Commitments and Contingencies

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. Commitments and Contingencies

(a) Legal Proceedings

There has been no significant change in legal proceedings at March 31, 2015 compared to December 31, 2014. See Note 18(f) to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

(b) Amalgamation related charges

In connection with the Amalgamation Agreement, the Company expects to incur further charges between $30 million and $35 million related to professional costs. The Company expects to incur these costs primarily in 2015.

In accordance with the terms of the Amalgamation Agreement and the Amendment to the Amalgamation Agreement, the Company would be obligated to pay AXIS a no approval fee of $55 million if the Company’s shareholders do not approve the transaction. If the Amalgamation Agreement is terminated for certain other reasons described in the Amalgamation Agreement or in certain circumstances the Company enters into a similar transaction with a third party in the 12 months following termination of the Amalgamation Agreement, the Company would be obligated to pay AXIS an aggregate termination fee of $280 million (less any termination fee already paid). In all such cases, the Company would be obligated to reimburse AXIS for costs and expenses incurred in connection with the Amalgamation Agreement and the transactions contemplated thereby in an amount not to exceed $35 million.

(c) Employment Agreements

Following the signing of the Amalgamation Agreement, the Company has entered into agreements with certain employees that provide for the payment of a cash retention award payable if the employee maintains an active employee status through a pre-determined future date and fulfills certain conduct and performance-related conditions. The award payments are contingent on the successful closing of the proposed Amalgamation.