(13,063	)		(594	)		11,875			24,344			36,813

The Company’s net reserves for losses and loss adjustment expenses of $532.7 million as of September 30, 2017 relate to multiple accident years. Therefore, the impact of changes in frequency and severity for more than one accident year could be higher or lower than the amounts reflected above.

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Underwriting Results

The following table compares the Company’s combined ratios by segment:

	Quarters Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Personal Lines		124.8	%		110.0	%		115.6	%		107.8	%
Commercial Lines		83.4	%		91.9	%		81.9	%		97.8	%
Reinsurance		214.7	%		85.8	%		123.8	%		80.0	%
Total		117.3	%		100.6	%		102.7	%		101.3	%

Personal Lines

The components of income and loss from the Company’s Personal Lines segment and corresponding underwriting ratios are as follows:

	Quarters Ended September 30,						% Change			Nine Months Ended September 30,						% Change
(Dollars in thousands)	2017 (3)			2016 (3)						2017 (3)			2016 (3)
Gross premiums written (1)	$	60,962		$	74,266			(17.9	%)	$	192,551		$	238,627			(19.3	%)
Net premiums written	$	50,607		$	60,179			(15.9	%)	$	161,979		$	182,107			(11.1	%)
Net premiums earned	$	52,268		$	61,221			(14.6	%)	$	164,102		$	184,581			(11.1	%)
Other income		2,254			991			127.4	%		5,153			2,714			89.9	%
Total revenues		54,522			62,212			(12.4	%)		169,255			187,295			(9.6	%)
Losses and expenses:
Net losses and loss adjustment expenses		42,534			42,927			(0.9	%)		120,410			122,540			(1.7	%)
Acquisition costs and other underwriting expenses (2)		22,689			24,411			(7.1	%)		69,281			76,349			(9.3	%)
Underwriting income (loss)	$	(10,701	)	$	(5,126	)		108.8	%	$	(20,436	)	$	(11,594	)		76.3	%
	Quarters Ended September 30,						Point Change			Nine Months Ended September 30,						Point Change
	2017 (3)			2016 (3)						2017 (3)			2016 (3)
Underwriting Ratios:
Loss ratio:
Current accident year		83.9	%		70.1	%		13.8			76.1	%		66.4	%		9.7
Prior accident year		(2.5	%)		0.0	%		(2.5	)		(2.7	%)		0.0	%		(2.7	)
Calendar year loss ratio		81.4	%		70.1	%		11.3			73.4	%		66.4	%		7.0
Expense ratio		43.4	%		39.9	%		3.5			42.2	%		41.4	%		0.8
Combined ratio		124.8	%		110.0	%		14.8			115.6	%		107.8	%		7.8

(1) Includes business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement of ($1.4) million and $7.3 million during the quarters ended September 30, 2017 and 2016, respectively, and ($0.2) million and $30.9 million during the nine months ended September 30, 2017 and 2016, respectively.

(2) Includes excise tax related to cessions from the Company’s Personal Lines to its Reinsurance Operations of $0.3 million during each of the quarters ended September 30, 2017 and 2016, and $0.8 million and $0.9 million for the nine months ended September 30, 2017 and 2016, respectively.

(3) Includes business ceded to the Company’s Reinsurance Operations.

Premiums

See “Result of Operations” above for a discussion on premiums.

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GLOBAL INDEMNITY LIMITED

Other Income

Other income was $2.3 million and $1.0 million for the quarters ended September 30, 2017 and 2016, respectively, and $5.2 million and $2.7 million for the nine months ended September 30, 2017 and 2016, respectively. Other income is primarily comprised of fee income on installments, commission income and accrued interest on the anticipated indemnification of unpaid loss and loss adjustment expense reserves. In accordance with a dispute resolution agreement between Global Indemnity Group, Inc. and American Bankers Group, Inc., former parent of American Reliable, any variance paid related to the loss indemnification will be subject to interest of 5% compounded semi-annually. The increase in other income is primarily the result of the Company increasing its estimate of unpaid losses and loss adjustment expenses that would be indemnified by $9.2 million and $18.7 million during the quarter and nine months ended September 30, 2017, respectively.

Loss Ratio

The current accident year losses and loss ratio is summarized as follows:

	Quarters Ended September 30,						% Change			Nine Months Ended September 30,						% Change
(Dollars in thousands)	2017			2016						2017			2016
Property losses
Catastrophe	$	11,424		$	9,318			22.6	%	$	35,048		$	28,594			22.6	%
Non-catastrophe		26,530			26,649			(0.4	%)		72,923			74,817			(2.5	%)
Property losses		37,954			35,967			5.5	%		107,971			103,411			4.4	%
Casualty losses		5,898			6,960			(15.3	%)		16,942			19,129			(11.4	%)
Total accident year losses	$	43,852		$	42,927			2.2	%	$	124,913		$	122,540			1.9	%
	Quarters Ended September 30,						Point Change			Nine Months Ended September 30,						Point Change
	2017			2016						2017			2016
Current accident year loss ratio:
Property
Catastrophe		25.8	%		17.8	%		8.0			25.1	%		18.0	%		7.1
Non-catastrophe		59.9	%		50.9	%		9.0			52.3	%		47.1	%		5.2
Property loss ratio		85.7	%		68.7	%		17.0			77.4	%		65.1	%		12.3
Casualty loss ratio		73.7	%		78.2	%		(4.5	)		68.8	%		74.4	%		(5.6	)
Total accident year loss ratio		83.9	%		70.1	%		13.8			76.1	%		66.4	%		9.7

The current accident year catastrophe loss ratio increased by 8.0 points and 7.1 points during the quarter and nine months ended September 30, 2017, respectively, as compared to the same period in 2016 driven by higher losses in the mobile home reserve category from hurricanes Harvey and Irma in the 3^rd quarter of 2017 and higher losses in the agriculture reserve category from convective storms in the first six months of 2017.

The current accident year non-catastrophe property loss ratio increased by 9.0 points and 5.2 points during the quarter and nine months ended September 30, 2017, respectively, as compared to the same period in 2016. The increase in the loss ratio is driven by higher claims frequency and severity compared to last year.

The current accident year casualty loss ratio improved by 4.5 points and 5.6 points during the quarter and nine months ended September 30, 2017 as compared to the same period in 2016. The improvement in the loss ratio reflects lower reported claims frequency in each of the accident quarters of 2017 compared to the same accident quarters last year.

The calendar year loss ratio for the quarter and nine months ended September 30, 2017 includes a decrease of $1.3 million, or 2.5 percentage points, and a decrease of $4.5 million, or 2.7 percentage points, respectively, related to reserve development on prior accident years. There were no changes to net prior accident year losses during the quarter and nine months ended September 30, 2016. Please see Note 6 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development.

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GLOBAL INDEMNITY LIMITED

Reconciliation of non-GAAP financial measures and ratios

The table below reconciles the non-GAAP measures or ratios to its most directly comparable GAAP measure or ratio. The Company believes the non-GAAP measures or ratios are useful to investors when evaluating the Company’s underwriting performance as trends in the Company’s Personal Lines may be obscured by prior accident year adjustments. These non-GAAP measures or ratios should not be considered as a substitute for its most directly comparable GAAP measure or ratio and does not reflect the overall underwriting profitability of the Company.

	Quarters Ended September 30,											Nine Months Ended September 30,
	2017						2016					2017						2016
	Losses $			Loss Ratio			Losses $		Loss Ratio			Losses $			Loss Ratio			Losses $		Loss Ratio
Property
Non catastrophe property losses and ratio excluding the effect of prior accident year (1)	$	26,530			59.9	%	$	26,649		50.9	%	$	72,923			52.3	%	$	74,817		47.1	%
Effect of prior accident year		17			—			—		—			(1,885	)		(1.4	%)		—		—
Non catastrophe property losses and ratio (2)	$	26,547			59.9	%	$	26,649		50.9	%	$	71,038			50.9	%	$	74,817		47.1	%
Catastrophe losses and ratio excluding the effect of prior accident year (1)	$	11,424			25.8	%	$	9,318		17.8	%	$	35,048			25.1	%	$	28,594		18.0	%
Effect of prior accident year		(1,241	)		(2.8	%)		—		—			(2,055	)		(1.4	%)		—		—
Catastrophe losses and ratio (2)	$	10,183			23.0	%	$	9,318		17.8	%	$	32,993			23.6	%	$	28,594		18.0	%
Total property losses and ratio excluding the effect of prior accident year (1)	$	37,954			85.7	%	$	35,967		68.7	%	$	107,971			77.4	%	$	103,411		65.1	%
Effect of prior accident year		(1,224	)		(2.8	%)		—		—			(3,940	)		(2.8	%)		—		—
Total property losses and ratio (2)	$	36,730			82.9	%	$	35,967		68.7	%	$	104,031			74.6	%	$	103,411		65.1	%
Casualty
Total Casualty losses and ratio excluding the effect of prior accident year (1)	$	5,898			73.7	%	$	6,960		78.2	%	$	16,942			68.8	%	$	19,129		74.4	%
Effect of prior accident year		(94	)		(1.2	%)		—		—			(563	)		(2.3	%)		—		—
Total Casualty losses and ratio (2)	$	5,804			72.5	%	$	6,960		78.2	%	$	16,379			66.5	%	$	19,129		74.4	%
Total
Total net losses and loss adjustment expense and total loss ratio excluding the effect of prior accident year (1)	$	43,852			83.9	%	$	42,927		70.1	%	$	124,913			76.1	%	$	122,540		66.4	%
Effect of prior accident year		(1,318	)		(2.5	%)		—		—			(4,503	)		(2.7	%)		—		—
Total net losses and loss adjustment expense and total loss ratio (2)	$	42,534			81.4	%	$	42,927		70.1	%	$	120,410			73.4	%	$	122,540		66.4	%

(1) Non-GAAP measure / ratio

(2) Most directly comparable GAAP measure / ratio

Expense Ratios

The expense ratio increased by 3.5 points from 39.9% for the quarter ended September 30, 2016 to 43.4% for the quarter ended September 30, 2017 primarily due to a decline in net premiums earned. The expense ratio increased 0.8 points from 41.4% for the nine months ended September 30, 2016 to 42.2% for the nine months ended September 30, 2017.

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GLOBAL INDEMNITY LIMITED

Commercial Lines

The components of income from the Company’s Commercial Lines segment and corresponding underwriting ratios are as follows:

	Quarters Ended September 30,						%			Nine Months Ended September 30,						%
(Dollars in thousands)	2017 (2)			2016 (2)			Change			2017 (2)			2016 (2)			Change
Gross premiums written	$	53,113		$	49,505			7.3	%	$	155,776		$	155,686			0.1	%
Net premiums written	$	46,471		$	45,074			3.1	%	$	137,025		$	140,199			(2.3	%)
Net premiums earned	$	44,778		$	47,774			(6.3	%)	$	133,289		$	142,749			(6.6	%)
Other income		—			6,872			(100.0	%)		78			6,872			(98.9	%)
Total revenues		44,778			54,646			(18.1	%)		133,367			149,621			(10.9	%)
Losses and expenses:
Net losses and loss adjustment expenses		19,095			23,848			(19.9	%)		53,688			78,813			(31.9	%)
Acquisition costs and other underwriting expenses (1)		18,237			20,048			(9.0	%)		55,398			60,784			(8.9	%)
Underwriting income (loss)	$	7,446		$	10,750			(30.7	%)	$	24,281		$	10,024			142.2	%
	Quarters Ended September 30,						Point			Nine Months Ended September 30,						Point
	2017 (2)			2016 (2)			Change			2017 (2)			2016 (2)			Change
Underwriting Ratios:
Loss ratio:
Current accident year		58.9	%		63.6	%		(4.7	)		59.9	%		68.4	%		(8.5	)
Prior accident year		(16.2	%)		(13.7	%)		(2.5	)		(19.6	%)		(13.2	%)		(6.4	)
Calendar year loss ratio		42.7	%		49.9	%		(7.2	)		40.3	%		55.2	%		(14.9	)
Expense ratio		40.7	%		42.0	%		(1.3	)		41.6	%		42.6	%		(1.0	)
Combined ratio		83.4	%		91.9	%		(8.5	)		81.9	%		97.8	%		(15.9	)

(1) Includes excise tax related to cessions from the Company’s Commercial Lines to its Reinsurance Operations of $0.1 million for the each of the quarters ended September 30, 2017 and 2016, and $0.4 million for each of the nine months ended September 30, 2017 and 2016.

(2) Includes business ceded to the Company’s Reinsurance Operations.

Premiums

See “Result of Operations” above for a discussion on premiums.

Other Income

Commercial Lines did not have any other income for the quarter ended September 30, 2017. Other income was $6.9 million for the quarter ended September 30, 2016, and $0.1 million and $6.9 million for the nine months ended September 30, 2017 and 2016, respectively. For the quarter and nine months ended September 30, 2016, other income of $6.9 million is comprised of the net gain on the asset sale of the Company’s wholly owned subsidiary, United National Specialty Insurance Company.

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GLOBAL INDEMNITY LIMITED

Loss Ratio

The current accident year losses and loss ratio is summarized as follows:

	Quarters Ended September 30,						%			Nine Months Ended September 30,						%
(Dollars in thousands)	2017			2016			Change			2017			2016			Change
Property losses
Catastrophe	$	3,873		$	2,447			58.3	%	$	9,132		$	13,110			(30.3	%)
Non-catastrophe		8,401			12,049			(30.3	%)		30,073			42,889			(29.9	%)
Property losses		12,274			14,496			(15.3	%)		39,205			55,999			(30.0	%)
Casualty losses		14,084			15,877			(11.3	%)		40,667			41,666			(2.4	%)
Total accident year losses	$	26,358		$	30,373			(13.2	%)	$	79,872		$	97,665			(18.2	%)
	Quarters Ended September 30,						Point			Nine Months Ended September 30,						Point
	2017			2016			Change			2017			2016			Change
Current accident year loss ratio:
Property
Catastrophe		17.6	%		9.5	%		8.1			13.5	%		16.8	%		(3.3	)
Non-catastrophe		38.1	%		46.9	%		(8.8	)		44.5	%		55.1	%		(10.6	)
Property loss ratio		55.7	%		56.4	%		(0.7	)		58.0	%		71.9	%		(13.9	)
Casualty loss ratio		61.9	%		71.8	%		(9.9	)		61.9	%		64.2	%		(2.3	)
Total accident year loss ratio		58.9	%		63.6	%		(4.7	)		59.9	%		68.4	%		(8.5	)

The current accident year catastrophe loss ratio increased by 8.1 points during the quarter ended September 30, 2017 as compared to the same period in 2016 primarily due to the impacts from hurricanes Harvey and Irma in the third quarter of 2017. The current accident year catastrophe loss ratio improved by 3.3 points during the nine months ended September 30, 2017 as compared to the same period in 2016 primarily due to lower claims severity in 2017.

The current accident year non-catastrophe property loss ratio improved by 8.8 points and 10.6 points during the quarter and nine months ended September 30, 2017, respectively, as compared to the same period in 2016. The improvement in the loss ratio reflects lower reported claims frequency in each of the accident quarters of 2017 compared to the same accident quarters last year.

The current accident year casualty loss ratio improved by 9.9 points and 2.3 points during the quarter and nine months ended September 30, 2017, respectively, as compared to the same period in 2016. The improvement in the loss ratio is driven primarily by lower reported claims frequency as compared to the same period last year.

The calendar year loss ratio for the quarter and nine months ended September 30, 2017 includes a decrease of $7.3 million, or 16.2 percentage points, and a decrease of $26.2 million, or 19.6 percentage points, respectively, related to reserve development on prior accident years. The calendar year loss ratio for the quarter and nine months ended September 30, 2016 includes a decrease of $6.5 million, or 13.7 percentage points and a decrease of $18.9 million, or 13.2 percentage points, respectively, related to reserve development on prior accident years. Please see Note 6 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development.

47

GLOBAL INDEMNITY LIMITED

Reconciliation of non-GAAP financial measures and ratios

The table below reconciles the non-GAAP measures or ratios to its most directly comparable GAAP measure or ratio. The Company believes the non-GAAP measures or ratios are useful to investors when evaluating the Company’s underwriting performance as trends in the Company’s Commercial Lines may be obscured by prior accident year adjustments. These non-GAAP measures or ratios should not be considered as a substitute for its most directly comparable GAAP measure or ratio and does not reflect the overall underwriting profitability of the Company.

	Quarters Ended September 30,												Nine Months Ended September 30,
	2017						2016						2017						2016
	Losses $			Loss Ratio			Losses $			Loss Ratio			Losses $			Loss Ratio			Losses $			Loss Ratio
Property
Non catastrophe property losses and ratio excluding the effect of prior accident year (1)	$	8,401			38.1	%		12,049			46.9	%	$	30,073			44.5	%		42,889			55.1	%
Effect of prior accident year		(356	)		(1.6	%)		2,093			8.2	%		(4,023	)		(6.0	%)		560			0.7	%
Non catastrophe property losses and ratio (2)	$	8,045			36.5	%		14,142			55.1	%	$	26,050			38.5	%		43,449			55.8	%
Catastrophe losses and ratio excluding the effect of prior accident year (1)	$	3,873			17.6	%		2,447			9.5	%	$	9,132			13.5	%		13,110			16.8	%
Effect of prior accident year		212			1.0	%		(2	)		0.0	%		(1,331	)		(2.0	%)		299			0.4	%
Catastrophe losses and ratio (2)	$	4,085			18.6	%		2,445			9.5	%	$	7,801			11.5	%		13,409			17.2	%
Total property losses and ratio excluding the effect of prior accident year (1)	$	12,274			55.7	%		14,496			56.4	%	$	39,205			58.0	%		55,999			71.9	%
Effect of prior accident year		(144	)		(0.6	%)		2,091			8.2	%		(5,354	)		(8.0	%)		859			1.1	%
Total property losses and ratio (2)	$	12,130			55.1	%		16,587			64.6	%	$	33,851			50.0	%		56,858			73.0	%
Casualty
Total Casualty losses and ratio excluding the effect of prior accident year (1)	$	14,084			61.9	%	$	15,877			71.8	%	$	40,667			61.9	%	$	41,666			64.2	%
Effect of prior accident year		(7,119	)		(31.3	%)		(8,616	)		(39.0	%)		(20,830	)		(31.7	%)		(19,711	)		(30.4	%)
Total Casualty losses and ratio (2)	$	6,965			30.6	%	$	7,261			32.8	%	$	19,837			30.2	%	$	21,955			33.8	%
Total
Total net losses and loss adjustment expense and total loss ratio excluding the effect of prior accident year (1)	$	26,358			58.9	%	$	30,373			63.6	%	$	79,872			59.9	%	$	97,665			68.4	%
Effect of prior accident year		(7,263	)		(16.2	%)		(6,525	)		(13.7	%)		(26,184	)		(19.6	%)		(18,852	)		(13.2	%)
Total net losses and loss adjustment expense and total loss ratio (2)	$	19,095			42.7	%	$	23,848			49.9	%	$	53,688			40.3	%	$	78,813			55.2	%

(1) Non-GAAP measure / ratio

(2) Most directly comparable GAAP measure / ratio

Expense Ratios

The expense ratio improved by 1.3 points from 42.0% for the quarter ended September 30, 2016 to 40.7% for the quarter ended September 30, 2017. The expense ratio improved 1.0 points from 42.6% for the nine months ended September 30, 2016 to 41.6% for the nine months ended September 30, 2017. The improvement in the expense ratio is primarily due to lower compensation expense.

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GLOBAL INDEMNITY LIMITED

Reinsurance Operations

The components of income from the Company’s Reinsurance Operations segment and corresponding underwriting ratios are as follows:

	Quarters Ended September 30,						%			Nine Months Ended September 30,						%
(Dollars in thousands)	2017 (1)			2016 (1)			Change			2017 (1)			2016 (1)			Change
Gross premiums written	$	11,979		$	9,798			22.3	%	$	45,372		$	34,941			29.9	%
Net premiums written	$	11,967		$	9,798			22.1	%	$	45,344		$	34,927			29.8	%
Net premiums earned	$	11,573		$	10,558			9.6	%	$	31,427		$	31,663			(0.7	%)
Other income		40			(11	)		NM			213			17			NM
Total revenues		11,613			10,547			10.1	%		31,640			31,680			(0.1	%)
Losses and expenses:
Net losses and loss adjustment expenses		20,766			5,387			285.5	%		28,558			13,704			108.4	%
Acquisition costs and other underwriting expenses		4,076			3,670			11.1	%		10,331			11,628			(11.2	%)
Underwriting income (loss)	$	(13,229	)	$	1,490			NM		$	(7,249	)	$	6,348			(214.2	%)
	Quarters Ended September 30,						Point			Nine Months Ended September 30,						Point
	2017 (1)			2016 (1)			Change			2017 (1)			2016 (1)			Change
Underwriting Ratios:
Loss ratio:
Current accident year (2)		186.3	%		78.4	%		107.9			104.0	%		62.5	%		41.5
Prior accident year		(6.8	%)		(27.4	%)		20.6			(13.1	%)		(19.2	%)		6.1
Calendar year loss ratio (3)		179.5	%		51.0	%		128.5			90.9	%		43.3	%		47.6
Expense ratio		35.2	%		34.8	%		0.4			32.9	%		36.7	%		(3.8	)
Combined ratio		214.7	%		85.8	%		128.9			123.8	%		80.0	%		43.8

NM – not meaningful

(1) External business only, excluding business assumed from affiliates.

(2) Non-GAAP ratio

(3) Most directly comparable GAAP ratio

Reconciliation of non-GAAP financial ratios

The table above includes a reconciliation of the current accident year loss ratio, which is a non-GAAP ratio, to its calendar year loss ratio, which is its most directly comparable GAAP ratio. The Company believes this non-GAAP ratio is useful to investors when evaluating the Company’s underwriting performance as trends in the Company’s Reinsurance Operations may be obscured by prior accident year adjustments. This non-GAAP ratio should not be considered as a substitute for its most directly comparable GAAP ratio and does not reflect the overall underwriting profitability of the Company.

Premiums

See “Result of Operations” above for a discussion on premiums.

Other Income

Reinsurance Operations recognized income of $0.04 million and a loss of $0.01 million for the quarters ended September 30, 2017 and 2016, respectively and income of $0.2 million and $0.02 million for the nine months ended September 30, 2017 and 2016, respectively. Other income is comprised of foreign exchange gains and losses.

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GLOBAL INDEMNITY LIMITED

Loss Ratio

The current accident year loss ratio increased by 107.9 points during the quarter ended September 30, 2017 as compared to the same period in 2016. The increase in the loss ratio was driven by the high frequency of catastrophe events in the 3^rd quarter including hurricanes Harvey, Irma and Maria.

The current accident year loss ratio increased by 41.5 points during the nine months ended September 30, 2017 as compared to the same period in 2016. The increase in the loss ratio was mainly attributable to the higher impact from catastrophes through nine months of development as compared to the same period last year.

The calendar year loss ratio for the quarter and nine months ended September 30, 2017 includes a decrease of $0.8 million, or 6.8 percentage points, and a decrease of $4.1 million or 13.1 percentage points, respectively, related to reserve development on prior accident years. The calendar year loss ratio for the quarter and nine months ended September 30, 2016 includes a decrease of $2.9 million, or 27.4 percentage points and a decrease of $6.1 million, or 19.2 percentage points, respectively, related to reserve development on prior accident years. Please see Note 6 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development.

Expense Ratio

The expense ratio increased by 0.4 points from 34.8% for the quarter ended September 30, 2016 to 35.2% for the quarter ended September 30, 2017. The expense ratio improved by 3.8 points from 36.7% for the nine months ended September 30, 2016 to 32.9% for the nine months ended September 30, 2017. The improvement in the expense ratio is primarily due to receiving a federal excise tax refund related to prior years.

Unallocated Corporate Items

The Company’s investments are managed distinctly according to assets supporting future insurance obligations and assets in excess of those supporting future insurance obligations. Assets supporting insurance obligations are referred to as the Insurance Obligations Portfolio. The Insurance Obligations Portfolio consists of cash and high-quality fixed income investments. Assets in excess of insurance obligations are referred to as the Surplus Portfolio. The Surplus Portfolio targets higher returns and is comprised of cash, fixed income, common stocks, and alternative investments.

The Insurance Obligations Portfolio has a market value of $845.7 million and the fixed income securities within have a credit quality of AA- and duration of 3.1 years. The Surplus Reserve Portfolio has a market value of $782.3 million and the fixed income securities within have a credit quality of A- and duration of 3.5 years.

Since the Company began managing its investments as two portfolios during the 2nd quarter of 2017, year to date performance metrics are an approximation. The Insurance Obligations Portfolio returned 2.7% for the nine months ended September 30, 2017 with net investment income of $13.4 million and realized gains of $0.5 million. The Surplus Portfolio returned 4.5% for the nine months ended September 30, 2017 with net investment income of $14.2 million and realized gains of $0.7 million.

Net Investment Income

	Quarters Ended September 30,						%			Nine Months Ended September 30,						%
(Dollars in thousands)	2017			2016			Change			2017			2016			Change
Gross investment income (1)	$	10,807		$	9,782			10.5	%	$	29,816		$	29,293			1.8	%
Investment expenses		(673	)		(987	)		(31.8	%)		(2,198	)		(4,190	)		(47.5	%)
Net investment income	$	10,134		$	8,795			15.2	%	$	27,618		$	25,103			10.0	%

(1) Excludes realized gains and losses

Gross investment income increased by 10.5% for the quarter ended September 30, 2017 and increased 1.8% for the nine months ended September 30, 2017, as compared with the same periods in 2016. The increase for the quarter ended was

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primarily due to an increase in yield within the fixed maturities portfolio. The increase for the nine months ended was due to an increase in yield and a larger investment portfolio, offset by a decrease in income related to the Company’s limited partnership investments.

Investment expenses decreased by 31.8% and 47.5% for the quarter and nine months ended September 30, 2017, respectively, as compared with the same periods in 2016. The decrease is mainly attributable to $1.5 million in upfront fees paid in 2016 to enter into a new investment in middle market corporate debt and equity investments in limited liability companies.

At September 30, 2017, the Company held agency mortgage-backed securities with a market value of $95.9 million. Excluding the agency mortgage-backed securities, the average duration of the Company’s fixed maturities portfolio was 3.2 years as of September 30, 2017, compared with 2.0 years as of September 30, 2016. Including cash and short-term investments, the average duration of the Company’s fixed maturities portfolio, excluding agency mortgage-backed securities, was 3.1 years as of September 30, 2017, compared with 1.9 years as of September 30, 2016. Changes in interest rates can cause principal payments on certain investments to extend or shorten which can impact duration. At September 30, 2017, the Company’s embedded book yield on its fixed maturities, not including cash, was 2.7% compared with 2.2% at September 30, 2016. The embedded book yield on the $117.2 million of municipal bonds in the Company’s portfolio, which includes $103.6 million of taxable municipal bonds, was 3.1% at September 30, 2017, compared to an embedded book yield of 2.8% on the Company’s municipal bond portfolio of $170.7 million at September 30, 2016.

Net Realized Investment Gains (Losses)

The components of net realized investment gains (losses) for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

	Quarters Ended September 30,						%			Nine Months Ended September 30,						%
(Dollars in thousands)	2017			2016			Change			2017			2016			Change
Common stock	$	289		$	2,989			(90.3	%)	$	2,079		$	7,056			(70.5	%)
Fixed maturities		134			395			(66.1	%)		795			1,162			(31.6	%)
Interest rate swap		(366	)		758			(148.3	%)		(2,016	)		(12,794	)		84.2	%
Other than temporary impairment losses		(1,020	)		(2,214	)		53.9	%		(1,708	)		(4,481	)		61.9	%
Net realized investment gains (losses)	$	(963	)	$	1,928			(149.9	%)	$	(850	)	$	(9,057	)		90.6	%

See Note 2 of the notes to the consolidated financial statements in Item 1 of Part I of this report for an analysis of total investment return on a pre-tax basis for the quarters and nine months ended September 30, 2017 and 2016.

Corporate and Other Operating Expenses

Corporate and other operating expenses consist primarily of outside legal fees, other professional fees, directors’ fees, management fees, salaries and benefits for holding company personnel, development costs for new products, and taxes incurred which are not directly related to operations. Corporate and other operating expenses were $4.6 million and $5.0 million during the quarters ended September 30, 2017 and 2016, respectively and $11.0 million and $13.1 million during the nine months ended September 30, 2017 and 2016, respectively. This decrease is primarily due to incurring cost in connection with the re-domestication in 2016 which the Company did not incur in 2017.

Interest Expense

Interest expense increased 116.6% and 80.7% during the quarter and nine months ended September 30, 2017 as compared to the same period in 2016. This increase is primarily due to the Company’s $130 million debt offering in March, 2017. See Note 7 of the notes to the consolidated financial statements in Item 1 of Part I of this report for details on the Company’s debt.

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Income Tax Benefit

The income tax benefit was $7.9 million for the quarter ended September 30, 2017 compared with income tax expense of $1.1 million for the quarter ended September 30, 2016. The increase in the income tax benefit is primarily due to losses incurred in the Company’s U.S. operations for the quarter ended September 30, 2017 as compared to a gain in 2016.

The income tax benefit was $13.2 million for the nine months ended September 30, 2017 compared with income tax benefit of $10.4 million for the nine months ended September 30, 2016. The increase in the income tax benefit rate is primarily due to higher losses incurred in the Company’s US operations for the nine months ended September 30, 2017 compared to the same period in 2016.

