Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies [Abstract]

Commitments and Contingencies

(13)Commitments and Contingencies

Catastrophe and Large Loss Exposure

We have exposure to catastrophic and other large losses caused by natural perils (such as hurricanes, earthquakes, floods, tsunamis, hail storms and tornados) andman-made events (such as terrorist attacks). The incidence, timing and severity of these losses are unpredictable. We assess our exposures in areas most vulnerable to natural catastrophes and apply procedures to ascertain our probable maximum loss from a single event. We maintain reinsurance protection to reduce our potential losses from a future event. In 2014, we recognized accident year gross losses of $28.8 million from catastrophic events related to various small catastrophes. After reinsurance and reinstatement premium, our pretax loss was $26.4 million. In 2013, we recognized accident year gross losses of $56.6 million, primarily due to European floods, German hail storms and various small catastrophes. After reinsurance and reinstatement premium, our pretax loss was $52.0 million. In 2012, we recognized accident year gross losses of $84.8 million, primarily from Superstorm Sandy in the United States. After reinsurance and reinstatement premium, our pretax loss was $52.8 million.

Litigation

We are a party to lawsuits, arbitrations and other proceedings that arise in the normal course of our business. Many of such lawsuits, arbitrations and other proceedings involve claims under policies that we underwrite as an insurer or reinsurer, the liabilities for which, we believe, have been adequately included in our loss reserves. Also, from time to time, we are a party to lawsuits, arbitrations and other proceedings that relate to disputes with third parties, or that involve alleged errors and omissions on the part of our subsidiaries. We have provided accruals for these items to the extent we deem the losses probable and reasonably estimable. Although the ultimate outcome of these matters cannot be determined at this time, based on present information, the availability of insurance coverage and advice received from our outside legal counsel, we believe the resolution of any such matters will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Indemnifications

In conjunction with the sales of business assets and subsidiaries, we have provided indemnifications to the buyers. Certain indemnifications cover typical representations and warranties related to our responsibilities to perform under the sales contracts. Under other indemnifications, we agree to reimburse the purchasers for taxes or ERISA-related amounts, if any, assessed after the sale date but related to pre-sale activities. We cannot quantify the maximum potential exposure covered by all of our indemnifications because the indemnifications cover a variety of matters, operations and scenarios and some have no time limit. For those with a time limit, the longest such indemnification expires in 2025. We accrue a loss when a valid claim is made by a purchaser and we believe we have potential exposure.

Terrorist Exposure

Under the Terrorism Risk Insurance Program Reauthorization Act of 2015 (Reauthorization Act), we are required to offer terrorism coverage to our commercial policyholders in certain lines of business, for which we maycharge an additional premium. The policyholders may or may not accept such coverage. The Reauthorization Act requires a $100.0 million terrorism-related loss event to trigger coverage in 2015. For such an event in 2015, the Federal government will reimburse 85% of our losses in excess of our deductible, up to the maximum annual amount in the Reauthorization Act. Our deductible is approximately $151.2millionfor 2015. Currently, the Reauthorization Act expires on December 31, 2020.

Leases

We lease administrative office facilities and transportation equipment under operating leases that expire at various dates through 2024.The agreements generally require us to pay rent, utilities, real estate or property taxes, sales taxes, insurance and repairs. We recognize rent expense on a straight-line basis over the term of the lease, including free-rent periods. Rent expense under operating leases totaled $16.7million in 2014, $15.7million in 2013 and $16.0 million in 2012.

At December 31,2014, future minimum rental payments required under long-term, non-cancelable operating leases, excluding certain expenses payable by us, were as follows:

2015	$	11,870
2016		10,098
2017		7,393
2018		5,411
2019		1,802
Thereafter		2,628
Total future minimum rental payments	$	39,202