Exhibit 99.1

 

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

2011 GLOBAL LOSS TRIANGLES

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Global Loss Development Triangle Cautionary Language

This report is for informational purposes only and is current only as of December 31, 2011. Allied World Assurance Company Holdings, AG (“Allied World”, the “Company”, “we”, “us” or “our”) is under no obligation (and expressly disclaims any such obligation) to update or revise this report, whether as a result of new information, future events or otherwise. Nothing contained in this report is or should be relied upon as a promise or representation as to the future. Although the loss development patterns disclosed in this report are an important factor in the process used to estimate loss reserve requirements, they are not the only factors considered in establishing reserves. The process for establishing reserves is subject to considerable variability and requires the use of informed estimates and judgments. Important details, such as specific loss development expectations for particular contracts, years or events, cannot be developed solely by analyzing the information provided in this report. In addition to analyzing loss development data, management incorporates additional information into the reserving process, such as pricing for insurance and reinsurance products as well as current market conditions. Readers must keep these and other qualifications more fully described in this report in mind when reviewing this information. Information presented in this report may differ materially from that reported in the Company’s financial statements prepared in accordance with accounting principles generally accepted in the United States due to differences in foreign exchange rates, exclusions, the impact of premium adjustments and other adjustments. This report is a supplement to the Company’s financial disclosures and should be read in conjunction with the Company’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents on file with the U.S. Securities and Exchange Commission (the “SEC”). This report shall not be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Cautionary Statement Regarding Forward-Looking Statements

Any forward-looking statements made in this report reflect the Company’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements. For example, the Company’s forward-looking statements could be affected by pricing and policy term trends; increased competition; the impact of acts of terrorism and acts of war; greater frequency or severity of unpredictable catastrophic events; negative rating agency actions; the adequacy of our loss reserves; the Company or its subsidiaries becoming subject to significant income taxes in the United States or elsewhere; changes in regulations or tax laws; changes in the availability, cost or quality of reinsurance or retrocessional coverage; adverse general economic conditions; and judicial, legislative, political and other governmental developments, as well as management’s response to these factors, and other factors identified in the Company’s filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise.

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

2011 GLOBAL LOSS TRIANGLES

Table of Contents

 

		Page
I. EXECUTIVE SUMMARY			1
– Overview			1
– Limitations of the Reserving Processes			3
– Treaty Year Projections			5
II. RECONCILIATION OF GLOBAL LOSS TRIANGLES TO DECEMBER 31, 2011 FINANCIAL STATEMENTS			6
III. GLOBAL LOSS TRIANGLES			7
– Basis of Presentation			7
– Description of Data Presented			8
– Large Losses			8
– GLT Class Details			9
– Property Insurance (Gross of Ceded Reinsurance)			12
– General Casualty Insurance (Gross of Ceded Reinsurance)			13
– Professional Liability Lines Insurance (Gross of Ceded Reinsurance)			14
– Healthcare Insurance (Gross of Ceded Reinsurance)			15
– Property Insurance (Net of Ceded Reinsurance)			16
– General Casualty Insurance (Net of Ceded Reinsurance)			17
– Professional Liability Lines Insurance (Net of Ceded Reinsurance)			18
– Healthcare Insurance (Net of Ceded Reinsurance)			19
– Property Catastrophe Reinsurance (Gross of Ceded Reinsurance)			20
– Property Other Reinsurance (Gross of Ceded Reinsurance)			21
– General Casualty Reinsurance (Gross of Ceded Reinsurance)			22
– Professional Liability Lines Reinsurance (Gross of Ceded Reinsurance)			23
– Other Reinsurance (Gross of Ceded Reinsurance)			24
– Property Catastrophe Reinsurance (Net of Ceded Reinsurance)			25
– Property Other Reinsurance (Net of Ceded Reinsurance)			26
– General Casualty Reinsurance (Net of Ceded Reinsurance)			27
– Professional Liability Lines Reinsurance (Net of Ceded Reinsurance)			28
– Other Reinsurance (Net of Ceded Reinsurance)			29
– Insurance (Gross of Ceded Reinsurance) Premium/Loss Summary			30
– Insurance (Net of Ceded Reinsurance) Premium/Loss Summary			31
– Reinsurance (Gross of Ceded Reinsurance) Premium/Loss Summary			32
– Reinsurance (Net of Ceded Reinsurance) Premium/Loss Summary			33
IV. SELECTED EXCERPTS FROM ALLIED WORLD’S 2011 10-K DISCLOSURE			34
V. GLOSSARY			39