See Note 5 of the notes to the consolidated financial statements in Item 1 of Part I of this report for a comparison of income tax between periods.

Net Income (Loss)

The factors described above resulted in a net loss of $8.9 million and net income of $9.5 million for the quarters ended September 30, 2017 and 2016, respectively, and net income of $13.4 million and $11.5 million for the nine months ended September 30, 2017 and 2016, respectively.

Liquidity and Capital Resources

Sources and Uses of Funds

Global Indemnity is a holding company. Its principal asset is its ownership of the shares of its direct and indirect subsidiaries, including those of its U.S. insurance companies: United National Insurance Company, Diamond State Insurance Company, Penn-America Insurance Company, Penn-Star Insurance Company, Penn-Patriot Insurance Company, and American Reliable Insurance Company; and its Reinsurance Operations: Global Indemnity Reinsurance.

The principal sources of cash that Global Indemnity requires to meet its short term and long term liquidity needs, including the payment of corporate expenses, debt service payments, and share repurchases includes dividends, other permitted disbursements from its direct and indirect subsidiaries, reimbursement for equity awards granted to employees and intercompany borrowings. The principal sources of funds at these direct and indirect subsidiaries include underwriting operations, investment income, and proceeds from sales and redemptions of investments. Funds are used principally by these operating subsidiaries to pay claims and operating expenses, to make debt payments, fund margin requirements on interest rate swap agreements, to purchase investments, and to make dividend payments. In addition, the Company periodically reviews opportunities related to business acquisitions and as a result, liquidity may be needed in the future.

On October 29, 2015, Global Indemnity acquired rights, expiring December 31, 2019, to redeem an additional 3,397,031 ordinary shares for $78.1 million, which is subject to an annual 3% increase in price. As of September 30, 2017, the Company also had future funding commitments of $59.5 million related to investments. The timing of commitments related to investments is uncertain.

The future liquidity of Global Indemnity is dependent on the ability of its subsidiaries to pay dividends. Global Indemnity’s U.S. insurance companies are restricted by statute as to the amount of dividends that they may pay without the prior approval of regulatory authorities. The dividend limitations imposed by state laws are based on the statutory financial results of each insurance company within the Insurance Operations that are determined by using statutory accounting practices that differ in various respects from accounting principles used in financial statements prepared in conformity with GAAP. See “Regulation—Statutory Accounting Principles” in Item 1 of Part I of the Company’s 2016 Annual Report on Form 10-K. Key differences relate to, among other items, deferred acquisition costs, limitations on deferred income taxes, reserve calculation assumptions and surplus notes. See Note 19 of the notes to the consolidated financial statements in Item 8 of Part II of the Company’s 2016 Annual Report on Form 10-K for further information on dividend limitations related to the U.S. Insurance Companies. The U.S. Insurance Companies did not declare any dividends during the quarter ended September 30, 2017. During the nine months ended September 30, 2017, the United National Insurance Company, the Penn-America Insurance Company, and American Reliable declared dividends of $17.8 million,

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$7.9 million, and $3.3 million, respectively, which were paid in September, 2017. In addition, United National Insurance Company paid a $35.0 million dividend, which was previously declared in 2015, to its parent company, American Insurance Services, Inc. during the nine months ended September 30, 2017.

For 2017, the Company believes that Global Indemnity Reinsurance, including distributions it could receive from its subsidiaries, should have sufficient liquidity and solvency to pay dividends. Global Indemnity Reinsurance is prohibited, without the approval of the Bermuda Monetary Authority (“BMA”), from reducing by 15% or more its total statutory capital as set out in its previous year’s statutory financial statements, and any application for such approval must include such information as the BMA may require. See “Regulation—Bermuda Insurance Regulation” in Item 1 of Part I of the Company’s 2016 Annual Report on Form 10-K. Global Indemnity Reinsurance did not declare or pay any dividends during the quarter or nine months ended September 30, 2017.

Cash Flows

Sources of operating funds consist primarily of net premiums written and investment income. Funds are used primarily to pay claims and operating expenses and to purchase investments.

The Company’s reconciliation of net income to cash used for operations is generally influenced by the following:

• the fact that the Company collects premiums, net of commissions, in advance of losses paid;

• the timing of the Company’s settlements with its reinsurers; and

• the timing of the Company’s loss payments.

Net cash used for operating activities was $13.6 million for the nine months ended September 30, 2017 and net cash used by operating activities was $9.3 million for the nine months ended September 30, 2016. The decrease in operating cash flows of approximately $4.3 million from the prior year was primarily a net result of the following items:

	Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			Change
Net premiums collected	$	323,239		$	363,677		$	(40,438	)
Net losses paid		(202,564	)		(225,631	)		23,067
Underwriting and corporate expenses		(150,012	)		(168,391	)		18,379
Net investment income		25,572			27,840			(2,268	)
Net federal income taxes paid		(104	)		(263	)		159
Interest paid		(9,738	)		(6,578	)		(3,160	)
Net cash used for operating activities	$	(13,607	)	$	(9,346	)	$	(4,261	)

See the consolidated statement of cash flows in the consolidated financial statements in Item 1 of Part I of this report for details concerning the Company’s investing and financing activities.

Liquidity

Property Catastrophe Quota Share

Effective April 15, 2017, the Company entered into an agreement to cede 50% of its property catastrophe losses for all single occurrences over $3 million up to a loss of $40 million. This treaty has an aggregate limit of $60 million and will expire on June 1, 2018.

As a result of entering into this treaty, the Company did not renew the $20 million in excess of $20 million layer of its property catastrophe treaty on June 1, 2017.

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Public Debt Offering

On March 23, 2017, the Company issued the 7.875% Subordinated Notes due 2047 in the aggregate principal amount of

$120.0 million through an underwritten public offering. Pursuant to the underwriting agreement, the Company granted the underwriters a 30 day option to purchase up to an additional $18 million aggregate principal amount of the 2047 Notes solely to cover over-allotments, if any. On March 30, 2017, the underwriters exercised their over-allotment option in the amount of $10 million principal amount of the 2047 Notes. As a result, the aggregate principal amount of the 2047 Notes increased to $130.0 million. The sale of the 2047 Notes pursuant to the over-allotment option closed on March 30, 2017.  

Other than the items discussed in the preceding paragraphs, there have been no material changes to the Company’s liquidity during the nine months ended September 30, 2017. Please see Item 7 of Part II in the Company’s 2016 Annual Report on Form 10-K for information regarding the Company’s liquidity.

Capital Resources

During the first quarter of 2017, Global Indemnity made a capital contribution in the amount of $96.0 million to its subsidiary, Global Indemnity (Gibraltar) Limited. Through a series of additional capital contributions and repayment of certain intercompany balances, U.A.I. (Luxembourg) IV S.à.r.l. was the ultimate recipient of this capital contribution in the amount of $93.5 million.

Global Indemnity Group, Inc. issued a promissory note in the amount of $120.0 million to U.A.I. (Luxembourg) Investment S.à.r.l. during the first quarter of 2017. This note bears interest at a rate of 8.15% and matures in 2047.

Other than the items discussed in the preceding paragraphs, there have been no material changes to the Company’s capital resources during the nine months ended September 30, 2017. Please see Item 7 of Part II in the Company’s 2016 Annual Report on Form 10-K for information regarding the Company’s capital resources.

Contractual Obligations

The Company has commitments in the form of operating leases, commitments to fund limited liability investments, subordinated notes, and unpaid losses and loss expense obligations. As of September 30, 2017, contractual obligations related to Global Indemnity’s commitments, including any principal and interest payments, were as follows:

			Payment Due by Period
(Dollars in thousands)	Total		Less than 1 year		1 – 3 years		3 -5 years		More than 5 years
Operating leases (1)	$	6,502	$	3,314	$	3,188	$	—	$	—
Commitments to fund limited partnership investments (2)		59,490		59,490		—		—		—
Subordinated notes due 2045 (3)		317,000		7,750		15,500		15,500		278,250
Subordinated notes due 2047 (4)		434,566		10,238		20,475		20,475		383,378
Unpaid losses and loss adjustment expenses obligations (5)		649,726		276,783		226,754		76,668		69,521
Total	$	1,467,284	$	357,575	$	265,917	$	112,643	$	731,149

(1) The Company leases office space and equipment as part of its normal operations. The amounts shown above represent future commitments under such operating leases.

(2) Represents future funding commitment of the Company’s participation in three separate limited partnership investments. See Note 10 of the notes to the consolidated financial statements in Item 1 of Part I of this report for additional information on these commitments.

(3) Represents the Subordinated Notes due in 2045 in the aggregate principal amount of $100.0 million through an underwritten public offering. The notes bear interest at an annual rate equal to 7.75% payable quarterly. Please see Note 12 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2016 Annual Report on Form 10-K for more information on the Company’s 7.75% subordinated note due 2045.

(4) Represents the Subordinated Notes due in 2047 in the aggregate principal amount of $130.0 million through an underwritten public offering. The notes bear interest at an annual rate equal to 7.875% payable quarterly. See Note 7 of the notes to the consolidated financial statements in Item 1 of Part I of this report for additional information on the 2047 Subordinated Notes.

(5) These amounts represent the gross future amounts needed to pay losses and related loss adjustment expenses and do not reflect amounts that are expected to be recovered from the Company’s reinsurers.

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Off Balance Sheet Arrangements

The Company has no off balance sheet arrangements.

Cautionary Note Regarding Forward-Looking Statements

Some of the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report may include forward-looking statements within the meaning of Section 21E of the Security Exchange Act of 1934, as amended, that reflect the Company’s current views with respect to future events and financial performance. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “project,” “plan,” “seek,” “intend,” or “anticipate” or the negative thereof or comparable terminology, and include discussions of strategy, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, expectations or consequences of identified transactions or natural disasters, and statements about the future performance, operations, products and services of the companies.

The Company’s business and operations are and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. See “Risk Factors” in Item 1A of Part I in the Company’s 2016 Annual Report on Form 10-K for risks, uncertainties and other factors that could cause actual results and experience to differ from those projected. The Company’s forward-looking statements speak only as of the date of this report or as of the date they were made. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For the quarter ending September 30, 2017, global equities rallied for the sixth consecutive quarter. A broad-based expansion of economic growth, supportive monetary policy, and benign inflation helped drive equity markets higher during the third quarter. Eurozone confidence reached a decade-high in September on the back of solid employment and manufacturing data and a reacceleration in the services sector. The US economy continued on an upward trajectory, and signs of firming inflation increased investors’ expectation of further monetary policy tightening at the end of the year. As the global economy continued to gain momentum, central banks began to normalize their long-standing loose monetary policies. Angela Merkel was reelected for a fourth term as German Chancellor. US equities rose for the eighth straight quarter. Despite continued White House turmoil and heightened U.S. tensions with Russia and North Korea, strong employment data and corporate earnings helped propel the S&P 500 Index to a series of new highs. Within the S&P 500 Index, 10 of the 11 sectors posted positive results for the quarter. Consumer staples was the only sector to post a negative return, with much of the weakness attributed to the poor performance of the tobacco and food products groups.

Global fixed income markets generated positive returns in the third quarter. Escalating geopolitical tensions between the US and North Korea and serial disappointments in inflation data helped to contain the increase in sovereign yields prompted by central bank policy normalization. Generally strong economic data, a rally in commodity prices, and continued demand for yield-producing assets supported credit markets and spreads tightened further. Most developed market currencies strengthened versus the US dollar as political uncertainty and continued skepticism about the US Federal Reserve’s (Fed’s) projected rate-hiking path weighed on the greenback.

The Company’s investment grade fixed income portfolio continues to maintain high quality with an A+ average rating and duration of 3.1 years. The Insurance Obligations Portfolio has a credit quality of AA- and duration of 3.0 years. The portion of the Surplus Portfolio comprised of cash and fixed income securities has a credit quality of A- and duration of 3.4 years.

Portfolio purchases were focused within agency mortgage backed securities, U.S. corporate bonds and asset backed securities. These purchases were funded primarily through sales of U.S. credit, commercial mortgage backed securities, and tax-exempt municipals, as well as maturities and paydowns. During the third quarter, the portfolio’s allocation to agency mortgaged backed securities increased and the allocation to tax-exempt municipals decreased.

There have been no other material changes to the Company’s market risk since December 31, 2016. Please see Item 7A of Part II in the Company’s 2016 Annual Report on Form 10-K for information regarding the Company’s market risk.

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Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2017. Based upon that evaluation, and subject to the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2017, the design and operation of the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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PART II-OTHER INFORMATION

Item 1. Legal Proceedings

The Company is, from time to time, involved in various legal proceedings in the ordinary course of business. The Company maintains insurance and reinsurance coverage for risks in amounts that it considers adequate. However, there can be no assurance that the insurance and reinsurance coverage that the Company maintains is sufficient or will be available in adequate amounts or at a reasonable cost. The Company does not believe that the resolution of any currently pending legal proceedings, either individually or taken as a whole, will have a material adverse effect on its business, results of operations, cash flows, or financial condition.

There is a greater potential for disputes with reinsurers who are in runoff. Some of the Company’s reinsurers’ have operations that are in runoff, and therefore, the Company closely monitors those relationships. The Company anticipates that, similar to the rest of the insurance and reinsurance industry, it will continue to be subject to litigation and arbitration proceedings in the ordinary course of business.

Item 1A. Risk Factors

The Company’s results of operations and financial condition are subject to numerous risks and uncertainties described in Item 1A of Part I in the Company’s 2016 Annual Report on Form 10-K, filed with the SEC on March 10, 2017 and the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 10, 2017. The risk factors identified therein have not materially changed.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company’s Share Incentive Plan allows employees to surrender the Company’s A ordinary shares as payment for the tax liability incurred upon the vesting of restricted stock. There were no shares surrendered by the Company’s employees during the quarter ended September 30, 2017. All A ordinary shares surrendered by the employees by the Company are held as treasury stock and recorded at cost until formally retired.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

On August 8, 2017, the Company’s subsidiary, Global Indemnity Group, Inc. and William J. Devlin, Jr. amended Mr. Devlin’s executive employment agreement to allow for the vesting of any unvested A ordinary shares held by Mr. Devlin upon a change in control of the Company, as defined in the amendment.

On August 8, 2017, the Company and Stephen Green amended Mr. Green’s executive employment term sheet to allow for the vesting of any unvested A ordinary shares held by Mr. Green upon a change in control of the Company, as defined in the amendment.

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Item 6. Exhibits

10.1+	Confidentiality Agreement between Fox Paine & Company, LLC and Global Indemnity Limited, dated September 17, 2017.
31.1+	Certification of Chief Executive Officer pursuant to Rule 13a-14 (a) / 15d-14 (a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2+	Certification of Chief Financial Officer pursuant to Rule 13a-14 (a) / 15d-14 (a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1+	The following financial information from Global Indemnity Limited’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 formatted in XBRL: (i) Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016; (ii) Consolidated Statements of Operations for the quarters and nine months ended September 30, 2017 and 2016; (iii) Consolidated Statements of Comprehensive Income for the quarters and nine months ended September 30, 2017 and 2016; (iv) Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended September 30, 2017 and the year ended December 31, 2016; (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016; and (vi) Notes to Consolidated Financial Statements.
+  Filed or furnished herewith, as applicable.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		GLOBAL INDEMNITY LIMITED Registrant
November 9, 2017			By:	/s/ Thomas M. McGeehan
Date:	November 9, 2017		Thomas M. McGeehan
			Chief Financial Officer
			(Authorized Signatory and Principal Financial and Accounting Officer)

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EX-10.1

Exhibit 10.1

CONFIDENTIALITY AGREEMENT

This agreement is between Fox Paine & Co, LLC (“Recipient”), and Global Indemnity Limited, a Cayman company, on behalf of itself and its subsidiaries (collectively, “GBLI” or the “Company”).

WHEREAS from time to time Recipient and may in the future nominate directors (each such nominee, a “Recipient’s Board Nominee”) to the Global Indemnity Limited Board of Directors (the “Board”).

WHEREAS When appointed to the Board, Recipient’s Board Nominees are expected to regularly receive confidential, proprietary, privileged and/or material non-public information regarding GBLI’s business in order to permit Recipient’s Board Nominees to fulfill Recipient’s Board Nominees’ duties as members of the Board (the “Purpose”):

NOW THEREFORE in consideration of the covenants herein contained, the parties agree as follows:

1.     As used herein “Proprietary Information” mean any information, communication or data in any form regarding GBLI or its business, including, without limitation, its financials, products, operations, Board deliberations and discussions, plans, customers, suppliers, agents and strategy provided to Recipient’s Board Nominee orally or in writing by or on behalf of GBLI or any agent or representative of GBLI or to which the Recipient’s Board Nominee has access by way of inspection or observation by reason of Recipient’s Board Nominees’ relationship to the Company, together with any notes, analyses, reports, models, studies, interpretations, documents or records containing, referring to, based upon or derived from such information, communication or data. Proprietary Information, as may be embodied in any form, is subject to the terms of this Agreement.

2.    The Company hereby agrees that, subject to and in accordance with the terms of this Agreement, Recipient’s Board Nominees may, if Recipient’s Board Nominee so desires, disclose Proprietary Information to Recipient; provided, however, that Recipient’s Board Nominees shall not take any action or fail to take any action with the purpose or effect of waiving attorney client privilege or disclose to Recipient any legal advice that may be included in the Proprietary Information with respect to which such disclosure would constitute waiver of the Company’s attorney client privilege or attorney work-product.

3.    Recipient will not disclose Proprietary Information to any third party without the prior written approval of GBLI.

4.    The obligations imposed by this Agreement will not apply with respect to any Proprietary Information that (a) has been publicly disclosed or otherwise made generally available to the public, through no fault of Recipient or Recipient’s Board Nominee in breach of this Agreement or the Recipient’s Board Nominees’ confidentiality obligations to the Company; (b) has been independently developed by Recipient; (c) has been received by Recipient from a source other than the Company or its representatives that, to the knowledge of Recipient, is not subject to a confidentiality agreement with the Company; or (d) required or requested by law or an applicable regulatory authority or stock exchange to be disclosed, provided that, to the extent reasonably practicable and if legally permitted, the Recipient notifies GBLI prior to such disclosure.

5.    Recipient acknowledges and agrees that the Proprietary Information may constitute material non-public information under applicable federal and state securities laws, and that Recipient shall not, while such information constitutes material non-public information, trade or engage in any derivative or other transaction, on the basis of such information in violation of such laws.

6.    No license, title or right with respect to any Proprietary Information is granted by GBLI to the Recipient under any patents, patent applications, trademarks, copyrights or trade secrets.

7.    This Agreement shall be governed by the laws of the State of New York and any suit brought by either party against the other party for claims arising out of this Agreement will be brought in the federal and/or state courts sitting therein.

9.    It is understood and agreed that no failure or delay by the Company in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or future exercise thereof or the exercise of any other right, power or privilege hereunder.

10.    Recipient acknowledges that the value of the Proprietary Information to the Company is unique and substantial, but may be impractical or difficult to assess in monetary terms. In the event of an actual or threatened violation of this letter agreement, in addition to any and all other remedies which may be available to the Company, Recipient expressly consents to the Company’s seeking the enforcement of this Agreement by injunctive relief or specific performance, without proof of actual damages or posting of a bond.

11.    Upon the written request and instruction of GBLI, all Proprietary Information in the possession of the Recipient shall be returned to GBLI or, at the option of Recipient, destroyed.

12.    This Agreement constitutes the entire agreement between the parties with respect to the disclosure(s) of Proprietary Information. Any amendments to this Agreement must be in writing and executed by each party.

IN WITNESS WHEREOF this Agreement has been duly executed by the parties hereto to effective as of the date signed by Recipient:

RECIPIENT:		GLOBAL INDEMNITY LIMITED
FOX PAINE & CO LLC
By:		By:
	Signature		Signature
	/s/ Saul A. Fox		/s/ Cynthia Y. Valko
	Saul A. Fox - CEO		Cynthia Y. Valko - CEO
	September 17, 2017
	Date

2

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a),

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Cynthia Y. Valko, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Global Indemnity Limited;

2. Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

d) Disclosed in this Quarterly Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s independent registered public accounting firm and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 9, 2017

/s/ Cynthia Y. Valko

Cynthia Y. Valko

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a),

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas M. McGeehan, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of Global Indemnity Limited;

2. Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

d) Disclosed in this Quarterly Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s independent registered public accounting firm and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 9, 2017

/s/ Thomas M. McGeehan

Thomas M. McGeehan

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Global Indemnity Limited (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Cynthia Y. Valko, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 9, 2017

/s/ Cynthia Y. Valko

Cynthia Y. Valko

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Global Indemnity Limited (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas M. McGeehan, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 9, 2017

/s/ Thomas M. McGeehan

Thomas M. McGeehan

Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 31, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	GBLI
Entity Registrant Name	Global Indemnity Ltd
Entity Central Index Key	0001494904
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Ordinary Shares A
Document Information [Line Items]
Entity Ordinary Shares, Shares Outstanding		13,462,999
Ordinary Shares B
Document Information [Line Items]
Entity Ordinary Shares, Shares Outstanding		4,133,366

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fixed maturities:
Available for sale, at fair value (amortized cost: $1,355,690 and $1,241,339)	$ 1,360,163	$ 1,240,031
Equity securities:
Available for sale, at fair value (cost: $124,064 and $119,515)	133,462	120,557
Other invested assets	73,553	66,121
Total investments	1,567,178	1,426,709
Cash and cash equivalents	60,087	75,110
Premiums receivable, net	84,462	92,094
Reinsurance receivables, net	123,769	143,774
Funds held by ceding insurers	40,274	13,114
Receivable for securities sold	785
Deferred federal income taxes	50,549	40,957
Deferred acquisition costs	62,297	57,901
Intangible assets	22,682	23,079
Goodwill	6,521	6,521
Prepaid reinsurance premiums	30,827	42,583
Other assets	81,259	51,104
Total assets	2,130,690	1,972,946
Liabilities:
Unpaid losses and loss adjustment expenses	649,726	651,042
Unearned premiums	290,760	286,984
Federal income taxes payable	533	219
Ceded balances payable	12,867	14,675
Payable for securities purchased		3,717
Contingent commissions	5,552	9,454
Debt	298,935	163,143
Other liabilities	48,404	45,761
Total liabilities	1,306,777	1,174,995
Commitments and contingencies (Note 10)
Shareholders' equity:
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 13,458,465 and 13,436,548 respectively; A ordinary shares outstanding: 13,428,914 and 13,436,548, respectively; B ordinary shares issued and outstanding: 4,133,366 and 4,133,366, respectively	2	2
Additional paid-in capital	433,254	430,283
Accumulated other comprehensive income, net of taxes	10,085	(618)
Retained earnings	381,731	368,284
Total shareholders' equity	823,913	797,951
Total liabilities and shareholders' equity	2,130,690	1,972,946
Ordinary Shares A
Shareholders' equity:
A ordinary shares in treasury, at cost: 29,551 and 0 shares, respectively	(1,159)
Total shareholders' equity	$ 1	$ 1

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Available for sale, amortized cost	$ 1,355,690	$ 1,241,339
Available for sale, at cost	$ 124,064	$ 119,515
Ordinary shares, par value	$ 0.0001	$ 0.0001
Ordinary shares, shares authorized	900,000,000	900,000,000
Ordinary Shares A
Ordinary shares, shares issued	13,458,465	13,436,548
Ordinary shares, shares outstanding	13,428,914	13,436,548
Treasury shares, shares	29,551	0
Ordinary Shares B
Ordinary shares, shares issued	4,133,366	4,133,366
Ordinary shares, shares outstanding	4,133,366	4,133,366

XML

Consolidated Statements of Operations - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues:
Gross premiums written		$ 126,054	$ 133,569	$ 393,699	$ 429,254
Net premiums written		109,045	115,051	344,348	357,233
Net premiums earned		108,619	119,553	328,818	358,993
Net investment income		10,134	8,795	27,618	25,103
Net realized investment gains (losses):
Other than temporary impairment losses on investments		(1,020)	(2,214)	(1,708)	(4,481)
Other net realized investment gains (losses)		57	4,142	858	(4,576)
Total net realized investment gains (losses)		(963)	1,928	(850)	(9,057)
Other income		2,294	7,852	5,444	9,603
Total revenues		120,084	138,128	361,030	384,642
Losses and Expenses:
Net losses and loss adjustment expenses		82,395	72,162	202,656	215,057
Acquisition costs and other underwriting expenses		45,002	48,129	135,010	148,761
Corporate and other operating expenses		4,630	5,006	11,045	13,064
Interest expense		4,836	2,233	12,065	6,677
Income (loss) before income taxes		(16,779)	10,598	254	1,083
Income tax expense (benefit)		(7,855)	1,063	(13,193)	(10,412)
Net income (loss)		$ (8,924)	$ 9,535	$ 13,447	$ 11,495
Net income (loss)
Basic	[1]	$ (0.51)	$ 0.55	$ 0.78	$ 0.67
Diluted	[1]	$ (0.51)	$ 0.54	$ 0.76	$ 0.66
Weighted-average number of shares outstanding
Basic		17,343,292	17,254,843	17,331,840	17,241,040
Diluted	[2]	17,343,292	17,540,060	17,684,519	17,515,854

[1] For the quarter ended September 30, 2017, "diluted" loss per share is the same as "basic" loss per share since there was a net loss for the period.

[2] For the quarter ended September 30, 2017, "weighted average shares outstanding - basic" was used to calculate "diluted earnings per share" due to a net loss for the period.

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net income (loss)	$ (8,924)	$ 9,535	$ 13,447	$ 11,495
Other comprehensive income, net of tax:
Unrealized holding gains	3,386	2,076	10,719	22,081
Portion of other-than-temporary impairment losses recognized in other comprehensive income	(1)	(3)	(2)	(4)
Reclassification adjustment for (gains) losses included in net income (loss)	441	(781)	(788)	(2,474)
Unrealized foreign currency translation gains (losses)	273	(89)	774	(402)
Other comprehensive income (loss), net of tax	4,099	1,203	10,703	19,201
Comprehensive income (loss), net of tax	$ (4,825)	$ 10,738	$ 24,150	$ 30,696

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Additional Paid-in Capital	Accumulated other comprehensive income, net of deferred income tax	Retained Earnings	Treasury Shares	Ordinary Shares A	Ordinary Shares A Treasury Shares	Ordinary Shares B
Number at Dec. 31, 2015					3,110,795	16,424,546		4,133,366
Ordinary shares issued under share incentive plans						115,711
A ordinary shares purchased							28,099
Ordinary shares issued to directors						35,185
Reduction in treasury shares due to redomestication					(3,138,894)	(3,138,894)
Number at Dec. 31, 2016						13,436,548		4,133,366
Balance at Dec. 31, 2015		$ 529,872	$ 4,078	$ 318,416	$ (102,443)	$ 2		$ 1
A ordinary shares purchased, at cost							$ (805)
Other comprehensive income (loss):
Change in unrealized holding gains (losses)			(4,751)
Change in other than temporary impairment losses recognized in other comprehensive income			(3)
Unrealized foreign currency translation gains			58
Other comprehensive income (loss), net of tax			(4,696)
Net income				49,868
Reduction in treasury shares due to redomestication		(103,248)			$ 103,248	(1)
Share compensation plans		3,532
Tax benefit on share-based compensation expense		127
Balance at Dec. 31, 2016	$ 797,951	430,283	(618)	368,284		$ 1		1
Ordinary shares issued under share incentive plans						2,204
A ordinary shares purchased							29,551
Ordinary shares issued to directors						19,713
Number at Sep. 30, 2017					29,551	13,458,465
A ordinary shares purchased, at cost							$ (1,159)
Other comprehensive income (loss):
Change in unrealized holding gains (losses)			9,932
Change in other than temporary impairment losses recognized in other comprehensive income			(3)
Unrealized foreign currency translation gains	774		774
Other comprehensive income (loss), net of tax	10,703		10,703
Net income	13,447			13,447
Share compensation plans		2,971
Balance at Sep. 30, 2017	$ 823,913	$ 433,254	$ 10,085	$ 381,731	$ (1,159)	$ 1		$ 1

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net income	$ 13,447	$ 11,495
Adjustments to reconcile net income to net cash used for operating activities:
Amortization and depreciation	4,813	4,757
Amortization of debt issuance costs	166	92
Restricted stock and stock option expense	2,971	2,499
Deferred federal income taxes	(13,611)	(10,847)
Amortization of bond premium and discount, net	6,137	7,398
Net realized investment gains	850	9,057
Gain on disposition of subsidiary		(6,872)
Equity in the earnings of equity method limited liability investments	(2,423)	(3,749)
Changes in:
Premiums receivable, net	7,632	2,776
Reinsurance receivables, net	20,005	7,142
Funds held by ceding insurers	(26,576)	(3,319)
Unpaid losses and loss adjustment expenses	(1,316)	(15,665)
Unearned premiums	3,776	(7,724)
Ceded balances payable	(1,808)	7,129
Other assets and liabilities, net	(31,442)	(19,348)
Contingent commissions	(3,902)	(1,677)
Federal income tax receivable/payable	314	172
Deferred acquisition costs, net	(4,396)	1,376
Prepaid reinsurance premiums	11,756	5,962
Net cash used for operating activities	(13,607)	(9,346)
Cash flows from investing activities:
Proceeds from sale of fixed maturities	742,229	279,659
Proceeds from sale of equity securities	24,483	34,976
Proceeds from maturity of fixed maturities	112,620	61,437
Proceeds from limited partnerships	12,990	6,350
Proceeds from disposition of subsidiary, net of cash and cash equivalents disposed of $1,269		16,937
Amounts paid in connection with derivatives	(2,500)	(11,527)
Purchases of fixed maturities	(979,074)	(344,514)
Purchases of equity securities	(28,631)	(34,945)
Purchases of other invested assets	(18,000)	(2,643)
Net cash provided by (used for) investing activities	(135,883)	5,730
Cash flows from financing activities:
Net borrowings under margin borrowing facility	9,872	1,050
Proceeds from issuance of subordinated notes	130,000
Debt issuance cost	(4,246)	(14)
Tax benefit on share-based compensation expense		127
Purchase of A ordinary shares	(1,159)	(805)
Net cash provided by financing activities	134,467	358
Net change in cash and cash equivalents	(15,023)	(3,258)
Cash and cash equivalents at beginning of period	75,110	67,037
Cash and cash equivalents at end of period	$ 60,087	$ 63,779

XML

Consolidated Statements of Cash Flows (Parenthetical) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Proceeds from disposition of subsidiary, cash disposed	$ 1,269

XML

Principles of Consolidation and Basis of Presentation

9 Months Ended

Sep. 30, 2017

Principles of Consolidation and Basis of Presentation

1. Principles of Consolidation and Basis of Presentation

Global Indemnity Limited (“Global Indemnity” or “the Company”), incorporated on February 9, 2016, is domiciled in the Cayman Islands. On November 7, 2016, Global Indemnity replaced Global Indemnity plc as the ultimate parent company as a result of a redomestication transaction. The Company’s A ordinary shares are publicly traded on the NASDAQ Global Select Market under the ticker symbol GBLI. Please see Note 2 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2016 Annual Report on Form 10-K for more information on the Company’s redomestication.

The Company manages its business through three business segments: Commercial Lines, Personal Lines, and Reinsurance Operations. The Company’s Commercial Lines offers specialty property and casualty insurance products in the excess and surplus lines marketplace. The Company manages its Commercial Lines by differentiating them into four product classifications: Penn-America, which markets property and general liability products to small commercial businesses through a select network of wholesale general agents with specific binding authority; United National, which markets insurance products for targeted insured segments, including specialty products, such as property, general liability, and professional lines through program administrators with specific binding authority; Diamond State, which markets property, casualty, and professional lines products, which are developed by the Company’s underwriting department by individuals with expertise in those lines of business, through wholesale brokers and also markets through program administrators having specific binding authority; and Vacant Express, which insures dwellings which are currently vacant, undergoing renovation, or are under construction and is distributed through aggregators, brokers, and retail agents. These product classifications comprise the Company’s Commercial Lines business segment and are not considered individual business segments because each product has similar economic characteristics, distribution, and coverage. The Company’s Personal Lines segment offers specialty personal lines and agricultural coverage through general and specialty agents with specific binding authority on an admitted basis. Collectively, the Company’s U.S. insurance subsidiaries are licensed in all 50 states and the District of Columbia. The Commercial Lines and Personal Lines segments comprise the Company’s U.S. Insurance Operations (‘Insurance Operations”). The Company’s Reinsurance Operations consist solely of the operations of its Bermuda-based wholly-owned subsidiary, Global Indemnity Reinsurance Company, Ltd. (“Global Indemnity Reinsurance”). Global Indemnity Reinsurance is a treaty reinsurer of specialty property and casualty insurance and reinsurance companies. The Company’s Reinsurance Operations segment provides reinsurance solutions through brokers and primary writers including insurance and reinsurance companies.

During the 1^st quarter of 2017, the Company re-evaluated its Commercial Lines and Personal Lines segments and determined that certain portions of business will be managed, operated and reported by including them in the other segment. As a result, the composition of the Company’s reportable segments changed slightly. Premium that is written through a wholly owned agency that mainly sells to individuals, which was previously included as part of the Commercial Lines segment, is now included within the Personal Lines segment. In addition, one of the small commercial programs written by American Reliable Insurance Company (“American Reliable”), which was previously included within the Personal Lines segment, is now aggregated within the Commercial Lines segment. Accordingly, the segment results for the quarter and nine months ended September 30, 2016 have been revised to reflect these changes. See Note 13 for additional information regarding segments.

The interim consolidated financial statements are unaudited, but have been prepared in conformity with United States of America generally accepted accounting principles (“GAAP”), which differs in certain respects from those principles followed in reports to insurance regulatory authorities. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The unaudited consolidated financial statements include all adjustments that are, in the opinion of management, of a normal recurring nature and are necessary for a fair statement of results for the interim periods. Results of operations for the quarters and nine months ended September 30, 2017 and 2016 are not necessarily indicative of the results of a full year. The accompanying notes to the unaudited consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in the Company’s 2016 Annual Report on Form 10-K.

The consolidated financial statements include the accounts of Global Indemnity and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

XML

Investments

9 Months Ended

Sep. 30, 2017

Investments

2. Investments

The amortized cost and estimated fair value of investments were as follows as of September 30, 2017 and December 31, 2016:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Other than temporary impairments recognized in AOCI (1)
As of September 30, 2017
Fixed maturities:
U.S. treasury and agency obligations	$	117,596	$	665	$	(495	)	$	117,766	$	—
Obligations of states and political subdivisions		116,508		991		(256	)		117,243		—
Mortgage-backed securities		146,800		650		(562	)		146,888		—
Asset-backed securities		209,028		634		(142	)		209,520		(1	)
Commercial mortgage-backed securities		139,740		94		(741	)		139,093		—
Corporate bonds		485,580		3,851		(838	)		488,593		—
Foreign corporate bonds		140,438		810		(188	)		141,060		—
Total fixed maturities		1,355,690		7,695		(3,222	)		1,360,163		(1	)
Common stock		124,064		13,148		(3,750	)		133,462		—
Other invested assets		73,553		—		—			73,553		—
Total	$	1,553,307	$	20,843	$	(6,972	)	$	1,567,178	$	(1	)

(1) Represents the total amount of other than temporary impairment losses relating to factors other than credit losses recognized in accumulated other comprehensive income (“AOCI”).

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Other than temporary impairments recognized in AOCI (1)
As of December 31, 2016
Fixed maturities:
U.S. treasury and agency obligations	$	71,517	$	763	$	(233	)	$	72,047	$	—
Obligations of states and political subdivisions		155,402		1,423		(379	)		156,446		—
Mortgage-backed securities		88,131		895		(558	)		88,468		—
Asset-backed securities		233,890		684		(583	)		233,991		(4	)
Commercial mortgage-backed securities		184,821		118		(1,747	)		183,192		—
Corporate bonds		381,209		1,666		(2,848	)		380,027		—
Foreign corporate bonds		126,369		164		(673	)		125,860		—
Total fixed maturities		1,241,339		5,713		(7,021	)		1,240,031		(4	)
Common stock		119,515		3,445		(2,403	)		120,557		—
Other invested assets		66,121		—		—			66,121		—
Total	$	1,426,975	$	9,158	$	(9,424	)	$	1,426,709	$	(4	)

(1) Represents the total amount of other than temporary impairment losses relating to factors other than credit losses recognized in accumulated other comprehensive income (“AOCI”).

Excluding U.S. treasuries and agency bonds, the Company did not hold any debt or equity investments in a single issuer that was in excess of 4% and 5% of shareholders’ equity at September 30, 2017 and December 31, 2016, respectively.

The amortized cost and estimated fair value of the Company’s fixed maturities portfolio classified as available for sale at September 30, 2017, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	86,480	$	86,515
Due in one year through five years		493,819		495,425
Due in five years through ten years		273,515		276,346
Due in ten years through fifteen years		592		598
Due after fifteen years		5,716		5,778
Mortgage-backed securities		146,800		146,888
Asset-backed securities		209,028		209,520
Commercial mortgage-backed securities		139,740		139,093
Total	$	1,355,690	$	1,360,163

The following table contains an analysis of the Company’s securities with gross unrealized losses, categorized by the period that the securities were in a continuous loss position as of September 30, 2017:

	Less than 12 months					12 months or longer (1)					Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities:
U.S. treasury and agency obligations	$	96,336	$	(489	)	$	594	$	(6	)	$	96,930	$	(495	)
Obligations of states and political subdivisions		27,806		(199	)		8,629		(57	)		36,435		(256	)
Mortgage-backed securities		105,162		(554	)		297		(8	)		105,459		(562	)
Asset-backed securities		41,719		(142	)		—		—			41,719		(142	)
Commercial mortgage-backed securities		97,191		(639	)		6,727		(102	)		103,918		(741	)
Corporate bonds		125,550		(600	)		17,493		(238	)		143,043		(838	)
Foreign corporate bonds		40,145		(87	)		10,446		(101	)		50,591		(188	)
Total fixed maturities		533,909		(2,710	)		44,186		(512	)		578,095		(3,222	)
Common stock		29,150		(3,750	)		—		—			29,150		(3,750	)
Total	$	563,059	$	(6,460	)	$	44,186	$	(512	)	$	607,245	$	(6,972	)

(1) Fixed maturities in a gross unrealized loss position for twelve months or longer are primarily comprised of non-credit losses on investment grade securities where management does not intend to sell, and it is more likely than not that the Company will not be forced to sell the security before recovery. The Company has analyzed these securities and has determined that they are not other than temporarily impaired.

The following table contains an analysis of the Company’s securities with gross unrealized losses, categorized by the period that the securities were in a continuous loss position as of December 31, 2016:

	Less than 12 months					12 months or longer (1)					Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities:
U.S. treasury and agency obligations	$	39,570	$	(233	)	$	—	$	—		$	39,570	$	(233	)
Obligations of states and political subdivisions		46,861		(369	)		670		(10	)		47,531		(379	)
Mortgage-backed securities		52,780		(541	)		298		(17	)		53,078		(558	)
Asset-backed securities		62,737		(493	)		23,937		(90	)		86,674		(583	)
Commercial mortgage-backed securities		94,366		(1,090	)		69,747		(657	)		164,113		(1,747	)
Corporate bonds		171,621		(2,731	)		9,218		(117	)		180,839		(2,848	)
Foreign corporate bonds		76,036		(673	)		—		—			76,036		(673	)
Total fixed maturities		543,971		(6,130	)		103,870		(891	)		647,841		(7,021	)
Common stock		57,439		(2,403	)		—		—			57,439		(2,403	)
Total	$	601,410	$	(8,533	)	$	103,870	$	(891	)	$	705,280	$	(9,424	)

(1) Fixed maturities in a gross unrealized loss position for twelve months or longer are primarily comprised of non-credit losses on investment grade securities where management does not intend to sell, and it is more likely than not that the Company will not be forced to sell the security before recovery. The Company has analyzed these securities and has determined that they are not other than temporarily impaired.

The Company regularly performs various analytical valuation procedures with respect to its investments, including reviewing each fixed maturity security in an unrealized loss position to assess whether the security has a credit loss. Specifically, the Company considers credit rating, market price, and issuer specific financial information, among other factors, to assess the likelihood of collection of all principal and interest as contractually due. Securities for which the Company determines that a credit loss is likely are subjected to further analysis through discounted cash flow testing to estimate the credit loss to be recognized in earnings, if any. The specific methodologies and significant assumptions used by asset class are discussed below. Upon identification of such securities and periodically thereafter, a detailed review is performed to determine whether the decline is considered other than temporary. This review includes an analysis of several factors, including but not limited to, the credit ratings and cash flows of the securities and the magnitude and length of time that the fair value of such securities is below cost.

For fixed maturities, the factors considered in reaching the conclusion that a decline below cost is other than temporary include, among others, whether:

(1) the issuer is in financial distress;

(2) the investment is secured;

(3) a significant credit rating action occurred;

(4) scheduled interest payments were delayed or missed;

(5) changes in laws or regulations have affected an issuer or industry;

(6) the investment has an unrealized loss and was identified by the Company’s investment manager as an investment to be sold before recovery or maturity; and

(7) the investment failed cash flow projection testing to determine if anticipated principal and interest payments will be realized.

According to accounting guidance for debt securities in an unrealized loss position, the Company is required to assess whether it has the intent to sell the debt security or more likely than not will be required to sell the debt security before the anticipated recovery. If either of these conditions is met the Company must recognize an other than temporary impairment with the entire unrealized loss being recorded through earnings. For debt securities in an unrealized loss position not meeting these conditions, the Company assesses whether the impairment of a security is other than temporary. If the impairment is deemed to be other than temporary, the Company must separate the other than temporary impairment into two components: the amount representing the credit loss and the amount related to all other factors, such as changes in interest rates. The credit loss represents the portion of the amortized book value in excess of the net present value of the projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. The credit loss component of the other than temporary impairment is recorded through earnings, whereas the amount relating to factors other than credit losses is recorded in other comprehensive income, net of taxes.

For equity securities, management carefully reviews all securities with unrealized losses to determine if a security should be impaired and further focuses on securities that have either:

(1) persisted with unrealized losses for more than twelve consecutive months or

(2) the value of the investment has been 20% or more below cost for six continuous months or more.

The amount of any write-down, including those that are deemed to be other than temporary, is included in earnings as a realized loss in the period in which the impairment arose.

The following is a description, by asset type, of the methodology and significant inputs that the Company used to measure the amount of credit loss recognized in earnings, if any:

U.S. treasury and agency obligations – As of September 30, 2017, gross unrealized losses related to U.S. treasury and agency obligations were $0.495 million. Of this amount, $0.006 million have been in an unrealized loss position for 12 months or greater and are rated AA+. Macroeconomic and market analysis is conducted in evaluating these securities. Consideration is given to the interest rate environment, duration and yield curve management of the portfolio, sector allocation and security selection.

Obligations of states and political subdivisions – As of September 30, 2017, gross unrealized losses related to obligations of states and political subdivisions were $0.256 million. Of this amount, $0.057 million have been in an unrealized loss position for twelve months or greater and are rated investment grade. All factors that influence performance of the municipal bond market are considered in evaluating these securities. The aforementioned factors include investor expectations, supply and demand patterns, and current versus historical yield and spread relationships. The analysis relies on the output of fixed income credit analysts, as well as dedicated municipal bond analysts who perform extensive in-house fundamental analysis on each issuer, regardless of their rating by the major agencies.

Mortgage-backed securities (“MBS”) – As of September 30, 2017, gross unrealized losses related to mortgage-backed securities were $0.562 million. Of this amount, $0.008 million have been in an unrealized loss position for twelve months or greater. 75.9% of the unrealized losses for twelve months or greater are related to securities rated AA+. Mortgage-backed securities are modeled to project principal losses under downside, base, and upside scenarios for the economy and home prices. The primary assumption that drives the security and loan level modeling is the Home Price Index (“HPI”) projection. These forecasts incorporate not just national macro-economic trends, but also regional impacts to arrive at the most granular and accurate projections. These assumptions are incorporated into the model as a basis to generate delinquency probabilities, default curves, loss severity curves, and voluntary prepayment curves at the loan level within each deal. The model utilizes HPI-adjusted current LTV, payment history, loan terms, loan modification history, and borrower characteristics as inputs to generate expected cash flows and principal loss for each bond under various scenarios.

Asset-backed securities (“ABS”) - As of September 30, 2017, gross unrealized losses related to asset backed securities were $0.142 million. All unrealized losses have been in an unrealized loss position for less than 12 months. The weighted average credit enhancement for the Company’s asset backed portfolio is 22.5. This represents the percentage of pool losses that can occur before an asset backed security will incur its first dollar of principal losses. Every ABS transaction is analyzed on a stand-alone basis. This analysis involves a thorough review of the collateral, prepayment, and structural risk in each transaction. Additionally, the analysis includes an in-depth credit analysis of the originator and servicer of the collateral. The analysis projects an expected loss for a deal given a set of assumptions specific to the asset type. These assumptions are used to calculate at what level of losses the deal will incur its first dollar of principal loss. The major assumptions used to calculate this ratio are loss severities, recovery lags, and no advances on principal and interest.

Commercial mortgage-backed securities (“CMBS”) - As of September 30, 2017, gross unrealized losses related to the CMBS portfolio were $0.741 million. Of this amount, $0.102 million have been in an unrealized loss position for twelve months or greater and are rated AA+ or better. The weighted average credit enhancement for the Company’s CMBS portfolio is 25.6. This represents the percentage of pool losses that can occur before a mortgage-backed security will incur its first dollar of principal loss. For the Company’s CMBS portfolio, a loan level analysis is utilized where every underlying CMBS loan is re-underwritten based on a set of assumptions reflecting expectations for the future path of the economy. Each loan is analyzed over time using a series of tests to determine if a credit event will occur during the life of the loan. Inherent in this process are several economic scenarios and their corresponding rent/vacancy and capital market states. The five primary credit events that frame the analysis include loan modifications, term default, balloon default, extension, and ability to pay off at balloon. The resulting output is the expected loss adjusted cash flows for each bond under the base case and distressed scenarios.

Corporate bonds - As of September 30, 2017, gross unrealized losses related to corporate bonds were $0.838 million. Of this amount, $0.238 million have been in an unrealized loss position for twelve months or greater and are rated A- or better. The analysis for this asset class includes maintaining detailed financial models that include a projection of each issuer’s future financial performance, including prospective debt servicing capabilities, capital structure composition, and the value of the collateral. The analysis incorporates the macroeconomic environment, industry conditions in which the issuer operates, the issuer’s current competitive position, its vulnerability to changes in the competitive and regulatory environment, issuer liquidity, issuer commitment to bondholders, issuer creditworthiness, and asset protection. Part of the process also includes running downside scenarios to evaluate the expected likelihood of default as well as potential losses in the event of default.

Foreign bonds – As of September 30, 2017, gross unrealized losses related to foreign bonds were $0.188 million. Of this amount, $0.101 million have been in an unrealized loss position for twelve months or greater and are rated investment grade. For this asset class, detailed financial models are maintained that include a projection of each issuer’s future financial performance, including prospective debt servicing capabilities, capital structure composition, and the value of the collateral. The analysis incorporates the macroeconomic environment, industry conditions in which the issuer operates, the issuer’s current competitive position, its vulnerability to changes in the competitive and regulatory environment, issuer liquidity, issuer commitment to bondholders, issuer creditworthiness, and asset protection. Part of the process also includes running downside scenarios to evaluate the expected likelihood of default as well as potential losses in the event of default.

Common stock – As of September 30, 2017, gross unrealized losses related to common stock were $3.750 million. All unrealized losses have been in an unrealized loss position for less than twelve months. To determine if an other-than-temporary impairment of an equity security has occurred, the Company considers, among other things, the severity and duration of the decline in fair value of the equity security. The Company also examines other factors to determine if the equity security could recover its value in a reasonable period of time.

The Company recorded the following other than temporary impairments (“OTTI”) on its investment portfolio for the quarters and nine months ended September 30, 2017 and 2016:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Fixed maturities:
OTTI losses, gross	$	—		$	(108	)	$	(31	)	$	(201	)
Portion of loss recognized in other comprehensive income (pre-tax)		—			—			—			—
Net impairment losses on fixed maturities recognized in earnings		—			(108	)		(31	)		(201	)
Equity securities		(1,020	)		(2,106	)		(1,677	)		(4,280	)
Total	$	(1,020	)	$	(2,214	)	$	(1,708	)	$	(4,481	)

The following table is an analysis of the credit losses recognized in earnings on fixed maturities held by the Company for the quarters and nine months ended September 30, 2017 and 2016 for which a portion of the OTTI loss was recognized in other comprehensive income.

	Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands)	2017			2016		2017			2016
Balance at beginning of period	$	16		$	31	$	31		$	31
Additions where no OTTI was previously recorded		—			—		—			—
Additions where an OTTI was previously recorded		—			—		—			—
Reductions for securities for which the company intends to sell or more likely than not will be required to sell before recovery		—			—		—			—
Reductions reflecting increases in expected cash flows to be collected		—			—		—			—
Reductions for securities sold during the period		(3	)		—		(18	)		—
Balance at end of period	$	13		$	31	$	13		$	31

Accumulated Other Comprehensive Income, Net of Tax

Accumulated other comprehensive income, net of tax, as of September 30, 2017 and December 31, 2016 was as follows:

(Dollars in thousands)	September 30, 2017			December 31, 2016
Net unrealized gains (losses)from:
Fixed maturities	$	4,473		$	(1,308	)
Common stock		9,398			1,042
Foreign currency fluctuations		584			—
Deferred taxes		(4,370	)		(352	)
Accumulated other comprehensive income, net of tax	$	10,085		$	(618	)

The following tables present the changes in accumulated other comprehensive income, net of tax, by component for the quarters and nine months ended September 30, 2017 and 2016:

Quarter Ended September 30, 2017 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax		Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	5,549	$	437		$	5,986
Other comprehensive income (loss) before reclassification		3,173		485			3,658
Amounts reclassified from accumulated other comprehensive income (loss)		653		(212	)		441
Other comprehensive income (loss)		3,826		273			4,099
Ending balance	$	9,375	$	710		$	10,085

Quarter Ended September 30, 2016 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax			Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	22,511		$	(435	)	$	22,076
Other comprehensive income (loss) before reclassification		2,073			(89	)		1,984
Amounts reclassified from accumulated other Comprehensive loss		(781	)		—			(781	)
Other comprehensive income (loss)		1,292			(89	)		1,203
Ending balance	$	23,803		$	(524	)	$	23,279

Nine Months Ended September 30, 2017 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax			Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	(554	)	$	(64	)	$	(618	)
Other comprehensive income (loss) before reclassification		10,498			993			11,491
Amounts reclassified from accumulated other comprehensive income (loss)		(569	)		(219	)		(788	)
Other comprehensive income (loss)		9,929			774			10,703
Ending balance	$	9,375		$	710		$	10,085

Nine Months Ended September 30, 2016 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax			Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	4,200		$	(122	)	$	4,078
Other comprehensive income (loss) before reclassification		22,075			(400	)		21,675
Amounts reclassified from accumulated other comprehensive loss		(2,472	)		(2	)		(2,474	)
Other comprehensive income (loss)		19,603			(402	)		19,201
Ending balance	$	23,803		$	(524	)	$	23,279

The reclassifications out of accumulated other comprehensive income for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

(Dollars in thousands)		Amounts Reclassified from Accumulated Other Comprehensive Income Quarters Ended September 30,
Details about Accumulated Other Comprehensive Income Components	Affected Line Item in the Consolidated Statements of Operations	2017			2016
Unrealized gains and losses on available for sale securities	Other net realized investment gains	$	(97	)	$	(3,384	)
	Other than temporary impairment losses on investments		1,020			2,214
	Total before tax		923			(1,170	)
	Income tax expense		(270	)		389
	Unrealized gains and losses on available for sale securities, net of tax	$	653		$	(781	)
Foreign currency items	Other net realized investment gains	$	(326	)	$	—
	Income tax expense		114			—
	Foreign currency items, net of tax	$	(212	)	$	—
Total reclassifications	Total reclassifications, net of tax	$	441		$	(781	)

(Dollars in thousands)		Amounts Reclassified from Accumulated Other Comprehensive Income Nine Months Ended September 30,
Details about Accumulated Other Comprehensive Income Components	Affected Line Item in the Consolidated Statements of Operations	2017			2016
Unrealized gains and losses on available for sale securities	Other net realized investment gains	$	(2,538	)	$	(8,214	)
	Other than temporary impairment losses on investments		1,708			4,481
	Total before tax		(830	)		(3,733	)
	Income tax expense		261			1,261
	Unrealized gains and losses on available for sale securities, net of tax	$	(569	)	$	(2,472	)
Foreign currency items	Other net realized investment gains	$	(336	)	$	(4	)
	Income tax expense		117			2
	Foreign currency items, net of tax	$	(219	)	$	(2	)
Total reclassifications	Total reclassifications, net of tax	$	(788	)	$	(2,474	)

Net Realized Investment Gains (Losses)

The components of net realized investment gains (losses) for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Fixed maturities:
Gross realized gains	$	434		$	434		$	3,122		$	1,252
Gross realized losses		(300	)		(147	)		(2,358	)		(291	)
Net realized gains		134			287			764			961
Common stock:
Gross realized gains		917			3,345			2,711			8,068
Gross realized losses		(1,648	)		(2,462	)		(2,309	)		(5,292	)
Net realized gains		(731	)		883			402			2,776
Derivatives:
Gross realized gains		486			1,955			822			—
Gross realized losses		(852	)		(1,197	)		(2,838	)		(12,794	)
Net realized gains (losses) (1)		(366	)		758			(2,016	)		(12,794	)
Total net realized investment gains (losses)	$	(963	)	$	1,928		$	(850	)	$	(9,057	)

(1) Includes periodic net interest settlements related to the derivatives of $0.9 million and $1.2 million for the quarters ended September 30, 2017 and 2016, respectively, and $2.8 million and $3.7 million for the nine months ended September 30, 2017 and 2016, respectively.

The proceeds from sales and redemptions of available-for-sale securities resulting in net realized investment gains for the nine months ended September 30, 2017 and 2016 were as follows:

	Nine Months Ended September 30,
(Dollars in thousands)	2017		2016
Fixed maturities	$	742,229	$	279,659
Equity securities		24,483		34,976

Net Investment Income

The sources of net investment income for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Fixed maturities	$	9,020		$	8,131		$	24,032		$	22,729
Equity securities		906			698			2,740			2,647
Cash and cash equivalents		226			44			621			111
Other invested assets		655			909			2,423			3,806
Total investment income		10,807			9,782			29,816			29,293
Investment expense (1)		(673	)		(987	)		(2,198	)		(4,190	)
Net investment income	$	10,134		$	8,795		$	27,618		$	25,103

(1) Investment expense for the nine months ended September 30, 2016 includes $1.5 million in upfront fees necessary to enter into a new investment. See Note 9 for additional information on the Company’s $40 million commitment related to this investment.

The Company’s total investment return on a pre-tax basis for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Net investment income	$	10,134		$	8,795		$	27,618		$	25,103
Net realized investment gains (losses)		(963	)		1,928			(850	)		(9,057	)
Change in unrealized holding gains and losses		5,631			2,061			14,721			25,398
Net realized and unrealized investment returns		4,668			3,989			13,871			16,341
Total investment return	$	14,802		$	12,784		$	41,489		$	41,444
Total investment return % (1)		0.9	%		0.8	%		2.6	%		2.7	%
Average investment portfolio	$	1,629,989		$	1,530,599		$	1,587,645		$	1,522,247

(1) Not annualized.

Insurance Enhanced Asset Backed and Credit Securities

As of September 30, 2017, the Company held insurance enhanced asset-backed, commercial mortgage-backed, and credit securities with a market value of approximately $37.9 million. Approximately $4.2 million of these securities were tax free municipal bonds, which represented approximately 0.3% of the Company’s total cash and invested assets, net of payable/receivable for securities purchased and sold. These securities had an average rating of “AA-.” Approximately $1.5 million of these bonds are pre-refunded with U.S. treasury securities. None of the remaining $2.7 million of tax free insurance enhanced municipal bonds, would have carried a lower credit rating had they not been insured. A summary of the Company’s insurance enhanced municipal bonds that are backed by financial guarantors, including the pre-refunded bonds that are escrowed in U.S. government obligations, as of September 30, 2017, is as follows:

(Dollars in thousands) Financial Guarantor	Total		Pre-refunded Securities		Government Guaranteed Securities		Exposure Net of Pre-refunded &  Government Guaranteed Securities
Ambac Financial Group	$	1,029	$	—	$	—	$	1,029
Municipal Bond Insurance Association		1,191		—		—		1,191
Gov’t National Housing Association		440		—		440		—
Total backed by financial guarantors		2,660		—		440		2,220
Other credit enhanced municipal bonds		1,523		1,523		—		—
Total	$	4,183	$	1,523	$	440	$	2,220

In addition to the tax-free municipal bonds, the Company held $33.7 million of insurance enhanced bonds, which represented approximately 2.1% of the Company’s total invested assets, net of receivable/payable for securities purchased and sold. The insurance enhanced bonds are comprised of $23.2 million of taxable municipal bonds, $10.4 million of commercial mortgage-backed securities, and $0.1 million of asset-backed securities. The financial guarantors of the Company’s $33.7 million of insurance enhanced asset-backed, commercial-mortgage-backed, and taxable municipal securities include Municipal Bond Insurance Association ($7.0 million), Assured Guaranty Corporation ($16.3 million), and Federal Home Loan Mortgage Corporation ($10.4 million).

The Company had no direct investments in the entities that have provided financial guarantees or other credit support to any security held by the Company at September 30, 2017.

Bonds Held on Deposit

Certain cash balances, cash equivalents, equity securities and bonds available for sale were deposited with various governmental authorities in accordance with statutory requirements, were held as collateral pursuant to borrowing arrangements, or were held in trust pursuant to intercompany reinsurance agreements. The fair values were as follows as of September 30, 2017 and December 31, 2016:

	Estimated Fair Value
(Dollars in thousands)	September 30, 2017		December 31, 2016
On deposit with governmental authorities	$	28,489	$	29,079
Intercompany trusts held for the benefit of U.S. policyholders		335,444		351,002
Held in trust pursuant to third party requirements		80,820		88,178
Letter of credit held for third party requirements		4,028		4,871
Securities held as collateral for borrowing arrangements (1)		93,736		85,939
Total	$	542,517	$	559,069

(1) Amount required to collateralize margin borrowing facility.

Variable Interest Entities

A Variable Interest Entity (VIE) refers to an investment in which an investor holds a controlling interest that is not based on the majority of voting rights. Under the VIE model, the party that has the power to exercise significant management influence and maintain a controlling financial interest in the entity’s economics is said to be the primary beneficiary, and is required to consolidate the entity within their results. Other entities that participate in a VIE, for which their financial interests fluctuate with changes in the fair value of the investment entity’s net assets but do not have significant management influence and the ability to direct the VIE’s significant economic activities are said to have a variable interest in the VIE but do not consolidate the VIE in their financial results.

The Company has variable interests in three VIE’s for which it is not the primary beneficiary. These investments are accounted for under the equity method of accounting as their ownership interest exceeds 3% of their respective investments. The fair value of one of the Company’s VIE’s, which invests in distressed securities and assets, was $29.8 million and $32.9 million as of September 30, 2017 and December 31, 2016, respectively. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $44.0 million at September 30, 2017 and $48.6 million at December 31, 2016. The fair value of a second VIE that provides financing for middle market companies, was $26.8 million at September 30, 2017 and $33.2 million at December 31, 2016. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $38.6 million at September 30, 2017 and $42.3 million at December 31, 2016. During the 2^nd quarter of 2017, the Company invested in a new limited partnership that also invests in distressed securities and assets and is considered a VIE. The Company’s investment in this partnership has a fair value of $16.9 million as of September 30, 2017. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $50.4 million at September 30, 2017. The Company’s investment in VIEs is included in other invested assets on the consolidated balance sheet with changes in fair value recorded in the consolidated statements of operations.

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Derivative Instruments

9 Months Ended

Sep. 30, 2017

Derivative Instruments

3. Derivative Instruments

Interest rate swaps are used by the Company primarily to reduce risks from changes in interest rates. Under the terms of the interest rate swaps, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount.

The Company accounts for the interest rate swaps as non-hedge instruments and recognizes the fair value of the interest rate swaps in other assets or other liabilities on the consolidated balance sheets with the changes in fair value recognized as net realized investment gains (losses) in the consolidated statements of operations. The Company is ultimately responsible for the valuation of the interest rate swaps. To aid in determining the estimated fair value of the interest rate swaps, the Company relies on the forward interest rate curve and information obtained from a third party financial institution.

The following table summarizes information on the location and the gross amount of the derivatives’ fair value on the consolidated balance sheets as of September 30, 2017 and December 31, 2016:

(Dollars in thousands)		September 30, 2017					December 31, 2016
Derivatives Not Designated as Hedging Instruments under ASC  815	Balance Sheet Location	Notional Amount		Fair Value			Notional Amount		Fair Value
Interest rate swap agreements	Other liabilities	$	200,000	$	(10,702	)	$	200,000	$	(11,524	)

The following table summarizes the net gain (loss) included in the consolidated statements of operations for changes in the fair value of the derivatives and the periodic net interest settlements under the derivatives for the quarters and nine months ended September 30, 2017 and 2016:

		Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands)	Consolidated Statement of Operations Line	2017			2016		2017			2016
Interest rate swap agreements	Net realized investment gains (losses)	$	(366	)	$	758	$	(2,016	)	$	(12,794	)

As of September 30, 2017 and December 31, 2016, the Company is due $3.3 million and $5.3 million, respectively, for funds it needed to post to execute the swap transaction and $14.2 million and $12.6 million, respectively, for margin calls made in connection with the interest rate swaps. These amounts are included in other assets on the consolidated balance sheets.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2017

Fair Value Measurements

4. Fair Value Measurements

The accounting standards related to fair value measurements define fair value, establish a framework for measuring fair value, outline a fair value hierarchy based on inputs used to measure fair value, and enhance disclosure requirements for fair value measurements. These standards do not change existing guidance as to whether or not an instrument is carried at fair value. The Company has determined that its fair value measurements are in accordance with the requirements of these accounting standards.

The Company’s invested assets and derivative instruments are carried at their fair value and are categorized based upon a fair value hierarchy:

• Level 1 - inputs utilize quoted prices (unadjusted) in active markets for identical assets that the Company has the ability to access at the measurement date.

• Level 2 - inputs utilize other than quoted prices included in Level 1 that are observable for similar assets, either directly or indirectly.

• Level 3 - inputs are unobservable for the asset, and include situations where there is little, if any, market activity for the asset.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset.

The following table presents information about the Company’s invested assets and derivative instruments measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

As of September 30, 2017	Fair Value Measurements
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
U.S. treasury and agency obligations	$	117,766	$	—	$	—	$	117,766
Obligations of states and political subdivisions		—		117,243		—		117,243
Mortgage-backed securities		—		146,888		—		146,888
Commercial mortgage-backed securities		—		139,093		—		139,093
Asset-backed securities		—		209,520		—		209,520
Corporate bonds		—		488,593		—		488,593
Foreign corporate bonds		—		141,060		—		141,060
Total fixed maturities		117,766		1,242,397		—		1,360,163
Common stock		133,462		—		—		133,462
Total assets measured at fair value (1)	$	251,228	$	1,242,397	$	—	$	1,493,625
Liabilities:
Derivative instruments	$	—	$	10,702	$	—	$	10,702
Total liabilities measured at fair value	$	—	$	10,702	$	—	$	10,702

(1) Excluded from the table above are limited partnerships of $73.6 million at September 30, 2017 whose fair value is based on net asset value as a practical expedient.

As of December 31, 2016	Fair Value Measurements
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
U.S. treasury and agency obligations	$	72,047	$	—	$	—	$	72,047
Obligations of states and political subdivisions		—		156,446		—		156,446
Mortgage-backed securities		—		88,468		—		88,468
Commercial mortgage-backed securities		—		183,192		—		183,192
Asset-backed securities		—		233,991		—		233,991
Corporate bonds		—		380,027		—		380,027
Foreign corporate bonds		—		125,860		—		125,860
Total fixed maturities		72,047		1,167,984		—		1,240,031
Common stock		120,557		—		—		120,557
Total assets measured at fair value (1)	$	192,604	$	1,167,984	$	—	$	1,360,588
Liabilities:
Derivative instruments	$	—	$	11,524	$	—	$	11,524
Total liabilities measured at fair value	$	—	$	11,524	$	—	$	11,524

(1) Excluded from the table above are limited partnerships of $66.1 million at December 31, 2016 whose fair value is based on net asset value as a practical expedient.

The securities classified as Level 1 in the above table consist of U.S. Treasuries and equity securities actively traded on an exchange.

The securities classified as Level 2 in the above table consist primarily of fixed maturity securities and derivative instruments. Based on the typical trading volumes and the lack of quoted market prices for fixed maturities, security prices are derived through recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. If there are no recent reported trades, matrix or model processes are used to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Included in the pricing of asset-backed securities, collateralized mortgage obligations, and mortgage-backed securities are estimates of the rate of future prepayments of principal over the remaining life of the securities. Such estimates are derived based on the characteristics of the underlying structure and prepayment speeds previously experienced at the interest rate levels projected for the underlying collateral. The estimated fair value of the derivative instruments, consisting of interest rate swaps, is obtained from a third party financial institution that utilizes observable inputs such as the forward interest rate curve.

For the Company’s material debt arrangements, the current fair value of the Company’s debt at September 30, 2017 and December 31, 2016 was as follows:

	September 30, 2017				December 31, 2016
(Dollars in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Margin Borrowing Facility	$	76,518	$	76,518	$	66,646	$	66,646
7.75% Subordinated Notes due 2045 (1)		96,588		100,448		96,497		95,697
7.875% Subordinated Notes due 2047 (2)		125,829		130,009		—		—
Total	$	298,935	$	306,975	$	163,143	$	162,343

(1) As of September 30, 2017 and December 31, 2016, the carrying value and fair value of the 7.75% Subordinated Notes due 2045 are net of unamortized debt issuance cost of $3.4 million and $3.5 million, respectively.

(2) As of September 30, 2017, the carrying value and fair value of the 7.875% Subordinated Notes due 2047 are net of unamortized debt issuance cost of $4.2 million.

The fair value of the margin borrowing facility approximates its carrying value due to the facility being due on demand. The subordinated notes due 2045 and 2047 are publicly traded instruments and are classified as Level 1 in the fair value hierarchy.

There were no transfers between Level 1 and Level 2 during the quarters ended September 30, 2017 and 2016.

Fair Value of Alternative Investments

Other invested assets consist of limited liability partnerships whose fair value is based on net asset value per share as a practical expedient. The following table provides the fair value and future funding commitments related to these investments at September 30, 2017 and December 31, 2016.

	September 30, 2017				December 31, 2016
(Dollars in thousands)	Fair Value		Future Funding Commitment		Fair Value		Future Funding Commitment
Real Estate Fund, LP (1)	$	—	$	—	$	—	$	—
European Non-Performing Loan Fund, LP (2)		29,795		14,214		32,922		15,714
Private Middle Market Loan Fund, LP (3)		26,824		11,776		33,199		9,054
Distressed Debt Fund, LP (4)		16,934		33,500		—		—
Total	$	73,553	$	59,490	$	66,121	$	24,768

(1) This limited partnership invests in real estate assets through a combination of direct or indirect investments in partnerships, limited liability companies, mortgage loans, and lines of credit. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company continues to hold an investment in this limited partnership and has written the fair value down to zero.

(2) This limited partnership invests in distressed securities and assets through senior and subordinated, secured and unsecured debt and equity, in both public and private large-cap and middle-market companies. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the partnership agreement, the Company anticipates its interest in this partnership to be redeemed by 2020.

(3) This limited partnership provides financing for middle market companies. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the investment management agreement, the Company anticipates its interest to be redeemed no later than 2024.

(4) This limited partnership invests in stressed and distressed debt instruments. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the partnership agreement, the Company anticipates its interest to be redeemed no later than 2027.

Limited Liability Companies and Limited Partnerships with ownership interest exceeding 3%

The Company uses the equity method to account for investments in limited liability companies and limited partnerships where its ownership interest exceeds 3%. The equity method of accounting for an investment in a limited liability company and limited partnership requires that its cost basis be updated to account for the income or loss earned on the investment. The investment income or loss associated with these limited liability companies or limited partnerships, which is reflected in the consolidated statements of operations, was $0.7 million and $0.9 million during the quarters end September 30, 2017 and 2016, respectively, and $2.4 million and $3.7 million during the nine months ended September 30, 2017 and 2016, respectively.

Pricing

The Company’s pricing vendors provide prices for all investment categories except for investments in limited partnerships whose fair value is based on net asset values as a practical expedient. Two primary vendors are utilized to provide prices for equity and fixed maturity securities.

The following is a description of the valuation methodologies used by the Company’s pricing vendors for investment securities carried at fair value:

• Common stock prices are received from all primary and secondary exchanges.

• Corporate and agency bonds are evaluated by utilizing a multi-dimensional relational model. For bonds with early redemption options, an option adjusted spread model is utilized. Both asset classes use standard inputs and incorporate security set up, defined sector breakdown, benchmark yields, apply base spreads, yield to maturity, and adjust for corporate actions.

• Data from commercial vendors is aggregated with market information, then converted into a prepayment/spread/LIBOR curve model used for commercial mortgage obligations (“CMO”). CMOs are categorized with mortgage-backed securities in the tables listed above. For asset-backed securities, data derived from market information along with trustee and servicer reports is converted into spreads to interpolated swap yield curve. For both asset classes, evaluations utilize standard inputs plus new issue data, monthly payment information, and collateral performance. The evaluated pricing models incorporate discount rates, loan level information, prepayment speeds, treasury benchmarks, and LIBOR and swap curves.

• For obligations of state and political subdivisions, a multi-dimensional relational model is used to evaluate securities. The pricing models incorporate security set-up, benchmark yields, apply base spreads, yield to worst or market convention, ratings updates, prepayment schedules and adjustments for material events notices.

• U.S. treasuries are evaluated by obtaining feeds from a number of live data sources including active market makers and inter-dealer brokers.

• For mortgage-backed securities, a matrix model correlation to a forward MBS trade or benchmarking is utilized to value a security.

The Company performs certain procedures to validate whether the pricing information received from the pricing vendors is reasonable, to ensure that the fair value determination is consistent with accounting guidance, and to ensure that its assets are properly classified in the fair value hierarchy. The Company’s procedures include, but are not limited to:

• Reviewing periodic reports provided by the Investment Manager that provides information regarding rating changes and securities placed on watch. This procedure allows the Company to understand why a particular security’s market value may have changed or may potentially change.

• Understanding and periodically evaluating the various pricing methods and procedures used by the Company’s pricing vendors to ensure that investments are properly classified within the fair value hierarchy.

• On a quarterly basis, the Company corroborates investment security prices received from its pricing vendors by obtaining pricing from a second pricing vendor for a sample of securities.

During the quarters and nine months ended September 30, 2017 and 2016, the Company has not adjusted quotes or prices obtained from the pricing vendors.

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Income Taxes

9 Months Ended

Sep. 30, 2017

Income Taxes

5. Income Taxes

The statutory income tax rates of the countries where the Company conducts or conducted business are 35% in the United States, 0% in Bermuda, 0% in the Cayman Islands, 0% in Gibraltar, 27.08% in the Duchy of Luxembourg, 0.25% to 2.5% in Barbados, and 25% on non-trading income, 33% on capital gains and 12.5% on trading income in the Republic of Ireland. The statutory income tax rate of each country is applied against the expected annual taxable income of the Company in each country to estimate the annual income tax expense. Generally, during interim periods, the Company will divide total estimated annual income tax expense by total estimated annual pre-tax income to determine the expected annual income tax rate used to compute the income tax provision. The expected annual income tax rate is then applied against interim pre-tax income, excluding net realized gains and losses and limited partnership distributions, and that amount is then added to the actual income taxes on net realized gains and losses, discrete items and limited partnership distributions. However, when there is significant volatility in the expected effective tax rate, the Company records its actual income tax provision in lieu of the estimated effective income tax rate.

The Company’s income before income taxes from its non-U.S. subsidiaries and U.S. subsidiaries, including the results of the quota share agreements between Global Indemnity Reinsurance and the Insurance Operations, for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

Quarter Ended September 30, 2017: (Dollars in thousands)	Non-U.S. Subsidiaries			U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	50,812		$	114,076		$	(38,834	)	$	126,054
Net premiums written	$	50,800		$	58,245		$	—		$	109,045
Net premiums earned	$	50,392		$	58,227		$	—		$	108,619
Net investment income		14,631			6,584			(11,081	)		10,134
Net realized investment losses		(150	)		(813	)		—			(963	)
Other income		40			2,254			—			2,294
Total revenues		64,913			66,252			(11,081	)		120,084
Losses and Expenses:
Net losses and loss adjustment expenses		31,044			51,351			—			82,395
Acquisition costs and other underwriting expenses		21,922			23,080			—			45,002
Corporate and other operating expenses		1,807			2,823			—			4,630
Interest expense		4,679			11,238			(11,081	)		4,836
Income (loss) before income taxes	$	5,461		$	(22,240	)	$	—		$	(16,779	)
Quarter Ended September 30, 2016: (Dollars in thousands)	Non-U.S. Subsidiaries			U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	51,900		$	123,770		$	(42,101	)	$	133,569
Net premiums written	$	51,900		$	63,151		$	—		$	115,051
Net premiums earned	$	54,155		$	65,398		$	—		$	119,553
Net investment income		11,556			5,828			(8,589	)		8,795
Net realized investment gains		58			1,870			—			1,928
Other income (loss)		(10	)		7,862			—			7,852
Total revenues		65,759			80,958			(8,589	)		138,128
Losses and Expenses:
Net losses and loss adjustment expenses		27,932			44,230			—			72,162
Acquisition costs and other underwriting expenses		24,651			23,478			—			48,129
Corporate and other operating expenses		2,906			2,100			—			5,006
Interest expense		2,081			8,741			(8,589	)		2,233
Income before income taxes	$	8,189		$	2,409		$	—		$	10,598
Nine Months Ended September 30, 2017: (Dollars in thousands)	Non-U.S. Subsidiaries			U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	164,975		$	348,331		$	(119,607	)	$	393,699
Net premiums written	$	164,947		$	179,401		$	—		$	344,348
Net premiums earned	$	150,384		$	178,434		$	—		$	328,818
Net investment income		41,519			16,786			(30,687	)		27,618
Net realized investment gains (losses)		87			(937	)		—			(850	)
Other income		213			5,231			—			5,444
Total revenues		192,203			199,514			(30,687	)		361,030
Losses and Expenses:
Net losses and loss adjustment expenses		74,780			127,876			—			202,656
Acquisition costs and other underwriting expenses		65,544			69,466			—			135,010
Corporate and other operating expenses		4,137			6,908			—			11,045
Interest expense		11,653			31,099			(30,687	)		12,065
Income (loss) before income taxes	$	36,089		$	(35,835	)	$	—		$	254

Nine Months Ended September 30, 2016: (Dollars in thousands)	Non-U.S. Subsidiaries		U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	141,297	$	394,312		$	(106,355	)	$	429,254
Net premiums written	$	141,283	$	215,950		$	—		$	357,233
Net premiums earned	$	162,594	$	196,399		$	—		$	358,993
Net investment income		36,791		13,888			(25,576	)		25,103
Net realized investment gains (losses)		128		(9,185	)		—			(9,057	)
Other income		17		9,586			—			9,603
Total revenues		199,530		210,688			(25,576	)		384,642
Losses and Expenses:
Net losses and loss adjustment expenses		84,154		130,903			—			215,057
Acquisition costs and other underwriting expenses		71,758		77,003			—			148,761
Corporate and other operating expenses		7,181		5,883			—			13,064
Interest expense		6,233		26,020			(25,576	)		6,677
Income (loss) before income taxes	$	30,204	$	(29,121	)	$	—		$	1,083

The following table summarizes the components of income tax benefit:

	Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands)	2017			2016		2017			2016
Current income tax expense:
Foreign	$	107		$	84	$	290		$	289
U.S. Federal		128			146		128			146
Total current income tax expense		235			230		418			435
Deferred income tax expense (benefit):
U.S. Federal		(8,090	)		833		(13,611	)		(10,847	)
Total deferred income tax expense (benefit)		(8,090	)		833		(13,611	)		(10,847	)
Total income tax expense (benefit)	$	(7,855	)	$	1,063	$	(13,193	)	$	(10,412	)

The weighted average expected tax provision has been calculated using income before income taxes in each jurisdiction multiplied by that jurisdiction’s applicable statutory tax rate.

The following table summarizes the differences between the tax provision for financial statement purposes and the expected tax provision at the weighted average tax rate:

	Quarters Ended September 30,
(Dollars in thousands)	2017						2016
	Amount			% of Pre- Tax Income			Amount			% of Pre- Tax Income
Expected tax provision at weighted average rate	$	(7,678	)		(45.8	%)	$	933			8.8	%
Adjustments:
Tax exempt interest		(40	)		(0.2	)		(101	)		(1.0	)
Dividend exclusion		(144	)		(0.9	)		(3	)		0.0
Other		7			0.1			234			2.2
Actual tax on continuing operations	$	(7,855	)		(46.8	%)	$	1,063			10.0	%

The effective income tax benefit rate for the quarter ended September 30, 2017 was 46.8%, compared with an effective income tax rate of 10.0% for the quarter ended September 30, 2016. The increase in the income tax benefit rate is primarily due to losses incurred in the Company’s U.S. operations for the quarter ended September 30, 2017 as compared to a gain in 2016. Taxes were computed using a discrete period computation because a reliable estimate of an effective tax rate could not be made.

	Nine Months Ended September 30,
(Dollars in thousands)	2017						2016
	Amount			% of Pre- Tax Income			Amount			% of Pre- Tax Income
Expected tax provision at weighted average rate	$	(12,252	)		(4,823.6	%)	$	(9,896	)		(913.8	%)
Adjustments:
Tax exempt interest		(191	)		(75.2	)		(304	)		(28.1	)
Dividend exclusion		(410	)		(161.4	)		(480	)		(44.3	)
Other		(340	)		(133.9	)		268			24.8
Actual tax on continuing operations	$	(13,193	)		(5,194.1	%)	$	(10,412	)		(961.4	%)

The effective income tax benefit rate for the nine months ended September 30, 2017 was 5,194.1%, compared with an effective income tax benefit rate of 961.4% for the nine months ended September 30, 2016. The increase in the income tax benefit rate is primarily due to higher losses incurred in the Company’s U.S. operations for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. Taxes were computed using a discrete period computation because a reliable estimate of an effective tax rate could not be made.

The Company has an alternative minimum tax (“AMT”) credit carryforward of $11.0 million as of September 30, 2017 and December 31, 2016, which can be carried forward indefinitely. The Company has a net operating loss (“NOL”) carryforward of $21.8 million as of September 30, 2017, which begins to expire in 2035 based on when the original NOL was generated, and a NOL carryforward of $3.2 million as of December 31, 2016. The Company has a Section 163(j) (“163(j)”) carryforward of $6.0 million and $8.1 million as of September 30, 2017 and December 31, 2016, respectively, which can be carried forward indefinitely. The 163(j) carryforward is for disqualified interest paid or accrued to a related entity that is not subject to U.S. tax.

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Liability for Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 2017

Liability for Unpaid Losses and Loss Adjustment Expenses

6. Liability for Unpaid Losses and Loss Adjustment Expenses

Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Balance at beginning of period	$	615,763		$	683,850		$	651,042		$	680,047
Less: Ceded reinsurance receivables		104,245			111,579			130,439			108,130
Net balance at beginning of period		511,518			572,271			520,603			571,917
Purchased reserves, gross		9,063			1,410			18,024			1,410
Purchased reserves ceded		63			641			573			641
Purchased reserves, net of third party reinsurance		9,126			2,051			18,597			2,051
Incurred losses and loss adjustment expenses related to:
Current year		91,766			81,579			237,460			239,991
Prior years		(9,371	)		(9,417	)		(34,804	)		(24,934	)
Total incurred losses and loss adjustment expenses		82,395			72,162			202,656			215,057
Paid losses and loss adjustment expenses related to:
Current year		45,193			49,704			115,927			113,090
Prior years		25,190			35,147			93,273			114,302
Total paid losses and loss adjustment expenses		70,383			84,851			209,200			227,392
Net balance at end of period		532,656			561,633			532,656			561,633
Plus: Ceded reinsurance receivables		117,070			102,749			117,070			102,749
Balance at end of period	$	649,726		$	664,382		$	649,726		$	664,382

When analyzing loss reserves and prior year development, the Company considers many factors, including the frequency and severity of claims, loss trends, case reserve settlements that may have resulted in significant development, and any other additional or pertinent factors that may impact reserve estimates.

In the third quarter of 2017, the Company reduced its prior accident year loss reserves by $9.4 million, which consisted of a $7.3 million decrease related to Commercial Lines, a $1.3 million decrease related to Personal Lines, and a $0.8 million decrease related to Reinsurance Operations.

The $7.3 million reduction of prior accident year loss reserves related to Commercial Lines primarily consisted of the following:

• General Liability: A $6.9 million reduction in aggregate with $1.0 million of favorable development in the construction defect reserve category and $5.9 million of favorable development in the other general liability reserve categories. The favorable development in the construction defect reserve category recognizes lower than anticipated claims frequency and severity which led to reductions primarily in the 2005 through 2009 accident years. For the other general liability reserve categories, lower than expected claims severity was the primary driver of the favorable development mainly in accident years 2008 through 2016.

• Professional Liability: A $0.2 million decrease in aggregate primarily reflects lower than expected claims severity in the 2010 through 2012 accident years which was partially offset by unfavorable development in the 2013 accident year.

The $1.3 million reduction of prior accident year loss reserves related to Personal Lines reflects $1.3 million in subrogation recoveries involving the 2015 wildfire.

The $0.8 million reduction related to Reinsurance Operations was from the property lines. Ultimate losses were lowered primarily in the 2015 accident year and partially offset by an increase in the 2016 accident year based on a review of the experience reported from cedants.

In the third quarter of 2016, the Company reduced its prior accident year loss reserves by $9.4 million, which consisted of a $6.5 million decrease related to Commercial Lines and a $2.9 million decrease related to Reinsurance Operations.

The $6.5 million reduction of prior accident year loss reserves related to Commercial Lines primarily consisted of the following:

• General Liability: A $9.0 million reduction in aggregate with $3.2 million of favorable development in the construction defect reserve category and $6.0 million of favorable development in the other general liability reserve categories. The favorable development in the construction defect reserve category reflects the lower than expected claims frequency and severity which led to a reduction in the 2005 through 2015 accident years. For the other general liability reserve categories, lower than anticipated claims severity was the driver of the favorable development mainly in accident years 2004 through 2012.

• Property: A $2.1 million increase was due to higher than expected case incurred emergence in the property brokerage segment excluding catastrophe experience in the 2011 through 2015 accident years.

The $2.9 million reduction related to Reinsurance Operations was from the property lines. Ultimate losses were lowered in the 2014 and 2015 accident years based on a review of the experience reported from cedants.

During the first nine months of 2017, the Company reduced its prior accident year loss reserves by $34.8 million, which consisted of a $26.2 million decrease related to Commercial Lines, a $4.5 million decrease related to Personal Lines, and a $4.1 million decrease related to Reinsurance Operations.

The $26.2 million reduction of prior accident year loss reserves related to Commercial Lines primarily consisted of the following:

• General Liability: A $17.1 million reduction in aggregate with $6.0 million of favorable development in the construction defect reserve category and $11.1 million of favorable development in the other general liability reserve categories. The favorable development in the construction defect reserve category recognizes lower than anticipated claims frequency and severity which led to reductions primarily in the 2005 through 2010 and 2012 through 2016 accident years. For the other general liability reserve categories, lower than expected claims severity was the primary driver of the favorable development mainly in the 2005 through 2014 accident years.

• Professional Liability: A $3.7 million decrease in aggregate primarily reflects lower than expected claims severity in the 2006 through 2008 and 2011 through 2012 accident years.

• Property: A $5.4 million reduction in aggregate with $3.2 million of favorable development in the property excluding catastrophe reserve categories and $2.2 million of favorable development in the property catastrophe reserve categories. The favorable development in the reserve categories excluding catastrophe experience reflects lower than expected claims frequency and severity in the 2011 through 2015 accident years. For the property catastrophe reserve categories, lower than anticipated claims severity was the driver of the favorable development in the 2011 through 2016 accident years.

The $4.5 million reduction of prior accident year loss reserves related to Personal Lines primarily consisted of the following:

• Property: A $3.9 million reduction in the property reserve categories, both including and excluding catastrophes. The decrease reflects lower than expected case incurred emergence, primarily in the 2016 accident year and the aforementioned $1.3 million favorable development from the 2015 wildfire.

• General Liability: A $0.6 million reduction in the agriculture reserve categories. The favorable development was primarily due to lower than expected case incurred emergence in the 2016 accident year partially offset by higher than expected development in the dwelling liability reserve category for the 2015 accident year.

The $4.1 million reduction of prior accident year loss reserve related to Reinsurance Operations was from the property lines. Ultimate losses were lowered in the 2013 through 2015 accident years and partially offset by an increase in the 2016 accident year based on a review of the experience reported from cedants.

In the first nine months of 2016, the Company decreased its prior accident year loss reserves by $24.9 million, which consisted of an $18.8 million decrease related to Commercial Lines and a $6.1 million decrease related to Reinsurance Operations.

The $18.8 million decrease related to Commercial Lines primarily consisted of the following:

• General Liability: A $21.1 million reduction in aggregate with $4.8 million of favorable development in the construction defect reserve category and $16.3 million of favorable development in the other general liability reserve categories. The favorable development in the construction defect reserve category reflects the lower than expected claims frequency and severity which led to a reduction in the 2005 through 2015 accident years. For the other general liability reserve categories, lower than anticipated claims severity was the driver of the favorable development mainly in accident years 2004 through 2012.

• Property: A $0.8 million increase in aggregate with a $0.5 million increase in the non-catastrophe segments and a $0.3 million increase in the catastrophe segments. The increases reflect higher than expected case incurred emergence primarily in the 2012 through 2015 accident years.

The $6.1 million reduction related to Reinsurance Operations was from the property lines. Ultimate losses were lowered for the 2013 through 2015 accident years due to lower than expected emergence of catastrophe losses.

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Debt

9 Months Ended

Sep. 30, 2017

Debt

7. Debt

7.875% Subordinated Notes due 2047

On March 23, 2017, the Company issued Subordinated Notes due in 2047 in the aggregate principal amount of $120.0 million through an underwritten public offering (the “2047 Notes”). Pursuant to the underwriting agreement, the Company granted the underwriters a 30 day option to purchase up to an additional $18 million aggregate principal amount of the 2047 Notes solely to cover over-allotments, if any. On March 30, 2017, the underwriters exercised their over-allotment option in the amount of $10 million principal amount of the 2047 Notes. As a result, the aggregate principal amount of the 2047 Notes increased to $130.0 million. The sale of the 2047 Notes pursuant to the over-allotment option closed on March 30, 2017.

The 2047 Notes bear interest at an annual rate equal to 7.875%, payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year, commencing July 15, 2017. The 2047 Notes mature on April 15, 2047. The Company has the right to redeem the 2047 Notes in $25 increments, in whole or in part, on and after April 15, 2022, or on any interest payment date thereafter, at a redemption price equal to 100% of the principal amount of the 2047 Notes being redeemed plus accrued and unpaid interest to, but not including, the date of redemption. If the Company redeems only a portion of the 2047 Notes on any date of redemption, the Company may subsequently redeem additional 2047 Notes.

The 2047 Notes are subordinated unsecured obligations and rank (i) senior to the Company’s existing and future capital stock, (ii) senior in right of payment to future junior subordinated debt, (iii) equally in right of payment with any existing unsecured, subordinated debt that the Company has issued or may issue in the future that ranks equally with the 2047 Notes, including the Company’s 7.75% subordinated notes for $100.0 million due 2045 and (iv) subordinate in right of payment to any of the Company’s future senior debt. In addition, the 2047 Notes are structurally subordinated to all existing and future indebtedness, liabilities and other obligations of the Company’s subsidiaries including the Company’s margin borrowing facilities.

The 2047 Notes do not require the maintenance of any financial ratios or specified levels of net worth or liquidity, and do not contain provisions that would afford holders of the 2047 Notes protection in the event of a sudden and dramatic decline in the Company’s credit quality resulting from any highly leveraged transaction, reorganization, restructuring, merger or similar transaction involving the Company that may adversely affect holders. The 2047 Notes do not restrict the Company in any way, now or in the future, from incurring additional indebtedness, including senior indebtedness that would rank senior in right of payment to the 2047 Notes. There is no right of acceleration of maturity of the 2047 Notes in the case of default in the payment of principal, premium, if any, or interest on, the 2047 Notes or in the performance of any other obligation of the Company under the notes or if the Company defaults on any other debt securities. Holders may accelerate payment of indebtedness on the 2047 Notes only upon the Company’s bankruptcy, insolvency or reorganization.

The Company incurred $4.2 million in deferred issuance costs associated with the 2047 Notes, which is being amortized over the term of the 2047 Notes. Interest expense, including amortization of deferred issuance costs, recognized on the 2047 Notes was $2.6 million and $5.4 million for the quarters and nine months ended September 30, 2017, respectively.

Please see Note 12 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2016 Annual Report on Form 10-K for information on the Company’s Margin Borrowing Facilities and the 7.75% Subordinated Notes due 2045.

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Shareholders' Equity

9 Months Ended

Sep. 30, 2017

Shareholders' Equity

8. Shareholders’ Equity

No A ordinary shares were repurchased during the quarters ended September 30, 2017 or 2016. During the nine months ended September 30, 2017 and 2016, the Company repurchased 29,551 shares and 28,099 shares, respectively, with an average price paid of $39.24 per share and $ 28.64 per share, respectively. The Company repurchased these shares from employees as payment for the tax liability incurred upon the vesting of the employee’s restricted stock in accordance with the Company’s Share Incentive Plan.

There were no B ordinary shares that were repurchased during the quarters ended September 30, 2017 or 2016.

Please see Note 13 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2016 Annual Report on Form 10-K for more information on the Company’s repurchase program.

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Related Party Transactions

9 Months Ended

Sep. 30, 2017

Related Party Transactions

9. Related Party Transactions

Fox Paine & Company (“Fox Paine”)

As of September 30, 2017, Fox Paine beneficially owned shares having approximately 84% of the Company’s total outstanding voting power. Fox Paine has the right to appoint a number of the Company’s Directors equal in aggregate to the pro rata percentage of the voting shares of the Company beneficially held by Fox Paine for so long as Fox Paine holds an aggregate of 25% or more of the voting power in the Company. Fox Paine controls the election of all of the Company’s Directors due to its controlling share ownership. The Company’s Chairman is a member of Fox Paine.

The Company relies on Fox Paine to provide management services and other services related to the operations of the Company, and Fox Paine may propose and negotiate transaction fees with the Company, subject to the provisions of the Company’s related party transaction policies including approval of the Company’s Audit Committee of the Board of Directors, for those services from time to time. The Company incurred management fees of $0.6 million and $0.5 million during the quarters ended September 30, 2017 and 2016, respectively, and $1.6 million and $1.5 million during the nine months ended September 30, 2017 and 2016, respectively, as part of the annual management fee paid to Fox Paine. As of September 30, 2017 and December 31, 2016, unpaid management fees, which were included in other liabilities on the consolidated balance sheets, were $6.3 million and $4.6 million, respectively.

On September 17, 2017, the Company and Fox Paine entered into a confidentiality agreement whereby Fox Paine agrees to keep confidential proprietary information, as defined in the confidentiality agreement, it receives regarding the Company from time to time, including proprietary information it may receive from director or director nominees appointed by Fox Paine.

Crystal & Company

The Company incurred $0.1 million and $0.2 million in brokerage fees to Crystal & Company, an insurance broker, during the quarter and nine months ended September 30, 2016, respectively. James W. Crystal, the chairman and chief executive officer of Crystal & Company, was a member of the Company’s Board of Directors until he resigned on July 24, 2016.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies

10. Commitments and Contingencies

Legal Proceedings

The Company is, from time to time, involved in various legal proceedings in the ordinary course of business. The Company maintains insurance and reinsurance coverage for such risks in amounts that it considers adequate. However, there can be no assurance that the insurance and reinsurance coverage that the Company maintains is sufficient or will be available in adequate amounts or at a reasonable cost. The Company does not believe that the resolution of any currently pending legal proceedings, either individually or taken as a whole, will have a material adverse effect on its business, results of operations, cash flows, or financial condition.

There is a greater potential for disputes with reinsurers who are in runoff. Some of the Company’s reinsurers’ have operations that are in runoff, and therefore, the Company closely monitors those relationships. The Company anticipates that, similar to the rest of the insurance and reinsurance industry, it will continue to be subject to litigation and arbitration proceedings in the ordinary course of business.

Commitments

In 2014, the Company entered into a $50 million commitment to purchase an alternative investment vehicle which is comprised of European non-performing loans. As of September 30, 2017, the Company has funded $35.8 million of this commitment leaving $14.2 million as unfunded.

In 2016, the Company entered into a $40 million commitment with an investment manager that provides financing for middle market companies. As of September 30, 2017, the Company has funded $28.2 million of this commitment leaving $11.8 million as unfunded.

In 2017, the Company entered into a $50 million commitment to purchase an alternative investment vehicle comprised of stressed and distressed debt instruments. As of September 30, 2017, the Company has funded $16.5 million of this commitment leaving $33.5 million as unfunded.

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Share-Based Compensation Plans

9 Months Ended

Sep. 30, 2017

Share-Based Compensation Plans

11. Share-Based Compensation Plans

Effective January 1, 2017, the Company adopted new accounting guidance which changed several aspects of the accounting for share-based payment transactions. Under the new guidance, all excess tax benefits and tax deficiencies associated with share-based payment awards are required to be recognized as an income tax benefit or expense in net income with the corresponding cash flows recognized as an operating activity in the Consolidated Statement of Cash Flow as opposed to being reported separately as a financing activity. Excess tax benefits and deficiencies are no longer recognized in additional paid-in-capital. The new guidance removes the requirement to delay recognition of any excess tax benefit when there is no current taxes payable to which the benefit would be applied. The new guidance also allows an employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur, rather than estimating forfeitures upon issuance of the award.

Upon adoption of this new accounting guidance, the Company elected to retain its policy of accruing the compensation cost based on the number of awards that are expected to vest. The adoption of this accounting guidance did not result in any cumulative adjustment or restatement. The provisions of this new guidance were adopted on a prospective basis and did not have a material impact on the Company’s financial position, results of operations or cash flows.

Options

No stock options were awarded during the quarters ended September 30, 2017 or 2016. No unvested stock options were forfeited during the quarters ended September 30, 2017 and 2016.

The Company did not award any stock options during the nine months ended September 30, 2017 or 2016. No unvested stock options were forfeited during the nine months ended September 30, 2017. 200,000 unvested stock options were forfeited during the nine months ended September 30, 2016.

Restricted Shares

No restricted shares were issued to employees during the quarters ended September 30, 2017 and 2016.

During the nine months ended September 30, 2017, the Company granted 22,503 A ordinary shares, with a weighted average grant date value of $38.21 per share, to key employees under the Plan.    These shares will vest as follows:

• 16.5%, 16.5%, and 17.0% of the granted stock vest on January 1, 2018, January 1, 2019, and January 1, 2020, respectively.

• Subject to Board approval, 50% of granted stock vests 100%, no later than March 15, 2020, following a re-measurement of 2016 results as of December 31, 2019.

During the nine months ended September 30, 2016, the Company granted 121,346 A ordinary shares, with a weighted average grant date value of $28.97 per share, to key employees under the Plan.    Of the shares granted during the nine months ended September 30, 2016, 11,199 were granted to the Company’s Chief Executive Officer and vest 33 1/3 on each subsequent anniversary date of the grant for a period of three years subject to a true-up of bonus year underwriting results as of the third anniversary of the grant. 5,309 were granted to another key employee and were due to vest 100% on February 7, 2019. These shares were forfeited during the nine months ended September 30, 2017 as the key employee is no longer employed by the company. 8,253 were issued to other key employees and vest 33% on the first and second anniversary of the grant and vest 34% on the third anniversary of the grant contingent on meeting certain performance objectives and subject to Board approval. The remaining 96,585 shares were granted to key employees and will vest as follows:

• 16.5% vested on January 1, 2017. 16.5% and 17.0% of the granted stock will vest on January 1, 2018 and January 1, 2019, respectively.

• Subject to Board approval 50% of granted stock vests 100%, no later than March 15, 2019, following a re-measurement of 2015 results as of December 31, 2018.

During the quarters ended September 30, 2017 and 2016, the Company granted 6,245 and 8,802 A ordinary shares, respectively, at a weighted average grant date value of $42.40 and $29.70 per share, respectively, to non-employee directors of the Company under the Plan. During the nine months ended September 30, 2017 and 2016, the Company granted 19,713 and 28,416 A ordinary shares, respectively, at a weighted average grant date value of $39.82 and $29.40 per share, respectively, to non-employee directors of the Company under the Plan. All of the shares granted to non-employee directors of the Company in 2017 and 2016 were fully vested but are subject to certain restrictions.

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Earnings Per Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share

12. Earnings Per Share

Earnings per share have been computed using the weighted average number of ordinary shares and ordinary share equivalents outstanding during the period.

The following table sets forth the computation of basic and diluted earnings per share:

	Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands, except share and per share data)	2017			2016		2017		2016
Net income (loss)	$	(8,924	)	$	9,535	$	13,447	$	11,495
Basic earnings per share:
Weighted average shares outstanding – basic		17,343,292			17,254,843		17,331,840		17,241,040
Net income (loss) per share	$	(0.51	)	$	0.55	$	0.78	$	0.67
Diluted earnings per share:
Weighted average shares outstanding – diluted (1)		17,343,292			17,540,060		17,684,519		17,515,854
Net income (loss) per share	$	(0.51	)	$	0.54	$	0.76	$	0 .66

(1) For the quarter ended September 30, 2017, “weighted average shares outstanding – basic” was used to calculate “diluted earnings per share” due to a net loss for the period.

A reconciliation of weighted average shares for basic earnings per share to weighted average shares for diluted earnings per share is as follows:

	Quarters Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Weighted average shares for basic earnings per share		17,343,292		17,254,843		17,331,840		17,241,040
Non-vested restricted stock		—		176,087		149,490		165,011
Options		—		109,130		203,189		109,803
Weighted average shares for diluted earnings per share		17,343,292		17,540,060		17,684,519		17,515,854

If the Company had not incurred a loss in the quarter ended September 30, 2017, 17,721,954 weighted average shares would have been used to compute the diluted loss per share calculation which would have included 164,693 shares of non-vested restricted stock and 213,969 share equivalents for options.

The weighted average shares outstanding used to determine dilutive earnings per share for the quarter and nine months ended September 30, 2016 do not include 300,000 shares which were deemed to be anti-dilutive. There were no anti-dilutive shares for the quarter or nine months ended September 30, 2017.

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Segment Information

9 Months Ended

Sep. 30, 2017

Segment Information

13. Segment Information

The Company manages its business through three business segments. Commercial Lines offers specialty property and casualty products designed for product lines such as Small Business Binding Authority, Property Brokerage, and Programs. Personal Lines offers specialty personal lines and agricultural coverage. Reinsurance Operations provides reinsurance solutions through brokers and primary writers including insurance and reinsurance companies.

During the 1^st quarter of 2017, the Company re-evaluated its Commercial Lines and Personal Lines segments and determined that certain portions of business will be managed, operated and reported by including them in the other segment. As a result, the composition of the Company’s reportable segments changed slightly. Premium that is written through a wholly owned agency that mainly sells to individuals, which was previously included as part of the Commercial Lines segment, is now included within the Personal Lines segment. In addition, one of the small commercial programs written by American Reliable Insurance Company, which was previously included within the Personal Lines segment, is now aggregated within the Commercial Lines segment. Accordingly, the segment results for the quarter and nine months ended September 30, 2016 have been revised to reflect these changes.

The following are tabulations of business segment information for the quarters and nine months ended September 30, 2017 and 2016.

Quarter Ended September 30, 2017: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	53,113		$	60,962	(6)	$	11,979		$	126,054
Net premiums written	$	46,471		$	50,607		$	11,967		$	109,045
Net premiums earned	$	44,778		$	52,268		$	11,573		$	108,619
Other income		—			2,254			40			2,294
Total revenues		44,778			54,522			11,613			110,913
Losses and Expenses:
Net losses and loss adjustment expenses		19,095			42,534			20,766			82,395
Acquisition costs and other underwriting expenses		18,237	(3)		22,689	(4)		4,076			45,002
Income (loss) from segments	$	7,446		$	(10,701	)	$	(13,229	)	$	(16,484	)
Unallocated Items:
Net investment income											10,134
Net realized investment loss											(963	)
Corporate and other operating expenses											(4,630	)
Interest expense											(4,836	)
Loss before income taxes											(16,779	)
Income tax benefit											7,855
Net loss											(8,924	)
Total assets	$	911,412		$	481,357		$	737,921	(5)	$	2,130,690

(1) Includes business ceded to the Company’s Reinsurance Operations.

(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $127 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $262 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes ($1,427) of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

Quarter Ended September 30, 2016: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	49,505		$	74,266	(6)	$	9,798		$	133,569
Net premiums written	$	45,074		$	60,179		$	9,798		$	115,051
Net premiums earned	$	47,774		$	61,221		$	10,558		$	119,553
Other income (loss)		6,872			991			(11	)		7,852
Total revenues		54,646			62,212			10,547			127,405
Losses and Expenses:
Net losses and loss adjustment expenses		23,848			42,927			5,387			72,162
Acquisition costs and other underwriting expenses		20,048	(3)		24,411	(4)		3,670			48,129
Income (loss) from segments	$	10,750		$	(5,126	)	$	1,490		$	7,114
Unallocated Items:
Net investment income											8,795
Net realized investment gains											1,928
Corporate and other operating expenses											(5,006	)
Interest expense											(2,233	)
Income before income taxes											10,598
Income tax expense											(1,063	)
Net income											9,535
Total assets	$	770,255		$	499,202		$	712,358	(5)	$	1,981,815

(1) Includes business ceded to the Company’s Reinsurance Operations.

(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $130 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $306 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes $7,328 of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

Nine Months Ended September 30, 2017: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	155,776		$	192,551	(6)	$	45,372		$	393,699
Net premiums written	$	137,025		$	161,979		$	45,344		$	344,348
Net premiums earned	$	133,289		$	164,102		$	31,427		$	328,818
Other income		78			5,153			213			5,444
Total revenues		133,367			169,255			31,640			334,262
Losses and Expenses:
Net losses and loss adjustment expenses		53,688			120,410			28,558			202,656
Acquisition costs and other underwriting expenses		55,398	(3)		69,281	(4)		10,331			135,010
Income (loss) from segments	$	24,281		$	(20,436	)	$	(7,249	)	$	(3,404	)
Unallocated Items:
Net investment income											27,618
Net realized investment loss											(850	)
Corporate and other operating expenses											(11,045	)
Interest expense											(12,065	)
Income before income taxes											254
Income tax benefit											13,193
Net income											13,447
Total assets	$	911,412		$	481,357		$	737,921	(5)	$	2,130,690

(1) Includes business ceded to the Company’s Reinsurance Operations.

(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $366 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $821 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes ($185) of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

Nine Months Ended September 30, 2016: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	155,686		$	238,627	(6)	$	34,941		$	429,254
Net premiums written	$	140,199		$	182,107		$	34,927		$	357,233
Net premiums earned	$	142,749		$	184,581		$	31,663		$	358,993
Other income		6,872			2,714			17			9,603
Total revenues		149,621			187,295			31,680			368,596
Losses and Expenses:
Net losses and loss adjustment expenses		78,813			122,540			13,704			215,057
Acquisition costs and other underwriting expenses		60,784	(3)		76,349	(4)		11,628			148,761
Income (loss) from segments	$	10,024		$	(11,594	)	$	6,348		$	4,778
Unallocated Items:
Net investment income											25,103
Net realized investment losses											(9,057	)
Corporate and other operating expenses											(13,064	)
Interest expense											(6,677	)
Income before income taxes											1,083
Income tax benefit											10,412
Net income											11,495
Total assets	$	770,255		$	499,202		$	712,358	(5)	$	1,981,815

(1) Includes business ceded to the Company’s Reinsurance Operations.

(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $386 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $923 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes $30,910 of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

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New Accounting Pronouncements

9 Months Ended

Sep. 30, 2017

New Accounting Pronouncements

14. New Accounting Pronouncements

In May, 2017, the Financial Accounting Standards Board (“FASB”) issued updated accounting guidance which clarifies whether changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. This guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. Although the Company is still evaluating the impact of this new guidance, the Company does not anticipate it will have a material impact on its financial condition, results of operations, or cash flows.

In March, 2017, the FASB issued new accounting guidance which amends the amortization period for certain purchased callable debt securities held at a premium. Under current generally accepted accounting principles, entities generally amortize the premium as an adjustment of yield over the contractual life of the instruments. Under the new guidance, the amortizations period would be shortened to the earliest call date. This guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is still evaluating the impact of this guidance on its financial condition, results of operations, and cash flows.

In January, 2017, the FASB issued updated guidance that simplifies how an entity is required to test goodwill for impairment by eliminating the requirement to calculate the implied fair value of goodwill (i.e. Step 2 of the current goodwill impairment test). Under the new amendments, an entity may still first assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment loss to be recognized, if any. A goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. This guidance is effective for public business entities’ annual or interim goodwill impairment testing in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Although the Company is still evaluating the impact of this new guidance, the Company does not anticipate it will have a material impact on its financial condition, results of operations, or cash flows.

In January, 2017, the FASB amended The Accounting Standards Codification to incorporate SEC Staff Announcements at the September 22, 2016 and November 17, 2016 Emerging Issues Task Force (EITF) Meetings. The announcement from September 22, 2016 specifically addresses Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606); ASU No. 2016-02, Leases (Topic 842); and ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and provides the SEC staff view that a registrant should evaluate ASUs that have not yet been adopted to determine the appropriate financial statement disclosures about the potential material effects of those ASUs on the financial statements when adopted. If a registrant does not know or cannot reasonably estimate the impact that adoption of the ASUs referenced in this announcement is expected to have on the financial statements, then in addition to making a statement to that effect, that registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact that the standard will have on the financial statements of the registrant when adopted. In this regard, the SEC staff expects the additional qualitative disclosures to include a description of the effect of the accounting policies that the registrant expects to apply, if determined, and a comparison to the registrant’s current accounting policies. Also, a registrant should describe the status of its process to implement the new standards and the significant implementation matters yet to be addressed. This guidance, which is effective immediately, has been adopted by the Company.

In February, 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new guidance increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This guidance is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Upon adoption, the Company expects to report higher assets and liabilities as a result of recognizing right-of-use assets and corresponding lease liabilities on the Consolidated Balance Sheets. The Company expects the new guidance to have minimal impact on the Consolidated Statement of Operations or Consolidated Statement of Cash Flows.

In June, 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). The new accounting guidance addresses the measurement of credit losses on financial instruments. For assets held at amortized cost basis, the new guidance replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of information for credit loss estimates. For available for sale debt securities, credit losses should be measured similar to current GAAP; however, the new guidance requires that credit losses be presented as an allowance rather than as a write-down and allows for the reversal of credit losses in the current period net income. This guidance is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early application of this new guidance is permitted as of the fiscal years beginning after December 15, 2018 including interim periods within those fiscal years. This guidance will be applied using a modified-retrospective approach through a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is still evaluating the impact of this guidance on its financial condition, results of operations, and cash flows.

In May, 2014, the FASB issued (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Long and short duration insurance contracts, which comprise the majority of the Company’s revenues, are excluded from this accounting guidance. While insurance contracts are not within the scope of this guidance, the Company is currently still evaluating whether its revenue recognition policy for fee income will be impacted by this updated guidance. Fee income related to policies written by the Company was $0.6 million for the nine months ended September 30, 2017. This guidance is effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Although the Company is still evaluating the impact of this new guidance, the Company does not anticipate it will have a material impact on its financial condition, results of operations, or cash flows.

Please see Note 22 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2016 Annual Report on Form 10-K for more information on accounting pronouncements issued in 2016 which have not been implemented in 2017.

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Principles of Consolidation and Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2017

Business Segments

The Company manages its business through three business segments: Commercial Lines, Personal Lines, and Reinsurance Operations. The Company’s Commercial Lines offers specialty property and casualty insurance products in the excess and surplus lines marketplace. The Company manages its Commercial Lines by differentiating them into four product classifications: Penn-America, which markets property and general liability products to small commercial businesses through a select network of wholesale general agents with specific binding authority; United National, which markets insurance products for targeted insured segments, including specialty products, such as property, general liability, and professional lines through program administrators with specific binding authority; Diamond State, which markets property, casualty, and professional lines products, which are developed by the Company’s underwriting department by individuals with expertise in those lines of business, through wholesale brokers and also markets through program administrators having specific binding authority; and Vacant Express, which insures dwellings which are currently vacant, undergoing renovation, or are under construction and is distributed through aggregators, brokers, and retail agents. These product classifications comprise the Company’s Commercial Lines business segment and are not considered individual business segments because each product has similar economic characteristics, distribution, and coverage. The Company’s Personal Lines segment offers specialty personal lines and agricultural coverage through general and specialty agents with specific binding authority on an admitted basis. Collectively, the Company’s U.S. insurance subsidiaries are licensed in all 50 states and the District of Columbia. The Commercial Lines and Personal Lines segments comprise the Company’s U.S. Insurance Operations (‘Insurance Operations”). The Company’s Reinsurance Operations consist solely of the operations of its Bermuda-based wholly-owned subsidiary, Global Indemnity Reinsurance Company, Ltd. (“Global Indemnity Reinsurance”). Global Indemnity Reinsurance is a treaty reinsurer of specialty property and casualty insurance and reinsurance companies. The Company’s Reinsurance Operations segment provides reinsurance solutions through brokers and primary writers including insurance and reinsurance companies.

During the 1^st quarter of 2017, the Company re-evaluated its Commercial Lines and Personal Lines segments and determined that certain portions of business will be managed, operated and reported by including them in the other segment. As a result, the composition of the Company’s reportable segments changed slightly. Premium that is written through a wholly owned agency that mainly sells to individuals, which was previously included as part of the Commercial Lines segment, is now included within the Personal Lines segment. In addition, one of the small commercial programs written by American Reliable Insurance Company (“American Reliable”), which was previously included within the Personal Lines segment, is now aggregated within the Commercial Lines segment. Accordingly, the segment results for the quarter and nine months ended September 30, 2016 have been revised to reflect these changes. See Note 13 for additional information regarding segments.

Intercompany Balances and Transactions

The interim consolidated financial statements are unaudited, but have been prepared in conformity with United States of America generally accepted accounting principles (“GAAP”), which differs in certain respects from those principles followed in reports to insurance regulatory authorities. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The unaudited consolidated financial statements include all adjustments that are, in the opinion of management, of a normal recurring nature and are necessary for a fair statement of results for the interim periods. Results of operations for the quarters and nine months ended September 30, 2017 and 2016 are not necessarily indicative of the results of a full year. The accompanying notes to the unaudited consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in the Company’s 2016 Annual Report on Form 10-K.

The consolidated financial statements include the accounts of Global Indemnity and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Investments Policy

The Company regularly performs various analytical valuation procedures with respect to its investments, including reviewing each fixed maturity security in an unrealized loss position to assess whether the security has a credit loss. Specifically, the Company considers credit rating, market price, and issuer specific financial information, among other factors, to assess the likelihood of collection of all principal and interest as contractually due. Securities for which the Company determines that a credit loss is likely are subjected to further analysis through discounted cash flow testing to estimate the credit loss to be recognized in earnings, if any. The specific methodologies and significant assumptions used by asset class are discussed below. Upon identification of such securities and periodically thereafter, a detailed review is performed to determine whether the decline is considered other than temporary. This review includes an analysis of several factors, including but not limited to, the credit ratings and cash flows of the securities and the magnitude and length of time that the fair value of such securities is below cost.

For fixed maturities, the factors considered in reaching the conclusion that a decline below cost is other than temporary include, among others, whether:

(1) the issuer is in financial distress;

(2) the investment is secured;

(3) a significant credit rating action occurred;

(4) scheduled interest payments were delayed or missed;

(5) changes in laws or regulations have affected an issuer or industry;

(6) the investment has an unrealized loss and was identified by the Company’s investment manager as an investment to be sold before recovery or maturity; and

(7) the investment failed cash flow projection testing to determine if anticipated principal and interest payments will be realized.

According to accounting guidance for debt securities in an unrealized loss position, the Company is required to assess whether it has the intent to sell the debt security or more likely than not will be required to sell the debt security before the anticipated recovery. If either of these conditions is met the Company must recognize an other than temporary impairment with the entire unrealized loss being recorded through earnings. For debt securities in an unrealized loss position not meeting these conditions, the Company assesses whether the impairment of a security is other than temporary. If the impairment is deemed to be other than temporary, the Company must separate the other than temporary impairment into two components: the amount representing the credit loss and the amount related to all other factors, such as changes in interest rates. The credit loss represents the portion of the amortized book value in excess of the net present value of the projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. The credit loss component of the other than temporary impairment is recorded through earnings, whereas the amount relating to factors other than credit losses is recorded in other comprehensive income, net of taxes.

For equity securities, management carefully reviews all securities with unrealized losses to determine if a security should be impaired and further focuses on securities that have either:

(1) persisted with unrealized losses for more than twelve consecutive months or

(2) the value of the investment has been 20% or more below cost for six continuous months or more.

Derivative Instruments Policy

The Company accounts for the interest rate swaps as non-hedge instruments and recognizes the fair value of the interest rate swaps in other assets or other liabilities on the consolidated balance sheets with the changes in fair value recognized as net realized investment gains (losses) in the consolidated statements of operations. The Company is ultimately responsible for the valuation of the interest rate swaps. To aid in determining the estimated fair value of the interest rate swaps, the Company relies on the forward interest rate curve and information obtained from a third party financial institution.

Fair Value Measurement Policy

The Company’s invested assets and derivative instruments are carried at their fair value and are categorized based upon a fair value hierarchy:

• Level 1 – inputs utilize quoted prices (unadjusted) in active markets for identical assets that the Company has the ability to access at the measurement date.

• Level 2 – inputs utilize other than quoted prices included in Level 1 that are observable for similar assets, either directly or indirectly.

• Level 3 – inputs are unobservable for the asset, and include situations where there is little, if any, market activity for the asset.

The following is a description of the valuation methodologies used by the Company’s pricing vendors for investment securities carried at fair value:

• Common stock prices are received from all primary and secondary exchanges.

• Corporate and agency bonds are evaluated by utilizing a multi-dimensional relational model. For bonds with early redemption options, an option adjusted spread model is utilized. Both asset classes use standard inputs and incorporate security set up, defined sector breakdown, benchmark yields, apply base spreads, yield to maturity, and adjust for corporate actions.

• Data from commercial vendors is aggregated with market information, then converted into a prepayment/spread/LIBOR curve model used for commercial mortgage obligations (“CMO”). CMOs are categorized with mortgage-backed securities in the tables listed above. For asset-backed securities, data derived from market information along with trustee and servicer reports is converted into spreads to interpolated swap yield curve. For both asset classes, evaluations utilize standard inputs plus new issue data, monthly payment information, and collateral performance. The evaluated pricing models incorporate discount rates, loan level information, prepayment speeds, treasury benchmarks, and LIBOR and swap curves.

• For obligations of state and political subdivisions, a multi-dimensional relational model is used to evaluate securities. The pricing models incorporate security set-up, benchmark yields, apply base spreads, yield to worst or market convention, ratings updates, prepayment schedules and adjustments for material events notices.

• U.S. treasuries are evaluated by obtaining feeds from a number of live data sources including active market makers and inter-dealer brokers.

• For mortgage-backed securities, a matrix model correlation to TBA (a forward MBS trade) or benchmarking is utilized to value a security.

Statutory Income Tax Rates

The statutory income tax rate of each country is applied against the expected annual taxable income of the Company in each country to estimate the annual income tax expense. Generally, during interim periods, the Company will divide total estimated annual income tax expense by total estimated annual pre-tax income to determine the expected annual income tax rate used to compute the income tax provision. The expected annual income tax rate is then applied against interim pre-tax income, excluding net realized gains and losses and limited partnership distributions, and that amount is then added to the actual income taxes on net realized gains and losses, discrete items and limited partnership distributions. However, when there is significant volatility in the expected effective tax rate, the Company records its actual income tax provision in lieu of the estimated effective income tax rate.

Loss Reserves and Prior Year Development

When analyzing loss reserves and prior year development, the Company considers many factors, including the frequency and severity of claims, loss trends, case reserve settlements that may have resulted in significant development, and any other additional or pertinent factors that may impact reserve estimates.

Earnings Per Share Policy

Earnings per share have been computed using the weighted average number of ordinary shares and ordinary share equivalents outstanding during the period.

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Investments (Tables)

9 Months Ended

Sep. 30, 2017

Schedule of Amortized Cost and Estimated Fair Value of Investments

The amortized cost and estimated fair value of investments were as follows as of September 30, 2017 and December 31, 2016:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Other than temporary impairments recognized in AOCI (1)
As of September 30, 2017
Fixed maturities:
U.S. treasury and agency obligations	$	117,596	$	665	$	(495	)	$	117,766	$	—
Obligations of states and political subdivisions		116,508		991		(256	)		117,243		—
Mortgage-backed securities		146,800		650		(562	)		146,888		—
Asset-backed securities		209,028		634		(142	)		209,520		(1	)
Commercial mortgage-backed securities		139,740		94		(741	)		139,093		—
Corporate bonds		485,580		3,851		(838	)		488,593		—
Foreign corporate bonds		140,438		810		(188	)		141,060		—
Total fixed maturities		1,355,690		7,695		(3,222	)		1,360,163		(1	)
Common stock		124,064		13,148		(3,750	)		133,462		—
Other invested assets		73,553		—		—			73,553		—
Total	$	1,553,307	$	20,843	$	(6,972	)	$	1,567,178	$	(1	)

(1) Represents the total amount of other than temporary impairment losses relating to factors other than credit losses recognized in accumulated other comprehensive income (“AOCI”).

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Other than temporary impairments recognized in AOCI (1)
As of December 31, 2016
Fixed maturities:
U.S. treasury and agency obligations	$	71,517	$	763	$	(233	)	$	72,047	$	—
Obligations of states and political subdivisions		155,402		1,423		(379	)		156,446		—
Mortgage-backed securities		88,131		895		(558	)		88,468		—
Asset-backed securities		233,890		684		(583	)		233,991		(4	)
Commercial mortgage-backed securities		184,821		118		(1,747	)		183,192		—
Corporate bonds		381,209		1,666		(2,848	)		380,027		—
Foreign corporate bonds		126,369		164		(673	)		125,860		—
Total fixed maturities		1,241,339		5,713		(7,021	)		1,240,031		(4	)
Common stock		119,515		3,445		(2,403	)		120,557		—
Other invested assets		66,121		—		—			66,121		—
Total	$	1,426,975	$	9,158	$	(9,424	)	$	1,426,709	$	(4	)

(1) Represents the total amount of other than temporary impairment losses relating to factors other than credit losses recognized in accumulated other comprehensive income (“AOCI”).

Summary of Amortized Cost and Estimated Fair Value Through Fixed Maturities

The amortized cost and estimated fair value of the Company’s fixed maturities portfolio classified as available for sale at September 30, 2017, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	86,480	$	86,515
Due in one year through five years		493,819		495,425
Due in five years through ten years		273,515		276,346
Due in ten years through fifteen years		592		598
Due after fifteen years		5,716		5,778
Mortgage-backed securities		146,800		146,888
Asset-backed securities		209,028		209,520
Commercial mortgage-backed securities		139,740		139,093
Total	$	1,355,690	$	1,360,163

Summary of Securities With Gross Unrealized Losses

The following table contains an analysis of the Company’s securities with gross unrealized losses, categorized by the period that the securities were in a continuous loss position as of September 30, 2017:

	Less than 12 months					12 months or longer (1)					Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities:
U.S. treasury and agency obligations	$	96,336	$	(489	)	$	594	$	(6	)	$	96,930	$	(495	)
Obligations of states and political subdivisions		27,806		(199	)		8,629		(57	)		36,435		(256	)
Mortgage-backed securities		105,162		(554	)		297		(8	)		105,459		(562	)
Asset-backed securities		41,719		(142	)		—		—			41,719		(142	)
Commercial mortgage-backed securities		97,191		(639	)		6,727		(102	)		103,918		(741	)
Corporate bonds		125,550		(600	)		17,493		(238	)		143,043		(838	)
Foreign corporate bonds		40,145		(87	)		10,446		(101	)		50,591		(188	)
Total fixed maturities		533,909		(2,710	)		44,186		(512	)		578,095		(3,222	)
Common stock		29,150		(3,750	)		—		—			29,150		(3,750	)
Total	$	563,059	$	(6,460	)	$	44,186	$	(512	)	$	607,245	$	(6,972	)

(1) Fixed maturities in a gross unrealized loss position for twelve months or longer are primarily comprised of non-credit losses on investment grade securities where management does not intend to sell, and it is more likely than not that the Company will not be forced to sell the security before recovery. The Company has analyzed these securities and has determined that they are not other than temporarily impaired.

The following table contains an analysis of the Company’s securities with gross unrealized losses, categorized by the period that the securities were in a continuous loss position as of December 31, 2016:

	Less than 12 months					12 months or longer (1)					Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities:
U.S. treasury and agency obligations	$	39,570	$	(233	)	$	—	$	—		$	39,570	$	(233	)
Obligations of states and political subdivisions		46,861		(369	)		670		(10	)		47,531		(379	)
Mortgage-backed securities		52,780		(541	)		298		(17	)		53,078		(558	)
Asset-backed securities		62,737		(493	)		23,937		(90	)		86,674		(583	)
Commercial mortgage-backed securities		94,366		(1,090	)		69,747		(657	)		164,113		(1,747	)
Corporate bonds		171,621		(2,731	)		9,218		(117	)		180,839		(2,848	)
Foreign corporate bonds		76,036		(673	)		—		—			76,036		(673	)
Total fixed maturities		543,971		(6,130	)		103,870		(891	)		647,841		(7,021	)
Common stock		57,439		(2,403	)		—		—			57,439		(2,403	)
Total	$	601,410	$	(8,533	)	$	103,870	$	(891	)	$	705,280	$	(9,424	)

(1) Fixed maturities in a gross unrealized loss position for twelve months or longer are primarily comprised of non-credit losses on investment grade securities where management does not intend to sell, and it is more likely than not that the Company will not be forced to sell the security before recovery. The Company has analyzed these securities and has determined that they are not other than temporarily impaired.

Schedule of Other Than Temporary Impairments on Investments

The Company recorded the following other than temporary impairments (“OTTI”) on its investment portfolio for the quarters and nine months ended September 30, 2017 and 2016:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Fixed maturities:
OTTI losses, gross	$	—		$	(108	)	$	(31	)	$	(201	)
Portion of loss recognized in other comprehensive income (pre-tax)		—			—			—			—
Net impairment losses on fixed maturities recognized in earnings		—			(108	)		(31	)		(201	)
Equity securities		(1,020	)		(2,106	)		(1,677	)		(4,280	)
Total	$	(1,020	)	$	(2,214	)	$	(1,708	)	$	(4,481	)

Schedule of Credit Losses Recognized in Earnings

The following table is an analysis of the credit losses recognized in earnings on fixed maturities held by the Company for the quarters and nine months ended September 30, 2017 and 2016 for which a portion of the OTTI loss was recognized in other comprehensive income.

	Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands)	2017			2016		2017			2016
Balance at beginning of period	$	16		$	31	$	31		$	31
Additions where no OTTI was previously recorded		—			—		—			—
Additions where an OTTI was previously recorded		—			—		—			—
Reductions for securities for which the company intends to sell or more likely than not will be required to sell before recovery		—			—		—			—
Reductions reflecting increases in expected cash flows to be collected		—			—		—			—
Reductions for securities sold during the period		(3	)		—		(18	)		—
Balance at end of period	$	13		$	31	$	13		$	31

Schedule of Accumulated Other Comprehensive Income, Net of Tax

Accumulated Other Comprehensive Income, Net of Tax

Accumulated other comprehensive income, net of tax, as of September 30, 2017 and December 31, 2016 was as follows:

(Dollars in thousands)	September 30, 2017			December 31, 2016
Net unrealized gains (losses)from:
Fixed maturities	$	4,473		$	(1,308	)
Common stock		9,398			1,042
Foreign currency fluctuations		584			—
Deferred taxes		(4,370	)		(352	)
Accumulated other comprehensive income, net of tax	$	10,085		$	(618	)

Changes in Accumulated Other Comprehensive Income

The following tables present the changes in accumulated other comprehensive income, net of tax, by component for the quarters and nine months ended September 30, 2017 and 2016:

Quarter Ended September 30, 2017 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax		Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	5,549	$	437		$	5,986
Other comprehensive income (loss) before reclassification		3,173		485			3,658
Amounts reclassified from accumulated other comprehensive income (loss)		653		(212	)		441
Other comprehensive income (loss)		3,826		273			4,099
Ending balance	$	9,375	$	710		$	10,085

Quarter Ended September 30, 2016 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax			Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	22,511		$	(435	)	$	22,076
Other comprehensive income (loss) before reclassification		2,073			(89	)		1,984
Amounts reclassified from accumulated other Comprehensive loss		(781	)		—			(781	)
Other comprehensive income (loss)		1,292			(89	)		1,203
Ending balance	$	23,803		$	(524	)	$	23,279

Nine Months Ended September 30, 2017 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax			Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	(554	)	$	(64	)	$	(618	)
Other comprehensive income (loss) before reclassification		10,498			993			11,491
Amounts reclassified from accumulated other comprehensive income (loss)		(569	)		(219	)		(788	)
Other comprehensive income (loss)		9,929			774			10,703
Ending balance	$	9,375		$	710		$	10,085

Nine Months Ended September 30, 2016 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities, Net of Tax			Foreign Currency Items, Net of Tax			Accumulated Other Comprehensive Income, Net of Tax
Beginning balance	$	4,200		$	(122	)	$	4,078
Other comprehensive income (loss) before reclassification		22,075			(400	)		21,675
Amounts reclassified from accumulated other comprehensive loss		(2,472	)		(2	)		(2,474	)
Other comprehensive income (loss)		19,603			(402	)		19,201
Ending balance	$	23,803		$	(524	)	$	23,279

Reclassifications Out of Accumulated Other Comprehensive Income

The reclassifications out of accumulated other comprehensive income for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

(Dollars in thousands)		Amounts Reclassified from Accumulated Other Comprehensive Income Quarters Ended September 30,
Details about Accumulated Other Comprehensive Income Components	Affected Line Item in the Consolidated Statements of Operations	2017			2016
Unrealized gains and losses on available for sale securities	Other net realized investment gains	$	(97	)	$	(3,384	)
	Other than temporary impairment losses on investments		1,020			2,214
	Total before tax		923			(1,170	)
	Income tax expense		(270	)		389
	Unrealized gains and losses on available for sale securities, net of tax	$	653		$	(781	)
Foreign currency items	Other net realized investment gains	$	(326	)	$	—
	Income tax expense		114			—
	Foreign currency items, net of tax	$	(212	)	$	—
Total reclassifications	Total reclassifications, net of tax	$	441		$	(781	)

(Dollars in thousands)		Amounts Reclassified from Accumulated Other Comprehensive Income Nine Months Ended September 30,
Details about Accumulated Other Comprehensive Income Components	Affected Line Item in the Consolidated Statements of Operations	2017			2016
Unrealized gains and losses on available for sale securities	Other net realized investment gains	$	(2,538	)	$	(8,214	)
	Other than temporary impairment losses on investments		1,708			4,481
	Total before tax		(830	)		(3,733	)
	Income tax expense		261			1,261
	Unrealized gains and losses on available for sale securities, net of tax	$	(569	)	$	(2,472	)
Foreign currency items	Other net realized investment gains	$	(336	)	$	(4	)
	Income tax expense		117			2
	Foreign currency items, net of tax	$	(219	)	$	(2	)
Total reclassifications	Total reclassifications, net of tax	$	(788	)	$	(2,474	)

Components of Net Realized Investment Gains (Losses)

The components of net realized investment gains (losses) for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Fixed maturities:
Gross realized gains	$	434		$	434		$	3,122		$	1,252
Gross realized losses		(300	)		(147	)		(2,358	)		(291	)
Net realized gains		134			287			764			961
Common stock:
Gross realized gains		917			3,345			2,711			8,068
Gross realized losses		(1,648	)		(2,462	)		(2,309	)		(5,292	)
Net realized gains		(731	)		883			402			2,776
Derivatives:
Gross realized gains		486			1,955			822			—
Gross realized losses		(852	)		(1,197	)		(2,838	)		(12,794	)
Net realized gains (losses) (1)		(366	)		758			(2,016	)		(12,794	)
Total net realized investment gains (losses)	$	(963	)	$	1,928		$	(850	)	$	(9,057	)

(1) Includes periodic net interest settlements related to the derivatives of $0.9 million and $1.2 million for the quarters ended September 30, 2017 and 2016, respectively, and $2.8 million and $3.7 million for the nine months ended September 30, 2017 and 2016, respectively.

Proceeds from Sales and Redemptions of Available-for-Sale Securities

The proceeds from sales and redemptions of available-for-sale securities resulting in net realized investment gains for the nine months ended September 30, 2017 and 2016 were as follows:

	Nine Months Ended September 30,
(Dollars in thousands)	2017		2016
Fixed maturities	$	742,229	$	279,659
Equity securities		24,483		34,976

Schedule of Investment Income

The sources of net investment income for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Fixed maturities	$	9,020		$	8,131		$	24,032		$	22,729
Equity securities		906			698			2,740			2,647
Cash and cash equivalents		226			44			621			111
Other invested assets		655			909			2,423			3,806
Total investment income		10,807			9,782			29,816			29,293
Investment expense (1)		(673	)		(987	)		(2,198	)		(4,190	)
Net investment income	$	10,134		$	8,795		$	27,618		$	25,103

(1) Investment expense for the nine months ended September 30, 2016 includes $1.5 million in upfront fees necessary to enter into a new investment. See Note 9 for additional information on the Company’s $40 million commitment related to this investment.

Schedule of Total Investment Return

The Company’s total investment return on a pre-tax basis for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Net investment income	$	10,134		$	8,795		$	27,618		$	25,103
Net realized investment gains (losses)		(963	)		1,928			(850	)		(9,057	)
Change in unrealized holding gains and losses		5,631			2,061			14,721			25,398
Net realized and unrealized investment returns		4,668			3,989			13,871			16,341
Total investment return	$	14,802		$	12,784		$	41,489		$	41,444
Total investment return % (1)		0.9	%		0.8	%		2.6	%		2.7	%
Average investment portfolio	$	1,629,989		$	1,530,599		$	1,587,645		$	1,522,247

(1) Not annualized.

Summary of Insurance Enhanced Municipal Bonds Backed by Financial Guarantors

A summary of the Company’s insurance enhanced municipal bonds that are backed by financial guarantors, including the pre-refunded bonds that are escrowed in U.S. government obligations, as of September 30, 2017, is as follows:

(Dollars in thousands) Financial Guarantor	Total		Pre-refunded Securities		Government Guaranteed Securities		Exposure Net of Pre-refunded &  Government Guaranteed Securities
Ambac Financial Group	$	1,029	$	—	$	—	$	1,029
Municipal Bond Insurance Association		1,191		—		—		1,191
Gov’t National Housing Association		440		—		440		—
Total backed by financial guarantors		2,660		—		440		2,220
Other credit enhanced municipal bonds		1,523		1,523		—		—
Total	$	4,183	$	1,523	$	440	$	2,220

Summary of Estimated Fair Values of Bonds Held on Deposit

The fair values were as follows as of September 30, 2017 and December 31, 2016:

	Estimated Fair Value
(Dollars in thousands)	September 30, 2017		December 31, 2016
On deposit with governmental authorities	$	28,489	$	29,079
Intercompany trusts held for the benefit of U.S. policyholders		335,444		351,002
Held in trust pursuant to third party requirements		80,820		88,178
Letter of credit held for third party requirements		4,028		4,871
Securities held as collateral for borrowing arrangements (1)		93,736		85,939
Total	$	542,517	$	559,069

(1) Amount required to collateralize margin borrowing facility.

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Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2017

Summary of Net Gain (Loss) Included in Consolidated Statements of Operations for Changes in Fair Value of Derivatives and Periodic Net Interest Settlements Under Derivatives

The following table summarizes information on the location and the gross amount of the derivatives’ fair value on the consolidated balance sheets as of September 30, 2017 and December 31, 2016:

(Dollars in thousands)		September 30, 2017					December 31, 2016
Derivatives Not Designated as Hedging Instruments under ASC  815	Balance Sheet Location	Notional Amount		Fair Value			Notional Amount		Fair Value
Interest rate swap agreements	Other liabilities	$	200,000	$	(10,702	)	$	200,000	$	(11,524	)

Summarized Information of Location and Gross Amount of Derivatives' Fair Value in Consolidated Balance Sheets

The following table summarizes the net gain (loss) included in the consolidated statements of operations for changes in the fair value of the derivatives and the periodic net interest settlements under the derivatives for the quarters and nine months ended September 30, 2017 and 2016:

		Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands)	Consolidated Statement of Operations Line	2017			2016		2017			2016
Interest rate swap agreements	Net realized investment gains (losses)	$	(366	)	$	758	$	(2,016	)	$	(12,794	)

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

Company's Invested Assets and Derivative Instruments Measured at Fair Value on Recurring Basis

The following table presents information about the Company’s invested assets and derivative instruments measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

As of September 30, 2017	Fair Value Measurements
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
U.S. treasury and agency obligations	$	117,766	$	—	$	—	$	117,766
Obligations of states and political subdivisions		—		117,243		—		117,243
Mortgage-backed securities		—		146,888		—		146,888
Commercial mortgage-backed securities		—		139,093		—		139,093
Asset-backed securities		—		209,520		—		209,520
Corporate bonds		—		488,593		—		488,593
Foreign corporate bonds		—		141,060		—		141,060
Total fixed maturities		117,766		1,242,397		—		1,360,163
Common stock		133,462		—		—		133,462
Total assets measured at fair value (1)	$	251,228	$	1,242,397	$	—	$	1,493,625
Liabilities:
Derivative instruments	$	—	$	10,702	$	—	$	10,702
Total liabilities measured at fair value	$	—	$	10,702	$	—	$	10,702

(1) Excluded from the table above are limited partnerships of $73.6 million at September 30, 2017 whose fair value is based on net asset value as a practical expedient.

As of December 31, 2016	Fair Value Measurements
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
U.S. treasury and agency obligations	$	72,047	$	—	$	—	$	72,047
Obligations of states and political subdivisions		—		156,446		—		156,446
Mortgage-backed securities		—		88,468		—		88,468
Commercial mortgage-backed securities		—		183,192		—		183,192
Asset-backed securities		—		233,991		—		233,991
Corporate bonds		—		380,027		—		380,027
Foreign corporate bonds		—		125,860		—		125,860
Total fixed maturities		72,047		1,167,984		—		1,240,031
Common stock		120,557		—		—		120,557
Total assets measured at fair value (1)	$	192,604	$	1,167,984	$	—	$	1,360,588
Liabilities:
Derivative instruments	$	—	$	11,524	$	—	$	11,524
Total liabilities measured at fair value	$	—	$	11,524	$	—	$	11,524

(1) Excluded from the table above are limited partnerships of $66.1 million at December 31, 2016 whose fair value is based on net asset value as a practical expedient.

Current Fair Value of Debt

For the Company’s material debt arrangements, the current fair value of the Company’s debt at September 30, 2017 and December 31, 2016 was as follows:

	September 30, 2017				December 31, 2016
(Dollars in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Margin Borrowing Facility	$	76,518	$	76,518	$	66,646	$	66,646
7.75% Subordinated Notes due 2045 (1)		96,588		100,448		96,497		95,697
7.875% Subordinated Notes due 2047 (2)		125,829		130,009		—		—
Total	$	298,935	$	306,975	$	163,143	$	162,343

(1) As of September 30, 2017 and December 31, 2016, the carrying value and fair value of the 7.75% Subordinated Notes due 2045 are net of unamortized debt issuance cost of $3.4 million and $3.5 million, respectively.

(2) As of September 30, 2017, the carrying value and fair value of the 7.875% Subordinated Notes due 2047 are net of unamortized debt issuance cost of $4.2 million.

Fair Value and Future Funding Commitments Related to These Investments

The following table provides the fair value and future funding commitments related to these investments at September 30, 2017 and December 31, 2016.

	September 30, 2017				December 31, 2016
(Dollars in thousands)	Fair Value		Future Funding Commitment		Fair Value		Future Funding Commitment
Real Estate Fund, LP (1)	$	—	$	—	$	—	$	—
European Non-Performing Loan Fund, LP (2)		29,795		14,214		32,922		15,714
Private Middle Market Loan Fund, LP (3)		26,824		11,776		33,199		9,054
Distressed Debt Fund, LP (4)		16,934		33,500		—		—
Total	$	73,553	$	59,490	$	66,121	$	24,768

(1) This limited partnership invests in real estate assets through a combination of direct or indirect investments in partnerships, limited liability companies, mortgage loans, and lines of credit. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company continues to hold an investment in this limited partnership and has written the fair value down to zero.

(2) This limited partnership invests in distressed securities and assets through senior and subordinated, secured and unsecured debt and equity, in both public and private large-cap and middle-market companies. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the partnership agreement, the Company anticipates its interest in this partnership to be redeemed by 2020.

(3) This limited partnership provides financing for middle market companies. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the investment management agreement, the Company anticipates its interest to be redeemed no later than 2024.

(4) This limited partnership invests in stressed and distressed debt instruments. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the partnership agreement, the Company anticipates its interest to be redeemed no later than 2027.

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2017

Income before Income Taxes from its Non-U.S. Subsidiaries and U.S. Subsidiaries

The Company’s income before income taxes from its non-U.S. subsidiaries and U.S. subsidiaries, including the results of the quota share agreements between Global Indemnity Reinsurance and the Insurance Operations, for the quarters and nine months ended September 30, 2017 and 2016 were as follows:

Quarter Ended September 30, 2017: (Dollars in thousands)	Non-U.S. Subsidiaries			U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	50,812		$	114,076		$	(38,834	)	$	126,054
Net premiums written	$	50,800		$	58,245		$	—		$	109,045
Net premiums earned	$	50,392		$	58,227		$	—		$	108,619
Net investment income		14,631			6,584			(11,081	)		10,134
Net realized investment losses		(150	)		(813	)		—			(963	)
Other income		40			2,254			—			2,294
Total revenues		64,913			66,252			(11,081	)		120,084
Losses and Expenses:
Net losses and loss adjustment expenses		31,044			51,351			—			82,395
Acquisition costs and other underwriting expenses		21,922			23,080			—			45,002
Corporate and other operating expenses		1,807			2,823			—			4,630
Interest expense		4,679			11,238			(11,081	)		4,836
Income (loss) before income taxes	$	5,461		$	(22,240	)	$	—		$	(16,779	)
Quarter Ended September 30, 2016: (Dollars in thousands)	Non-U.S. Subsidiaries			U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	51,900		$	123,770		$	(42,101	)	$	133,569
Net premiums written	$	51,900		$	63,151		$	—		$	115,051
Net premiums earned	$	54,155		$	65,398		$	—		$	119,553
Net investment income		11,556			5,828			(8,589	)		8,795
Net realized investment gains		58			1,870			—			1,928
Other income (loss)		(10	)		7,862			—			7,852
Total revenues		65,759			80,958			(8,589	)		138,128
Losses and Expenses:
Net losses and loss adjustment expenses		27,932			44,230			—			72,162
Acquisition costs and other underwriting expenses		24,651			23,478			—			48,129
Corporate and other operating expenses		2,906			2,100			—			5,006
Interest expense		2,081			8,741			(8,589	)		2,233
Income before income taxes	$	8,189		$	2,409		$	—		$	10,598
Nine Months Ended September 30, 2017: (Dollars in thousands)	Non-U.S. Subsidiaries			U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	164,975		$	348,331		$	(119,607	)	$	393,699
Net premiums written	$	164,947		$	179,401		$	—		$	344,348
Net premiums earned	$	150,384		$	178,434		$	—		$	328,818
Net investment income		41,519			16,786			(30,687	)		27,618
Net realized investment gains (losses)		87			(937	)		—			(850	)
Other income		213			5,231			—			5,444
Total revenues		192,203			199,514			(30,687	)		361,030
Losses and Expenses:
Net losses and loss adjustment expenses		74,780			127,876			—			202,656
Acquisition costs and other underwriting expenses		65,544			69,466			—			135,010
Corporate and other operating expenses		4,137			6,908			—			11,045
Interest expense		11,653			31,099			(30,687	)		12,065
Income (loss) before income taxes	$	36,089		$	(35,835	)	$	—		$	254

Nine Months Ended September 30, 2016: (Dollars in thousands)	Non-U.S. Subsidiaries		U.S. Subsidiaries			Eliminations			Total
Revenues:
Gross premiums written	$	141,297	$	394,312		$	(106,355	)	$	429,254
Net premiums written	$	141,283	$	215,950		$	—		$	357,233
Net premiums earned	$	162,594	$	196,399		$	—		$	358,993
Net investment income		36,791		13,888			(25,576	)		25,103
Net realized investment gains (losses)		128		(9,185	)		—			(9,057	)
Other income		17		9,586			—			9,603
Total revenues		199,530		210,688			(25,576	)		384,642
Losses and Expenses:
Net losses and loss adjustment expenses		84,154		130,903			—			215,057
Acquisition costs and other underwriting expenses		71,758		77,003			—			148,761
Corporate and other operating expenses		7,181		5,883			—			13,064
Interest expense		6,233		26,020			(25,576	)		6,677
Income (loss) before income taxes	$	30,204	$	(29,121	)	$	—		$	1,083

Components of Income Tax Benefit

The following table summarizes the components of income tax benefit:

	Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands)	2017			2016		2017			2016
Current income tax expense:
Foreign	$	107		$	84	$	290		$	289
U.S. Federal		128			146		128			146
Total current income tax expense		235			230		418			435
Deferred income tax expense (benefit):
U.S. Federal		(8,090	)		833		(13,611	)		(10,847	)
Total deferred income tax expense (benefit)		(8,090	)		833		(13,611	)		(10,847	)
Total income tax expense (benefit)	$	(7,855	)	$	1,063	$	(13,193	)	$	(10,412	)

Differences in Tax and Estimated Tax Provisions at Weighted Average Tax Rate

The following table summarizes the differences between the tax provision for financial statement purposes and the expected tax provision at the weighted average tax rate:

	Quarters Ended September 30,
(Dollars in thousands)	2017						2016
	Amount			% of Pre- Tax Income			Amount			% of Pre- Tax Income
Expected tax provision at weighted average rate	$	(7,678	)		(45.8	%)	$	933			8.8	%
Adjustments:
Tax exempt interest		(40	)		(0.2	)		(101	)		(1.0	)
Dividend exclusion		(144	)		(0.9	)		(3	)		0.0
Other		7			0.1			234			2.2
Actual tax on continuing operations	$	(7,855	)		(46.8	%)	$	1,063			10.0	%

	Nine Months Ended September 30,
(Dollars in thousands)	2017						2016
	Amount			% of Pre- Tax Income			Amount			% of Pre- Tax Income
Expected tax provision at weighted average rate	$	(12,252	)		(4,823.6	%)	$	(9,896	)		(913.8	%)
Adjustments:
Tax exempt interest		(191	)		(75.2	)		(304	)		(28.1	)
Dividend exclusion		(410	)		(161.4	)		(480	)		(44.3	)
Other		(340	)		(133.9	)		268			24.8
Actual tax on continuing operations	$	(13,193	)		(5,194.1	%)	$	(10,412	)		(961.4	%)

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Liability for Unpaid Losses and Loss Adjustment Expenses (Tables)

9 Months Ended

Sep. 30, 2017

Summarized Activity in Liability for Unpaid Losses and Loss Adjustment Expenses

Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows:

	Quarters Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2017			2016			2017			2016
Balance at beginning of period	$	615,763		$	683,850		$	651,042		$	680,047
Less: Ceded reinsurance receivables		104,245			111,579			130,439			108,130
Net balance at beginning of period		511,518			572,271			520,603			571,917
Purchased reserves, gross		9,063			1,410			18,024			1,410
Purchased reserves ceded		63			641			573			641
Purchased reserves, net of third party reinsurance		9,126			2,051			18,597			2,051
Incurred losses and loss adjustment expenses related to:
Current year		91,766			81,579			237,460			239,991
Prior years		(9,371	)		(9,417	)		(34,804	)		(24,934	)
Total incurred losses and loss adjustment expenses		82,395			72,162			202,656			215,057
Paid losses and loss adjustment expenses related to:
Current year		45,193			49,704			115,927			113,090
Prior years		25,190			35,147			93,273			114,302
Total paid losses and loss adjustment expenses		70,383			84,851			209,200			227,392
Net balance at end of period		532,656			561,633			532,656			561,633
Plus: Ceded reinsurance receivables		117,070			102,749			117,070			102,749
Balance at end of period	$	649,726		$	664,382		$	649,726		$	664,382

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2017

Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Quarters Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands, except share and per share data)	2017			2016		2017		2016
Net income (loss)	$	(8,924	)	$	9,535	$	13,447	$	11,495
Basic earnings per share:
Weighted average shares outstanding – basic		17,343,292			17,254,843		17,331,840		17,241,040
Net income (loss) per share	$	(0.51	)	$	0.55	$	0.78	$	0.67
Diluted earnings per share:
Weighted average shares outstanding – diluted (1)		17,343,292			17,540,060		17,684,519		17,515,854
Net income (loss) per share	$	(0.51	)	$	0.54	$	0.76	$	0 .66

(1) For the quarter ended September 30, 2017, “weighted average shares outstanding – basic” was used to calculate “diluted earnings per share” due to a net loss for the period.

Reconciliation of Weighted Average Shares for Basic and Diluted Earnings Per Share

A reconciliation of weighted average shares for basic earnings per share to weighted average shares for diluted earnings per share is as follows:

	Quarters Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Weighted average shares for basic earnings per share		17,343,292		17,254,843		17,331,840		17,241,040
Non-vested restricted stock		—		176,087		149,490		165,011
Options		—		109,130		203,189		109,803
Weighted average shares for diluted earnings per share		17,343,292		17,540,060		17,684,519		17,515,854

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2017

Summary of Business Segment Information

The following are tabulations of business segment information for the quarters and nine months ended September 30, 2017 and 2016.

Quarter Ended September 30, 2017: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	53,113		$	60,962	(6)	$	11,979		$	126,054
Net premiums written	$	46,471		$	50,607		$	11,967		$	109,045
Net premiums earned	$	44,778		$	52,268		$	11,573		$	108,619
Other income		—			2,254			40			2,294
Total revenues		44,778			54,522			11,613			110,913
Losses and Expenses:
Net losses and loss adjustment expenses		19,095			42,534			20,766			82,395
Acquisition costs and other underwriting expenses		18,237	(3)		22,689	(4)		4,076			45,002
Income (loss) from segments	$	7,446		$	(10,701	)	$	(13,229	)	$	(16,484	)
Unallocated Items:
Net investment income											10,134
Net realized investment loss											(963	)
Corporate and other operating expenses											(4,630	)
Interest expense											(4,836	)
Loss before income taxes											(16,779	)
Income tax benefit											7,855
Net loss											(8,924	)
Total assets	$	911,412		$	481,357		$	737,921	(5)	$	2,130,690

(1) Includes business ceded to the Company’s Reinsurance Operations.

(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $127 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $262 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes ($1,427) of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

Quarter Ended September 30, 2016: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	49,505		$	74,266	(6)	$	9,798		$	133,569
Net premiums written	$	45,074		$	60,179		$	9,798		$	115,051
Net premiums earned	$	47,774		$	61,221		$	10,558		$	119,553
Other income (loss)		6,872			991			(11	)		7,852
Total revenues		54,646			62,212			10,547			127,405
Losses and Expenses:
Net losses and loss adjustment expenses		23,848			42,927			5,387			72,162
Acquisition costs and other underwriting expenses		20,048	(3)		24,411	(4)		3,670			48,129
Income (loss) from segments	$	10,750		$	(5,126	)	$	1,490		$	7,114
Unallocated Items:
Net investment income											8,795
Net realized investment gains											1,928
Corporate and other operating expenses											(5,006	)
Interest expense											(2,233	)
Income before income taxes											10,598
Income tax expense											(1,063	)
Net income											9,535
Total assets	$	770,255		$	499,202		$	712,358	(5)	$	1,981,815

(1) Includes business ceded to the Company’s Reinsurance Operations.

(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $130 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $306 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes $7,328 of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

Nine Months Ended September 30, 2017: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	155,776		$	192,551	(6)	$	45,372		$	393,699
Net premiums written	$	137,025		$	161,979		$	45,344		$	344,348
Net premiums earned	$	133,289		$	164,102		$	31,427		$	328,818
Other income		78			5,153			213			5,444
Total revenues		133,367			169,255			31,640			334,262
Losses and Expenses:
Net losses and loss adjustment expenses		53,688			120,410			28,558			202,656
Acquisition costs and other underwriting expenses		55,398	(3)		69,281	(4)		10,331			135,010
Income (loss) from segments	$	24,281		$	(20,436	)	$	(7,249	)	$	(3,404	)
Unallocated Items:
Net investment income											27,618
Net realized investment loss											(850	)
Corporate and other operating expenses											(11,045	)
Interest expense											(12,065	)
Income before income taxes											254
Income tax benefit											13,193
Net income											13,447
Total assets	$	911,412		$	481,357		$	737,921	(5)	$	2,130,690

(1) Includes business ceded to the Company’s Reinsurance Operations.

(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $366 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $821 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes ($185) of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

Nine Months Ended September 30, 2016: (Dollars in thousands)	Commercial Lines (1)			Personal Lines (1)			Reinsurance Operations (2)			Total
Revenues:
Gross premiums written	$	155,686		$	238,627	(6)	$	34,941		$	429,254
Net premiums written	$	140,199		$	182,107		$	34,927		$	357,233
Net premiums earned	$	142,749		$	184,581		$	31,663		$	358,993
Other income		6,872			2,714			17			9,603
Total revenues		149,621			187,295			31,680			368,596
Losses and Expenses:
Net losses and loss adjustment expenses		78,813			122,540			13,704			215,057
Acquisition costs and other underwriting expenses		60,784	(3)		76,349	(4)		11,628			148,761
Income (loss) from segments	$	10,024		$	(11,594	)	$	6,348		$	4,778
Unallocated Items:
Net investment income											25,103
Net realized investment losses											(9,057	)
Corporate and other operating expenses											(13,064	)
Interest expense											(6,677	)
Income before income taxes											1,083
Income tax benefit											10,412
Net income											11,495
Total assets	$	770,255		$	499,202		$	712,358	(5)	$	1,981,815

(1) Includes business ceded to the Company’s Reinsurance Operations.

(2) External business only, excluding business assumed from affiliates.

(3) Includes federal excise tax of $386 relating to cessions from Commercial Lines to Reinsurance Operations.

(4) Includes federal excise tax of $923 relating to cessions from Personal Lines to Reinsurance Operations.

(5) Comprised of Global Indemnity Reinsurance’s total assets less its investment in subsidiaries.

(6) Includes $30,910 of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

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Principles of Consolidation and Basis of Presentation - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2017 Segment Product
Organization And Basis Of Presentation [Line Items]
Date of incorporation	Feb. 09, 2016
State of incorporation	Cayman Islands
Kind of listing	A ordinary shares
Number of business segments | Segment	3
Commercial Lines Segment
Organization And Basis Of Presentation [Line Items]
Number of product classifications | Product	4

XML

Schedule of Amortized Cost and Estimated Fair Value of Investments (Detail) - USD ($) $ in Thousands		Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		$ 1,553,307	$ 1,426,975
Gross Unrealized Gains		20,843	9,158
Gross Unrealized Losses		(6,972)	(9,424)
Estimated Fair Value		1,567,178	1,426,709
Other than temporary impairments recognized in AOCI	[1]	(1)	(4)
Common Shares
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		124,064	119,515
Gross Unrealized Gains		13,148	3,445
Gross Unrealized Losses		(3,750)	(2,403)
Estimated Fair Value		133,462	120,557
Other Invested Assets
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		73,553	66,121
Estimated Fair Value		73,553	66,121
Fixed Maturities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		1,355,690	1,241,339
Gross Unrealized Gains		7,695	5,713
Gross Unrealized Losses		(3,222)	(7,021)
Estimated Fair Value		1,360,163	1,240,031
Other than temporary impairments recognized in AOCI	[1]	(1)	(4)
Fixed Maturities | U.S. Treasury and Agency Obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		117,596	71,517
Gross Unrealized Gains		665	763
Gross Unrealized Losses		(495)	(233)
Estimated Fair Value		117,766	72,047
Fixed Maturities | Obligations of States and Political Subdivisions
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		116,508	155,402
Gross Unrealized Gains		991	1,423
Gross Unrealized Losses		(256)	(379)
Estimated Fair Value		117,243	156,446
Fixed Maturities | Mortgage Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		146,800	88,131
Gross Unrealized Gains		650	895
Gross Unrealized Losses		(562)	(558)
Estimated Fair Value		146,888	88,468
Fixed Maturities | Asset-backed Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		209,028	233,890
Gross Unrealized Gains		634	684
Gross Unrealized Losses		(142)	(583)
Estimated Fair Value		209,520	233,991
Other than temporary impairments recognized in AOCI	[1]	(1)	(4)
Fixed Maturities | Commercial Mortgage-Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		139,740	184,821
Gross Unrealized Gains		94	118
Gross Unrealized Losses		(741)	(1,747)
Estimated Fair Value		139,093	183,192
Fixed Maturities | Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		485,580	381,209
Gross Unrealized Gains		3,851	1,666
Gross Unrealized Losses		(838)	(2,848)
Estimated Fair Value		488,593	380,027
Fixed Maturities | Foreign Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		140,438	126,369
Gross Unrealized Gains		810	164
Gross Unrealized Losses		(188)	(673)
Estimated Fair Value		$ 141,060	$ 125,860

[1] Represents the total amount of other than temporary impairment losses relating to factors other than credit losses recognized in accumulated other comprehensive income ("AOCI").

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Investments - Additional Information (Detail) - USD ($)		Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses		$ 6,972,000	$ 9,424,000
Gross unrealized losses for 12 months or greater	[1]	512,000	$ 891,000
Insurance enhanced asset-backed, commercial mortgage-backed, and credit securities		37,900,000
Investments in insurance enhanced municipal bonds		4,183,000
Ratings without insurance		0
Investments in asset-backed, commercial mortgage-backed securities and taxable municipal bonds		$ 33,700,000
Asset backed and taxable municipal bonds as a percentage of total cash and invested assets		2.10%
Municipal Bond Insurance Association
Schedule of Available-for-sale Securities [Line Items]
Investments in asset-backed, commercial mortgage-backed securities and taxable municipal bonds		$ 7,000,000
Assured Guaranty Corporation
Schedule of Available-for-sale Securities [Line Items]
Investments in asset-backed, commercial mortgage-backed securities and taxable municipal bonds		$ 16,300,000
Maximum
Schedule of Available-for-sale Securities [Line Items]
Investments in a single issuer as a percentage of shareholders' equity		4.00%	5.00%
Taxable Municipal Bonds
Schedule of Available-for-sale Securities [Line Items]
Investments in asset-backed, commercial mortgage-backed securities and taxable municipal bonds		$ 23,200,000
Federal Home Loan Mortgage Corporation
Schedule of Available-for-sale Securities [Line Items]
Investments in asset-backed, commercial mortgage-backed securities and taxable municipal bonds		10,400,000
Pre-Refunded Securities
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds		1,523,000
AA- Rating
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds		$ 4,200,000
Insurance enhanced municipal bonds as a percentage of total cash and invested assets		0.30%
Tax free insurance enhanced municipal bonds		$ 2,700,000
U.S. Treasury and Agency Obligations | AA+ Rating
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses		495,000
Gross unrealized losses for 12 months or greater		6,000
Asset-backed Securities
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses		$ 142,000
Weighted average credit enhancement		22.50%
Investments in asset-backed, commercial mortgage-backed securities and taxable municipal bonds		$ 100,000
Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses		838,000
Corporate Bonds | A- Rating
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses for 12 months or greater		238,000
Foreign Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses		188,000
Foreign Corporate Bonds | Investment Grade Rating
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses for 12 months or greater		101,000
Common Shares
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses		3,750,000	$ 2,403,000
Obligations of States and Political Subdivisions
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses		256,000
Obligations of States and Political Subdivisions | Investment Grade Rating
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses for 12 months or greater		57,000
Commercial Mortgage-Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses		$ 741,000
Weighted average credit enhancement		25.60%
Investments in asset-backed, commercial mortgage-backed securities and taxable municipal bonds		$ 10,400,000
Commercial Mortgage-Backed Securities | AA+ Rating
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses for 12 months or greater		102,000
Mortgage Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses		562,000
Mortgage Backed Securities | AA+ Rating
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses for 12 months or greater		$ 8,000
Percentage of unrealized losses for twelve months or greater		75.90%
One of the Company's variable interest VIE's, invests in distressed securities and assets
Schedule of Available-for-sale Securities [Line Items]
Significant variable interest in fair value of the non-consolidated VIE		$ 29,800,000	32,900,000
Variable interest entities, maximum exposure to loss		44,000,000	48,600,000
Second VIE that provides financing for middle market companies
Schedule of Available-for-sale Securities [Line Items]
Significant variable interest in fair value of the non-consolidated VIE		26,800,000	33,200,000
Variable interest entities, maximum exposure to loss		38,600,000	$ 42,300,000
New limited partnership that invests in distressed securities and assets and considered a VIE
Schedule of Available-for-sale Securities [Line Items]
Significant variable interest in fair value of the non-consolidated VIE		16,900,000
Variable interest entities, maximum exposure to loss		$ 50,400,000

[1] Fixed maturities in a gross unrealized loss position for twelve months or longer are primarily comprised of non-credit losses on investment grade securities where management does not intend to sell, and it is more likely than not that the Company will not be forced to sell the security before recovery. The Company has analyzed these securities and has determined that they are not other than temporarily impaired.

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Summary of Amortized Cost and Estimated Fair Value Through Fixed Maturities (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Due in one year or less, Amortized Cost	$ 86,480
Due in one year through five years, Amortized Cost	493,819
Due in five years through ten years, Amortized Cost	273,515
Due in ten years through fifteen years, Amortized Cost	592
Due after fifteen years, Amortized Cost	5,716
Fixed maturities, amortized cost	1,355,690	$ 1,241,339
Due in one year or less, Estimated Fair value	86,515
Due in one year through five years, Estimated Fair value	495,425
Due in five years through ten years, Estimated Fair value	276,346
Due in ten years through fifteen years, Estimated Fair value	598
Due after fifteen years, Estimated Fair value	5,778
Fixed Maturities, estimated fair value	1,360,163	$ 1,240,031
Mortgage Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	146,800
Estimated Fair value	146,888
Asset-backed Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	209,028
Estimated Fair value	209,520
Commercial Mortgage-Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	139,740
Estimated Fair value	$ 139,093

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Summary of Securities with Gross Unrealized Losses (Detail) - USD ($) $ in Thousands		Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		$ 563,059	$ 601,410
Less than 12 months, Gross Unrealized Losses		(6,460)	(8,533)
12 months or longer, Fair Value	[1]	44,186	103,870
12 months or longer, Gross Unrealized Losses	[1]	(512)	(891)
Total, Fair Value		607,245	705,280
Total, Gross Unrealized Losses		(6,972)	(9,424)
Obligations of States and Political Subdivisions
Schedule of Available-for-sale Securities [Line Items]
Total, Gross Unrealized Losses		(256)
Mortgage Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Total, Gross Unrealized Losses		(562)
Asset-backed Securities
Schedule of Available-for-sale Securities [Line Items]
Total, Gross Unrealized Losses		(142)
Commercial Mortgage-Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Total, Gross Unrealized Losses		(741)
Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Total, Gross Unrealized Losses		(838)
Foreign Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Total, Gross Unrealized Losses		(188)
Common Shares
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		29,150	57,439
Less than 12 months, Gross Unrealized Losses		(3,750)	(2,403)
Total, Fair Value		29,150	57,439
Total, Gross Unrealized Losses		(3,750)	(2,403)
Fixed Maturities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		533,909	543,971
Less than 12 months, Gross Unrealized Losses		(2,710)	(6,130)
12 months or longer, Fair Value	[1]	44,186	103,870
12 months or longer, Gross Unrealized Losses	[1]	(512)	(891)
Total, Fair Value		578,095	647,841
Total, Gross Unrealized Losses		(3,222)	(7,021)
Fixed Maturities | U.S. Treasury and Agency Obligations
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		96,336	39,570
Less than 12 months, Gross Unrealized Losses		(489)	(233)
12 months or longer, Fair Value	[1]	594
12 months or longer, Gross Unrealized Losses	[1]	(6)
Total, Fair Value		96,930	39,570
Total, Gross Unrealized Losses		(495)	(233)
Fixed Maturities | Obligations of States and Political Subdivisions
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		27,806	46,861
Less than 12 months, Gross Unrealized Losses		(199)	(369)
12 months or longer, Fair Value	[1]	8,629	670
12 months or longer, Gross Unrealized Losses	[1]	(57)	(10)
Total, Fair Value		36,435	47,531
Total, Gross Unrealized Losses		(256)	(379)
Fixed Maturities | Mortgage Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		105,162	52,780
Less than 12 months, Gross Unrealized Losses		(554)	(541)
12 months or longer, Fair Value	[1]	297	298
12 months or longer, Gross Unrealized Losses	[1]	(8)	(17)
Total, Fair Value		105,459	53,078
Total, Gross Unrealized Losses		(562)	(558)
Fixed Maturities | Asset-backed Securities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		41,719	62,737
Less than 12 months, Gross Unrealized Losses		(142)	(493)
12 months or longer, Fair Value	[1]		23,937
12 months or longer, Gross Unrealized Losses	[1]		(90)
Total, Fair Value		41,719	86,674
Total, Gross Unrealized Losses		(142)	(583)
Fixed Maturities | Commercial Mortgage-Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		97,191	94,366
Less than 12 months, Gross Unrealized Losses		(639)	(1,090)
12 months or longer, Fair Value	[1]	6,727	69,747
12 months or longer, Gross Unrealized Losses	[1]	(102)	(657)
Total, Fair Value		103,918	164,113
Total, Gross Unrealized Losses		(741)	(1,747)
Fixed Maturities | Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		125,550	171,621
Less than 12 months, Gross Unrealized Losses		(600)	(2,731)
12 months or longer, Fair Value	[1]	17,493	9,218
12 months or longer, Gross Unrealized Losses	[1]	(238)	(117)
Total, Fair Value		143,043	180,839
Total, Gross Unrealized Losses		(838)	(2,848)
Fixed Maturities | Foreign Corporate Bonds
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		40,145	76,036
Less than 12 months, Gross Unrealized Losses		(87)	(673)
12 months or longer, Fair Value	[1]	10,446
12 months or longer, Gross Unrealized Losses	[1]	(101)
Total, Fair Value		50,591	76,036
Total, Gross Unrealized Losses		$ (188)	$ (673)

[1] Fixed maturities in a gross unrealized loss position for twelve months or longer are primarily comprised of non-credit losses on investment grade securities where management does not intend to sell, and it is more likely than not that the Company will not be forced to sell the security before recovery. The Company has analyzed these securities and has determined that they are not other than temporarily impaired.

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Schedule of Other Than Temporary Impairments on Investments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Schedule of Available-for-sale Securities [Line Items]
OTTI losses, gross		$ (108)	$ (31)	$ (201)
Portion of loss recognized in other comprehensive income (pre-tax)	$ 0	0	0	0
Net impairment losses on fixed maturities recognized in earnings		(108)	(31)	(201)
Equity securities	(1,020)	(2,106)	(1,677)	(4,280)
Total	$ (1,020)	$ (2,214)	$ (1,708)	$ (4,481)

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Schedule of Credit Losses Recognized in Earnings (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Schedule of Available-for-sale Securities [Line Items]
Balance at beginning of period	$ 16	$ 31	$ 31	$ 31
Additions where no OTTI was previously recorded	0	0	0	0
Additions where an OTTI was previously recorded	0	0	0	0
Reductions for securities for which the company intends to sell or more likely than not will be required to sell before recovery	0	0	0	0
Reductions reflecting increases in expected cash flows to be collected	0	0	0	0
Reductions for securities sold during the period	(3)		(18)
Balance at end of period	$ 13	$ 31	$ 13	$ 31

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Schedule of Accumulated Other Comprehensive Income, Net of Tax (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Foreign currency fluctuations	$ 584
Deferred taxes	(4,370)		$ (352)
Accumulated other comprehensive income, net of tax	10,085	$ 5,986	(618)	$ 23,279	$ 22,076	$ 4,078
Fixed Maturities
Schedule of Available-for-sale Securities [Line Items]
Net unrealized gains (losses)	4,473		(1,308)
Common Shares
Schedule of Available-for-sale Securities [Line Items]
Net unrealized gains (losses)	$ 9,398		$ 1,042

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Changes in Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ 5,986	$ 22,076	$ (618)	$ 4,078	$ 4,078
Other comprehensive income (loss) before reclassification	3,658	1,984	11,491	21,675
Amounts reclassified from accumulated other comprehensive income (loss)	441	(781)	(788)	(2,474)
Other comprehensive income (loss), net of tax	4,099	1,203	10,703	19,201
Ending balance	10,085	23,279	10,085	23,279	(618)
Unrealized Gains and Losses on Available for Sale Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	5,549	22,511	(554)	4,200	4,200
Other comprehensive income (loss) before reclassification	3,173	2,073	10,498	22,075
Amounts reclassified from accumulated other comprehensive income (loss)	653	(781)	(569)	(2,472)
Other comprehensive income (loss), net of tax	3,826	1,292	9,929	19,603
Ending balance	9,375	23,803	9,375	23,803	(554)
Foreign Currency Items
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	437	(435)	(64)	(122)	(122)
Other comprehensive income (loss) before reclassification	485	(89)	993	(400)
Amounts reclassified from accumulated other comprehensive income (loss)	(212)		(219)	(2)
Other comprehensive income (loss), net of tax	273	(89)	774	(402)
Ending balance	$ 710	$ (524)	$ 710	$ (524)	$ (64)

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Reclassifications Out of Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications, net of tax	$ 441	$ (781)	$ (788)	$ (2,474)
Other net realized investment gains	57	4,142	858	(4,576)
Other than temporary impairment losses on investments	(1,020)	(2,214)	(1,708)	(4,481)
Income (loss) before income taxes	(16,779)	10,598	254	1,083
Income tax expense	7,855	(1,063)	13,193	10,412
Net income (loss)	(8,924)	9,535	13,447	11,495
Unrealized Gains and Losses on Available for Sale Securities
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications, net of tax	653	(781)	(569)	(2,472)
Foreign Currency Items
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications, net of tax	(212)		(219)	(2)
Reclassification out of Accumulated Other Comprehensive Income | Unrealized Gains and Losses on Available for Sale Securities
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other net realized investment gains	(97)	(3,384)	(2,538)	(8,214)
Other than temporary impairment losses on investments	1,020	2,214	1,708	4,481
Income (loss) before income taxes	923	(1,170)	(830)	(3,733)
Income tax expense	(270)	389	261	1,261
Net income (loss)	653	$ (781)	(569)	(2,472)
Reclassification out of Accumulated Other Comprehensive Income | Foreign Currency Items
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other net realized investment gains	(326)		(336)	(4)
Income tax expense	114		117	2
Net income (loss)	$ (212)		$ (219)	$ (2)

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Components of Net Realized Investment Gains (Losses) (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Schedule of Available-for-sale Securities [Line Items]
Total net realized investment gains (losses)		$ (963)	$ 1,928	$ (850)	$ (9,057)
Not Designated as Hedging Instrument | Interest Rate Swap
Schedule of Available-for-sale Securities [Line Items]
Gross realized gains		486	1,955	822
Gross realized losses		(852)	(1,197)	(2,838)	(12,794)
Total net realized investment gains (losses)	[1]	(366)	758	(2,016)	(12,794)
Fixed Maturities
Schedule of Available-for-sale Securities [Line Items]
Gross realized gains		434	434	3,122	1,252
Gross realized losses		(300)	(147)	(2,358)	(291)
Total net realized investment gains (losses)		134	287	764	961
Common Shares
Schedule of Available-for-sale Securities [Line Items]
Gross realized gains		917	3,345	2,711	8,068
Gross realized losses		(1,648)	(2,462)	(2,309)	(5,292)
Total net realized investment gains (losses)		$ (731)	$ 883	$ 402	$ 2,776

[1] Includes periodic net interest settlements related to the derivatives of $0.9 million and $1.2 million for the quarters ended September 30, 2017 and 2016, respectively, and $2.8 million and $3.7 million for the nine months ended September 30, 2017 and 2016, respectively.

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Components of Net Realized Investment Gains (Losses) (Parenthetical) (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interest Rate Swap
Schedule of Available-for-sale Securities [Line Items]
Net interest settlements	$ 0.9	$ 1.2	$ 2.8	$ 3.7

XML

Schedule of Proceeds From Sales and Redemptions of Available for Sale Securities (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Schedule of Available-for-sale Securities [Line Items]
Fixed maturities	$ 742,229	$ 279,659
Equity securities	$ 24,483	$ 34,976

XML

Schedule of Investment Income (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Schedule of Available-for-sale Securities [Line Items]
Investment income		$ 10,807	$ 9,782	$ 29,816	$ 29,293
Investment expense	[1]	(673)	(987)	(2,198)	(4,190)
Net investment income		10,134	8,795	27,618	25,103
Fixed Maturities
Schedule of Available-for-sale Securities [Line Items]
Investment income		9,020	8,131	24,032	22,729
Equity Securities
Schedule of Available-for-sale Securities [Line Items]
Investment income		906	698	2,740	2,647
Cash and Cash Equivalents
Schedule of Available-for-sale Securities [Line Items]
Investment income		226	44	621	111
Other Invested Assets
Schedule of Available-for-sale Securities [Line Items]
Investment income		$ 655	$ 909	$ 2,423	$ 3,806

[1] Investment expense for the nine months ended September 30, 2016 includes $1.5 million in upfront fees necessary to enter into a new investment. See Note 9 for additional information on the Company's $40 million commitment related to this investment.

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Schedule of Investment Income (Parenthetical) (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Investment expense	[1]	$ 673	$ 987	$ 2,198	$ 4,190
Commitment to purchase alternative investment		$ 50,000		$ 50,000		$ 40,000	$ 50,000
Upfront Fees
Schedule of Available-for-sale Securities [Line Items]
Investment expense					$ 1,500

[1] Investment expense for the nine months ended September 30, 2016 includes $1.5 million in upfront fees necessary to enter into a new investment. See Note 9 for additional information on the Company's $40 million commitment related to this investment.

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Schedule of Total Investment Return (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net Investment Income [Line Items]
Net investment income		$ 10,134	$ 8,795	$ 27,618	$ 25,103
Net realized investment gains (losses)		(963)	1,928	(850)	(9,057)
Change in unrealized holding gains and losses		5,631	2,061	14,721	25,398
Net realized and unrealized investment returns		4,668	3,989	13,871	16,341
Total investment return		$ 14,802	$ 12,784	$ 41,489	$ 41,444
Total investment return %	[1]	0.90%	0.80%	2.60%	2.70%
Average investment portfolio		$ 1,629,989	$ 1,530,599	$ 1,587,645	$ 1,522,247

[1] Not annualized.

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Summary of Insurance Enhanced Municipal Bonds Backed by Financial Guarantors (Detail) $ in Thousands	Sep. 30, 2017 USD ($)
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	$ 4,183
Ambac Financial Group
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	1,029
Municipal Bond Insurance Association
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	1,191
Gov't National Housing Association
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	440
Financial Guarantors
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	2,660
Other Credit Enhanced Municipal Bonds
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	1,523
Pre-Refunded Securities
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	1,523
Pre-Refunded Securities | Other Credit Enhanced Municipal Bonds
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	1,523
Government Guaranteed Securities
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	440
Government Guaranteed Securities | Gov't National Housing Association
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	440
Government Guaranteed Securities | Financial Guarantors
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	440
Exposure Net Of Pre-refunded & Government Guaranteed Securities
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	2,220
Exposure Net Of Pre-refunded & Government Guaranteed Securities | Ambac Financial Group
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	1,029
Exposure Net Of Pre-refunded & Government Guaranteed Securities | Municipal Bond Insurance Association
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	1,191
Exposure Net Of Pre-refunded & Government Guaranteed Securities | Financial Guarantors
Schedule of Available-for-sale Securities [Line Items]
Investments in insurance enhanced municipal bonds	$ 2,220

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Summary of Estimated Fair Values of Bonds Held on Deposit (Detail) - USD ($) $ in Thousands		Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Estimated Fair Value		$ 542,517	$ 559,069
On Deposit With Governmental Authorities
Schedule of Available-for-sale Securities [Line Items]
Estimated Fair Value		28,489	29,079
Intercompany Trusts Held For Benefit Of U.S. Policyholders
Schedule of Available-for-sale Securities [Line Items]
Estimated Fair Value		335,444	351,002
Held In Trust Pursuant To Third Party Requirements
Schedule of Available-for-sale Securities [Line Items]
Estimated Fair Value		80,820	88,178
Letter Of Credit Held For Third Party Requirements
Schedule of Available-for-sale Securities [Line Items]
Estimated Fair Value		4,028	4,871
Securities held as collateral for borrowing arrangements
Schedule of Available-for-sale Securities [Line Items]
Estimated Fair Value	[1]	$ 93,736	$ 85,939

[1] Amount required to collateralize margin borrowing facility.

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Summarized Information of Location and Gross Amount of Derivatives' Fair Value in Consolidated Balance Sheets (Detail) - Not Designated as Hedging Instrument - Interest Rate Swap - Other Liabilities - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Derivatives, Fair Value [Line Items]
Notional Amount	$ 200,000	$ 200,000
Fair Value	$ (10,702)	$ (11,524)

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Summary of Net Gain (Loss) Included in Consolidated Statements of Operations for Changes in Fair Value of Derivatives and Periodic Net Interest Settlements Under Derivatives (Detail) - Interest Rate Swap - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Derivative Instruments, Gain (Loss) [Line Items]
Net loss for changes in fair value and net settlements of derivatives	$ 900	$ 1,200	$ 2,800	$ 3,700
Net Realized Investment Gains (Losses)
Derivative Instruments, Gain (Loss) [Line Items]
Net loss for changes in fair value and net settlements of derivatives	$ (366)	$ 758	$ (2,016)	$ (12,794)

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Derivative Instruments - Additional Information (Detail) - Other Assets - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Funds needed to post execute swap transaction	$ 3.3	$ 5.3
Interest Rate Swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Margin calls made in connection with interest rate swaps	$ 14.2	$ 12.6

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Company's Invested Assets and Derivative Instruments Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2017		Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	$ 1,567,178		$ 1,426,709
Common Shares
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	133,462		120,557
Fixed Maturities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	1,360,163		1,240,031
Fixed Maturities | U.S. Treasury and Agency Obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	117,766		72,047
Fixed Maturities | Obligations of States and Political Subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	117,243		156,446
Fixed Maturities | Mortgage Backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	146,888		88,468
Fixed Maturities | Commercial Mortgage-Backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	139,093		183,192
Fixed Maturities | Asset-backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	209,520		233,991
Fixed Maturities | Corporate Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	488,593		380,027
Fixed Maturities | Foreign Corporate Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	141,060		125,860
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	1,493,625	[1]	1,360,588	[2]
Total invested liabilities	10,702		11,524
Fair Value, Measurements, Recurring | Derivative instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested liabilities	10,702		11,524
Fair Value, Measurements, Recurring | Common Shares
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	133,462		120,557
Fair Value, Measurements, Recurring | Fixed Maturities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	1,360,163		1,240,031
Fair Value, Measurements, Recurring | Fixed Maturities | U.S. Treasury and Agency Obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	117,766		72,047
Fair Value, Measurements, Recurring | Fixed Maturities | Obligations of States and Political Subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	117,243		156,446
Fair Value, Measurements, Recurring | Fixed Maturities | Mortgage Backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	146,888		88,468
Fair Value, Measurements, Recurring | Fixed Maturities | Commercial Mortgage-Backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	139,093		183,192
Fair Value, Measurements, Recurring | Fixed Maturities | Asset-backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	209,520		233,991
Fair Value, Measurements, Recurring | Fixed Maturities | Corporate Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	488,593		380,027
Fair Value, Measurements, Recurring | Fixed Maturities | Foreign Corporate Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	141,060		125,860
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	251,228	[1]	192,604	[2]
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Common Shares
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	133,462		120,557
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Fixed Maturities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	117,766		72,047
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Fixed Maturities | U.S. Treasury and Agency Obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	117,766		72,047
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	1,242,397	[1]	1,167,984	[2]
Total invested liabilities	10,702		11,524
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Derivative instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested liabilities	10,702		11,524
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Fixed Maturities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	1,242,397		1,167,984
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Fixed Maturities | Obligations of States and Political Subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	117,243		156,446
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Fixed Maturities | Mortgage Backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	146,888		88,468
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Fixed Maturities | Commercial Mortgage-Backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	139,093		183,192
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Fixed Maturities | Asset-backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	209,520		233,991
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Fixed Maturities | Corporate Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	488,593		380,027
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Fixed Maturities | Foreign Corporate Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total invested assets	$ 141,060		$ 125,860

[1] Excluded from the table above are limited partnerships of $73.6 million at September 30, 2017 whose fair value is based on net asset value as a practical expedient.

[2] Excluded from the table above are limited partnerships of $66.1 million at December 31, 2016 whose fair value is based on net asset value as a practical expedient.

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Company's Invested Assets and Derivative Instruments Measured at Fair Value on Recurring Basis (Parenthetical) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investment in limited partnership	$ 73,553	$ 66,121

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Current Fair Value of Debt (Detail) - USD ($) $ in Thousands		Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt		$ 298,935	$ 163,143
Debt, fair value		306,975	162,343
7.75% Subordinated Notes due 2045
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt	[1]	96,588	96,497
Debt, fair value	[1]	100,448	95,697
7.875% Subordinated Notes due 2047
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt	[2]	125,829
Debt, fair value	[2]	130,009
Margin borrowing facilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt		76,518	66,646
Debt, fair value		$ 76,518	$ 66,646

[1] As of September 30, 2017 and December 31, 2016, the carrying value and fair value of the 7.75% Subordinated Notes due 2045 are net of unamortized debt issuance cost of $3.4 million and $3.5 million, respectively.

[2] As of September 30, 2017, the carrying value and fair value of the 7.875% Subordinated Notes due 2047 are net of unamortized debt issuance cost of $4.2 million.

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Current Fair Value of Debt (Parenthetical) (Detail) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
7.75% Subordinated Notes due 2045
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Subordinated Notes percentage	7.75%	7.75%
Subordinated Notes due date	2045	2045
Unamortized Debt Issuance Costs	$ 3.4	$ 3.5
7.875% Subordinated Notes due 2047
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Subordinated Notes percentage	7.875%
Subordinated Notes due date	2047
Unamortized Debt Issuance Costs	$ 4.2

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Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity in the earnings of liability companies or partnerships			$ 2,423	$ 3,749
Equity Method Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity in the earnings of liability companies or partnerships	$ 700	$ 900	$ 2,400	$ 3,700
7.75% Subordinated Notes due 2045
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Subordinated Notes due date			2045		2045
7.875% Subordinated Notes due 2047
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Subordinated Notes due date			2047
Fair Value, Inputs, Level 1 | 7.75% Subordinated Notes due 2045
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Subordinated Notes due date			2045
Fair Value, Inputs, Level 1 | 7.875% Subordinated Notes due 2047
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Subordinated Notes due date			2047

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Fair Value and Future Funding Commitments Related to These Investments (Detail) - USD ($) $ in Thousands		Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value		$ 73,553	$ 66,121
Future Funding Commitments		59,490	24,768
Fair Value, Inputs, Level 3 | European Non-Performing Loan Fund, LP
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	[1]	29,795	32,922
Future Funding Commitments	[1]	14,214	15,714
Fair Value, Inputs, Level 3 | Private Middle Market Loans, LLC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	[2]	26,824	33,199
Future Funding Commitments	[2]	11,776	$ 9,054
Fair Value, Inputs, Level 3 | Distressed Debt Fund, LP
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	[3]	16,934
Future Funding Commitments	[3]	$ 33,500

[1] This limited partnership invests in distressed securities and assets through senior and subordinated, secured and unsecured debt and equity, in both public and private large-cap and middle-market companies. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the partnership agreement, the Company anticipates its interest in this partnership to be redeemed by 2020.

[2] This limited partnership provides financing for middle market companies. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the investment management agreement, the Company anticipates its interest to be redeemed no later than 2024.

[3] This limited partnership invests in stressed and distressed debt instruments. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Based on the terms of the partnership agreement, the Company anticipates its interest to be redeemed no later than 2027.

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Fair Value and Future Funding Commitments Related to These Investments (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2017 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value written down	$ 0

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Income Tax [Line Items]
Effective income tax benefit rate	(46.80%)	10.00%	(5194.10%)	(961.40%)
Alternative minimum tax credit carry forward	$ 11.0		$ 11.0		$ 11.0
Net operating loss carryforwards	21.8		21.8		3.2
Section 163(j) carryforward	$ 6.0		$ 6.0		$ 8.1
UNITED STATES
Income Tax [Line Items]
Statutory income tax rates			35.00%
BERMUDA
Income Tax [Line Items]
Statutory income tax rates			0.00%
CAYMAN ISLANDS
Income Tax [Line Items]
Statutory income tax rates			0.00%
GIBRALTAR
Income Tax [Line Items]
Statutory income tax rates			0.00%
LUXEMBOURG
Income Tax [Line Items]
Statutory income tax rates			27.08%
IRELAND | Non Trading Income
Income Tax [Line Items]
Statutory income tax rates			25.00%
IRELAND | Capital Gain
Income Tax [Line Items]
Statutory income tax rates			33.00%
IRELAND | Trading Income
Income Tax [Line Items]
Statutory income tax rates			12.50%
BARBADOS | Minimum
Income Tax [Line Items]
Statutory income tax rates			0.25%
BARBADOS | Maximum
Income Tax [Line Items]
Statutory income tax rates			2.50%

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Income Before Income Taxes from its Non-U.S. Subsidiaries and U.S. Subsidiaries (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues:
Gross premiums written	$ 126,054	$ 133,569	$ 393,699	$ 429,254
Net premiums written	109,045	115,051	344,348	357,233
Net premiums earned	108,619	119,553	328,818	358,993
Net investment income	10,134	8,795	27,618	25,103
Net realized investment gains (losses)	(963)	1,928	(850)	(9,057)
Other income (loss)	2,294	7,852	5,444	9,603
Total revenues	120,084	138,128	361,030	384,642
Losses and Expenses:
Net losses and loss adjustment expenses	82,395	72,162	202,656	215,057
Acquisition costs and other underwriting expenses	45,002	48,129	135,010	148,761
Corporate and other operating expenses	4,630	5,006	11,045	13,064
Interest expense	4,836	2,233	12,065	6,677
Income (loss) before income taxes	(16,779)	10,598	254	1,083
Non-U.S. Subsidiaries
Revenues:
Gross premiums written	50,812	51,900	164,975	141,297
Net premiums written	50,800	51,900	164,947	141,283
Net premiums earned	50,392	54,155	150,384	162,594
Net investment income	14,631	11,556	41,519	36,791
Net realized investment gains (losses)	(150)	58	87	128
Other income (loss)	40	(10)	213	17
Total revenues	64,913	65,759	192,203	199,530
Losses and Expenses:
Net losses and loss adjustment expenses	31,044	27,932	74,780	84,154
Acquisition costs and other underwriting expenses	21,922	24,651	65,544	71,758
Corporate and other operating expenses	1,807	2,906	4,137	7,181
Interest expense	4,679	2,081	11,653	6,233
Income (loss) before income taxes	5,461	8,189	36,089	30,204
U.S. Subsidiaries
Revenues:
Gross premiums written	114,076	123,770	348,331	394,312
Net premiums written	58,245	63,151	179,401	215,950
Net premiums earned	58,227	65,398	178,434	196,399
Net investment income	6,584	5,828	16,786	13,888
Net realized investment gains (losses)	(813)	1,870	(937)	(9,185)
Other income (loss)	2,254	7,862	5,231	9,586
Total revenues	66,252	80,958	199,514	210,688
Losses and Expenses:
Net losses and loss adjustment expenses	51,351	44,230	127,876	130,903
Acquisition costs and other underwriting expenses	23,080	23,478	69,466	77,003
Corporate and other operating expenses	2,823	2,100	6,908	5,883
Interest expense	11,238	8,741	31,099	26,020
Income (loss) before income taxes	(22,240)	2,409	(35,835)	(29,121)
Eliminations
Revenues:
Gross premiums written	(38,834)	(42,101)	(119,607)	(106,355)
Net investment income	(11,081)	(8,589)	(30,687)	(25,576)
Total revenues	(11,081)	(8,589)	(30,687)	(25,576)
Losses and Expenses:
Interest expense	$ (11,081)	$ (8,589)	$ (30,687)	$ (25,576)

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Components of Income Tax Benefit (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Current income tax expense:
Foreign	$ 107	$ 84	$ 290	$ 289
U.S. Federal	128	146	128	146
Total current income tax expense	235	230	418	435
Deferred income tax expense (benefit):
U.S. Federal	(8,090)	833	(13,611)	(10,847)
Total deferred income tax expense (benefit)	(8,090)	833	(13,611)	(10,847)
Actual tax on continuing operations	$ (7,855)	$ 1,063	$ (13,193)	$ (10,412)

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Differences in Tax Provision for Financial Statement Purposes and Expected Tax Provision at Weighted Average Tax Rate (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Tax [Line Items]
Expected tax provision at weighted average rate	$ (7,678)	$ 933	$ (12,252)	$ (9,896)
Adjustments:
Tax exempt interest	(40)	(101)	(191)	(304)
Dividend exclusion	(144)	(3)	(410)	(480)
Other	7	234	(340)	268
Actual tax on continuing operations	$ (7,855)	$ 1,063	$ (13,193)	$ (10,412)
Expected tax provision at weighted average rate	(45.80%)	8.80%	(4823.60%)	(913.80%)
Adjustments:
Tax exempt interest, % of Pre-Tax Income	(0.20%)	(1.00%)	(75.20%)	(28.10%)
Dividend exclusion, % of Pre-Tax Income	(0.90%)	(0.00%)	(161.40%)	(44.30%)
Other, % of Pre-Tax Income	0.10%	2.20%	(133.90%)	24.80%
Actual tax on continuing operations, % of Pre-Tax Income	(46.80%)	10.00%	(5194.10%)	(961.40%)

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Summarized Activity in Liability for Unpaid Losses and Loss Adjustment Expenses (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Liability for Claims and Claims Adjustment Expense [Line Items]
Balance at beginning of period	$ 615,763	$ 683,850	$ 651,042	$ 680,047
Less: Ceded reinsurance receivables	104,245	111,579	130,439	108,130
Net balance at beginning of period	511,518	572,271	520,603	571,917
Purchased reserves, gross	9,063	1,410	18,024	1,410
Purchased reserves ceded	63	641	573	641
Purchased reserves, net of third party reinsurance	9,126	2,051	18,597	2,051
Incurred losses and loss adjustment expenses related to:
Current year	91,766	81,579	237,460	239,991
Prior years	(9,371)	(9,417)	(34,804)	(24,934)
Total incurred losses and loss adjustment expenses	82,395	72,162	202,656	215,057
Paid losses and loss adjustment expenses related to:
Current year	45,193	49,704	115,927	113,090
Prior years	25,190	35,147	93,273	114,302
Total paid losses and loss adjustment expenses	70,383	84,851	209,200	227,392
Net balance at end of period	532,656	561,633	532,656	561,633
Plus: Ceded reinsurance receivables	117,070	102,749	117,070	102,749
Balance at end of period	$ 649,726	$ 664,382	$ 649,726	$ 664,382

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Liability for Unpaid Losses and Loss Adjustment Expenses - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve	$ (9,371)	$ (9,417)	$ (34,804)	$ (24,934)
Commercial Lines Segment
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve	(7,300)	(6,500)	(26,200)	(18,800)
Commercial Lines Segment | General Liability
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve	(6,900)	(9,000)	(17,100)	(21,100)
Commercial Lines Segment | General Liability | Accident years 2005 through 2009 [Member]
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve	(1,000)
Commercial Lines Segment | General Liability | Accident years 2008 through 2016
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve	(5,900)
Commercial Lines Segment | General Liability | Accident years 2005 through 2015
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve		(3,200)		(4,800)
Commercial Lines Segment | General Liability | Accident years 2004 through 2012
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve		(6,000)		(16,300)
Commercial Lines Segment | General Liability | Accident years 2005 through 2010 and 2012 through 2016
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve			(6,000)
Commercial Lines Segment | General Liability | Accident years 2005 through 2014
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve			(11,100)
Commercial Lines Segment | Property Lines
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve			(5,400)
Commercial Lines Segment | Property Lines | Accident years 2011 through 2015
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve		2,100	(3,200)
Commercial Lines Segment | Property Lines | Accident years 2012 through 2015
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve				800
Commercial Lines Segment | Property Lines | Accident years 2012 through 2015 | Non-catastrophe
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve				500
Commercial Lines Segment | Property Lines | Accident years 2012 through 2015 | Catastrophe
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve				300
Commercial Lines Segment | Property Lines | Accident Years 2011 Through 2016
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve			(2,200)
Commercial Lines Segment | Professional Liability | Accident years 2006 through 2008 and 2011 through 2012
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve			(3,700)
Commercial Lines Segment | Professional Liability | Accident Years 2010 through 2012 and 2013
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve	(200)
Personal Lines Segment
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve			(4,500)
Personal Lines Segment | Accident Years 2015
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve	(1,300)
Personal Lines Segment | General Liability | Accident Year 2015 and 2016
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve			(600)
Personal Lines Segment | Property Lines
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve			(3,900)
Personal Lines Segment | Property Lines | Accident year 2015
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve			(1,300)
Reinsurance Operations
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve	(800)	(2,900)	(4,100)	(6,100)
Reinsurance Operations | Property Lines | Accident Years 2015 And 2016
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve	$ (800)
Reinsurance Operations | Property Lines | Accident Years 2014 and 2015
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve		$ (2,900)
Reinsurance Operations | Property Lines | Accident Years 2013 Through 2015 And 2016
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve			$ (4,100)
Reinsurance Operations | Property Lines | Accident Years 2013 through 2015
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items]
Changes in prior year reserve				$ (6,100)

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Debt - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Mar. 23, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Mar. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Interest expense, including amortization of deferred issuance cost		$ 4,836	$ 2,233	$ 12,065	$ 6,677
7.875% Subordinated Notes due 2047
Debt Instrument [Line Items]
Debt instrument, face amount	$ 120,000	$ 130,000		$ 130,000
Number of days granted to underwriters option to purchase	30 days
Additional aggregate principal amount purchased pursuant to over-allotment option granted to the underwriters	$ 18,000
Subordinated Notes percentage		7.875%		7.875%
Debt instrument, interest rate terms				Payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year
Debt instrument, maturity date				Apr. 15, 2047
Debt instrument, redemption description				The Company has the right to redeem the 2047 Notes in $25 increments, in whole or in part, on and after April 15, 2022, or on any interest payment date thereafter, at a redemption price equal to 100% of the principal amount of the 2047 Notes being redeemed plus accrued and unpaid interest to, but not including, the date of redemption.
Debt instrument, redemption price, percentage of principal amount redeemed				100.00%
Deferred issuance costs		$ 4,200		$ 4,200
Interest expense, including amortization of deferred issuance cost		2,600		5,400
7.875% Subordinated Notes due 2047 | Over-Allotment Option
Debt Instrument [Line Items]
Debt instrument, face amount						$ 10,000
7.75% Subordinated Notes due 2045
Debt Instrument [Line Items]
Debt instrument, face amount		$ 100,000		$ 100,000
Subordinated Notes percentage		7.75%		7.75%			7.75%

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Shareholders' Equity - Additional Information (Detail) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Ordinary Shares A
Equity, Class of Treasury Stock [Line Items]
Shares repurchased	0	0	29,551	28,099
Average price paid per share			$ 39.24	$ 28.64
Ordinary Shares B
Equity, Class of Treasury Stock [Line Items]
Shares repurchased	0	0

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Related Party Transactions - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Fox Paine and Company
Related Party Transaction [Line Items]
Company's total outstanding voting power	84.00%		84.00%
Minimum voting power required to nominate Directors	25.00%		25.00%
Management fees	$ 0.6	$ 0.5	$ 1.6	$ 1.5
Unpaid management fees	$ 6.3		$ 6.3		$ 4.6
Crystal & Company
Related Party Transaction [Line Items]
Brokerage fee incurred		$ 0.1		$ 0.2

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Commitments And Contingencies - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Dec. 31, 2014
Commitments and Contingencies [Line Items]
Commitment to purchase alternative investment	$ 50,000	$ 40,000	$ 50,000
Future Funding Commitments	59,490	$ 24,768
Distressed Debt Fund, LP
Commitments and Contingencies [Line Items]
Funded commitment amount	16,500
European Non-Performing Loan Fund, LP
Commitments and Contingencies [Line Items]
Funded commitment amount	35,800
Private Middle Market Loans, LLC
Commitments and Contingencies [Line Items]
Funded commitment amount	28,200
Unfunded Commitments | Distressed Debt Fund, LP
Commitments and Contingencies [Line Items]
Future Funding Commitments	33,500
Unfunded Commitments | European Non-Performing Loan Fund, LP
Commitments and Contingencies [Line Items]
Future Funding Commitments	14,200
Unfunded Commitments | Private Middle Market Loans, LLC
Commitments and Contingencies [Line Items]
Future Funding Commitments	$ 11,800

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Share-Based Compensation Plans - Additional Information (Detail) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options awarded	0	0	0	0
Unvested stock options forfeited	0	0	0	200,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted	0	0	22,503	121,346
Weighted average fair value per share			$ 38.21	$ 28.97
Restricted Stock | Key Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted				96,585
Restricted Stock | Key Employees | Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vested on each anniversary of the grant date			16.50%	16.50%
Vesting date			Jan. 01, 2018	Jan. 01, 2017
Restricted Stock | Key Employees | Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vested on each anniversary of the grant date			16.50%	16.50%
Vesting date			Jan. 01, 2019	Jan. 01, 2018
Restricted Stock | Key Employees | Share-based Compensation Award, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vested on each anniversary of the grant date			17.00%	17.00%
Vesting date			Jan. 01, 2020	Jan. 01, 2019
Restricted Stock | Key Employees | Vesting Schedule Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vested on each anniversary of the grant date			100.00%	100.00%
Vesting date			Mar. 15, 2020	Mar. 15, 2019
Percentage of stock award subject to vesting			50.00%	50.00%
Restricted Stock | Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted				11,199
Vesting period				3 years
Restricted Stock | Chief Executive Officer | Each subsequent anniversary date
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vested on each anniversary of the grant date				33.33%
Restricted Stock | Another Key Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted				5,309
Vesting date				Feb. 07, 2019
Restricted Stock | Another Key Employees | Vest on February 7, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vested on each anniversary of the grant date				100.00%
Restricted Stock | Other Key Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted				8,253
Restricted Stock | Other Key Employees | Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vested on each anniversary of the grant date				33.00%
Restricted Stock | Other Key Employees | Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vested on each anniversary of the grant date				33.00%
Restricted Stock | Other Key Employees | Share-based Compensation Award, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of shares vested on each anniversary of the grant date				34.00%
Restricted Stock | Non Employee Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted	6,245	8,802	19,713	28,416
Weighted average fair value per share	$ 42.40	$ 29.70	$ 39.82	$ 29.40

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Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Schedule Of Earnings Per Share Basic And Diluted [Line Items]
Net income (loss)		$ (8,924)	$ 9,535	$ 13,447	$ 11,495
Weighted average shares outstanding - basic		17,343,292	17,254,843	17,331,840	17,241,040
Net income (loss) per share	[1]	$ (0.51)	$ 0.55	$ 0.78	$ 0.67
Weighted average shares outstanding - diluted	[2]	17,343,292	17,540,060	17,684,519	17,515,854
Net income (loss) per share	[1]	$ (0.51)	$ 0.54	$ 0.76	$ 0.66

[1] For the quarter ended September 30, 2017, "diluted" loss per share is the same as "basic" loss per share since there was a net loss for the period.

[2] For the quarter ended September 30, 2017, "weighted average shares outstanding - basic" was used to calculate "diluted earnings per share" due to a net loss for the period.

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Reconciliation of Weighted Average Shares for Basic and Diluted Earnings Per Share (Detail) - shares		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Reconciliation Of Basic Weighted Average Shares To Diluted Weighted Average Shares [Line Items]
Weighted average shares for basic earnings per share		17,343,292	17,254,843	17,331,840	17,241,040
Weighted average shares for diluted earnings per share	[1]	17,343,292	17,540,060	17,684,519	17,515,854
Restricted Stock
Reconciliation Of Basic Weighted Average Shares To Diluted Weighted Average Shares [Line Items]
Non-vested restricted stock and options			176,087	149,490	165,011
Stock Options
Reconciliation Of Basic Weighted Average Shares To Diluted Weighted Average Shares [Line Items]
Non-vested restricted stock and options			109,130	203,189	109,803

[1] For the quarter ended September 30, 2017, "weighted average shares outstanding - basic" was used to calculate "diluted earnings per share" due to a net loss for the period.

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Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share [Line Items]
Weighted average shares for diluted earnings per share	17,721,954
Shares excluded from calculation of diluted earnings per share	0	300,000	0	300,000
Restricted Stock Diluted
Earnings Per Share [Line Items]
Non-vested restricted stock and options	164,693
Stock Options Diluted
Earnings Per Share [Line Items]
Non-vested restricted stock and options	213,969

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Segment Information - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2017 Segment
Segment Reporting Information [Line Items]
Number of reportable business segments managed	3

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Summary of Business Segment Information (Detail) - USD ($) $ in Thousands		3 Months Ended				9 Months Ended
		Sep. 30, 2017		Sep. 30, 2016		Sep. 30, 2017		Sep. 30, 2016		Dec. 31, 2016
Revenues:
Gross premiums written		$ 126,054		$ 133,569		$ 393,699		$ 429,254
Net premiums written		109,045		115,051		344,348		357,233
Net premiums earned		108,619		119,553		328,818		358,993
Other income		2,294		7,852		5,444		9,603
Total revenues		110,913		127,405		334,262		368,596
Losses and Expenses:
Net losses and loss adjustment expenses		82,395		72,162		202,656		215,057
Acquisition costs and other underwriting expenses		45,002		48,129		135,010		148,761
Income (loss) from segments		(16,484)		7,114		(3,404)		4,778
Unallocated Items:
Net investment income		10,134		8,795		27,618		25,103
Net realized investment gains		(963)		1,928		(850)		(9,057)
Corporate and other operating expenses		(4,630)		(5,006)		(11,045)		(13,064)
Interest expense		(4,836)		(2,233)		(12,065)		(6,677)
Income (loss) before income taxes		(16,779)		10,598		254		1,083
Income tax benefit		7,855		(1,063)		13,193		10,412
Net income		(8,924)		9,535		13,447		11,495
Total assets		2,130,690		1,981,815		2,130,690		1,981,815		$ 1,972,946
Commercial Lines Segment
Revenues:
Gross premiums written	[2]	53,113	[1]	49,505		155,776		155,686
Net premiums written	[2]	46,471	[1]	45,074		137,025		140,199
Net premiums earned	[2]	44,778	[1]	47,774		133,289		142,749
Other income	[2]			6,872		78		6,872
Total revenues	[2]	44,778	[1]	54,646		133,367		149,621
Losses and Expenses:
Net losses and loss adjustment expenses	[2]	19,095	[1]	23,848		53,688		78,813
Acquisition costs and other underwriting expenses	[2]	18,237	[1],[3]	20,048	[4]	55,398	[5]	60,784	[6]
Income (loss) from segments	[2]	7,446	[1]	10,750		24,281		10,024
Unallocated Items:
Total assets	[2]	911,412	[1]	770,255		911,412	[1]	770,255
Personal Lines Segment
Revenues:
Gross premiums written	[2]	60,962	[1],[7]	74,266	[8]	192,551	[9]	238,627	[10]
Net premiums written	[2]	50,607	[1]	60,179		161,979		182,107
Net premiums earned	[2]	52,268	[1]	61,221		164,102		184,581
Other income	[2]	2,254	[1]	991		5,153		2,714
Total revenues	[2]	54,522	[1]	62,212		169,255		187,295
Losses and Expenses:
Net losses and loss adjustment expenses	[2]	42,534	[1]	42,927		120,410		122,540
Acquisition costs and other underwriting expenses	[2]	22,689	[1],[11]	24,411	[12]	69,281	[13]	76,349	[14]
Income (loss) from segments	[2]	(10,701)	[1]	(5,126)		(20,436)		(11,594)
Unallocated Items:
Total assets	[2]	481,357	[1]	499,202		481,357	[1]	499,202
Reinsurance Operations
Revenues:
Gross premiums written		11,979		9,798	[1]	45,372	[1]	34,941	[1]
Net premiums written		11,967		9,798	[1]	45,344	[1]	34,927	[1]
Net premiums earned		11,573		10,558	[1]	31,427	[1]	31,663	[1]
Other income		40		(11)	[1]	213	[1]	17	[1]
Total revenues		11,613		10,547	[1]	31,640	[1]	31,680	[1]
Losses and Expenses:
Net losses and loss adjustment expenses		20,766		5,387	[1]	28,558	[1]	13,704	[1]
Acquisition costs and other underwriting expenses		4,076		3,670	[1]	10,331	[1]	11,628	[1]
Income (loss) from segments		(13,229)		1,490	[1]	(7,249)	[1]	6,348	[1]
Unallocated Items:
Total assets	[1],[15]	$ 737,921		$ 712,358		$ 737,921		$ 712,358

[1] External business only, excluding business assumed from affiliates.

[2] Includes business ceded to the Company's Reinsurance Operations.

[3] Includes federal excise tax of $127 relating to cessions from Commercial Lines to Reinsurance Operations.

[4] Includes federal excise tax of $130 relating to cessions from Commercial Lines to Reinsurance Operations.

[5] Includes federal excise tax of $366 relating to cessions from Commercial Lines to Reinsurance Operations.

[6] Includes federal excise tax of $386 relating to cessions from Commercial Lines to Reinsurance Operations.

[7] Includes ($1,427) of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

[8] Includes $7,328 of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

[9] Includes ($185) of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

[10] Includes $30,910 of business written by American Reliable that is ceded to insurance companies owned by Assurant under a 100% quota share reinsurance agreement.

[11] Includes federal excise tax of $262 relating to cessions from Personal Lines to Reinsurance Operations.

[12] Includes federal excise tax of $306 relating to cessions from Personal Lines to Reinsurance Operations.

[13] Includes federal excise tax of $821 relating to cessions from Personal Lines to Reinsurance Operations.

[14] Includes federal excise tax of $923 relating to cessions from Personal Lines to Reinsurance Operations.

[15] Comprised of Global Indemnity Reinsurance's total assets less its investment in subsidiaries.

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Summary of Business Segment Information (Parenthetical) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Commercial Lines Segment
Segment Reporting Information [Line Items]
Federal excise tax relating to cessions from Insurance Operations to Reinsurance Operations	$ 127	$ 130	$ 366	$ 386
Personal Lines Segment
Segment Reporting Information [Line Items]
Federal excise tax relating to cessions from Insurance Operations to Reinsurance Operations	262	306	821	923
American Reliable Insurance Company | Personal Lines Segment
Segment Reporting Information [Line Items]
Ceded premiums written	$ (1,427)	$ 7,328	$ (185)	$ 30,910
Quota share agreement percentage	100.00%	100.00%	100.00%	100.00%

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New Accounting Pronouncements - Additional Information (Detail) $ in Millions	9 Months Ended
	Sep. 30, 2017 USD ($)
ASU No. 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Fee income	$ 0.6