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I. EXECUTIVE SUMMARY

Overview

A critical component of financial reporting for insurance and reinsurance companies is to accurately estimate potential losses and associated loss expenses on risks that have been insured or reinsured. This report is Allied World’s release of its Global Loss Triangles (“GLTs”) as of December 31, 2011. For your convenience, we have included a glossary beginning on page 39 of selected insurance and reinsurance terms.

We establish a reserve for losses and loss expenses to cover our estimated liability for the payment of all losses and loss expenses incurred with respect to earned premiums on the policies and treaties that we write. This reserve is a balance sheet liability representing estimates of losses and loss expenses we are required to pay for insured or reinsured claims that have occurred as of or before the balance sheet date.

The process of establishing loss reserves can be complex and is subject to considerable variability as it requires the use of judgment regarding numerous items, including future litigation trends, future inflation trends, new laws and regulations, attachment points and timing of payments. Actuarial estimates of these reserves are subject to potential errors of estimation, which could be significant, as they are based upon the outcomes of future events. The estimates are even more difficult for a company such as Allied World, as many of our casualty lines of business have relatively high attachment points (often exceeding $100 million) and relatively high net limits (with $25 million being a typical maximum). Those characteristics make some of our casualty lines subject to claims that are very low in frequency (the number of actual claims), but very high in severity (the average claim size). The combination of low frequency and high severity exacerbates the difficulty in establishing loss reserves for Allied World. Loss reserves may vary considerably from prior estimates. We caution that an attempt to evaluate our loss reserves using exclusively the data presented in this report could be misleading.

The reserve for losses and loss expenses is comprised of two main elements: outstanding loss reserves, also known as “case reserves,” and reserves for losses incurred but not reported (“IBNR”). Outstanding loss reserves relate to known claims and represent management’s best estimate of the likely loss settlement cost. Thus, there is a significant amount of estimation involved in determining the likely loss payment. IBNR reserves require judgment because they relate primarily to unreported events that, based on industry information, management’s experience and actuarial evaluation, can reasonably be expected to have occurred and are reasonably likely to result in a loss to the Company. IBNR reserves also relate to estimated development of reported events that based on industry information, management’s experience and actuarial evaluation, can reasonably be expected to reach our attachment point and are reasonably likely to result in a loss to the Company.

IBNR is the estimated liability for (1) claims that have occurred but have not yet been reported as well as (2) changes in the values of claims that have been reported to us but are not yet settled. Each claim is settled individually based upon its merits and it is not unusual for a

 

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claim to take years after being reported to settle, especially if legal action is involved. As a result, reserves for losses and loss expenses include significant estimates for IBNR reserves.

The reserve for IBNR is estimated by management for each line of business based on various factors, including underwriters’ expectations about loss experience, actuarial analysis, comparisons with the results of industry benchmarks and loss experience to date. The reserve for IBNR is calculated as the ultimate amount of losses and loss expenses less cumulative paid losses and loss expenses and case reserves. Our actuaries employ generally accepted actuarial methodologies to determine estimated ultimate loss reserves.

When estimating IBNR reserves, we segregate the Company’s insurance and reinsurance loss and exposure data into over 90 classes in total. Within each class, the business is further segregated by treaty year, accident year or report year. Professional liability and healthcare lines of business are reviewed on a report year basis due to the claims-made nature of the underlying contracts. Our general casualty insurance business is a mixture of claims-made and loss-occurring contracts. Since the Company’s formation in November 2001, 59% of our gross earned premiums and 57% of our net earned premiums have been associated with occurrence policies for our general casualty insurance business.

Generally, initial actuarial estimates of IBNR reserves not related to a single event (such as a catastrophe) are based upon the expected loss ratio method applied to each class of business. Actual paid losses and case reserves are subtracted from the expected ultimate losses to derive the IBNR reserves. The initial expected loss ratio used in the expected loss ratio method involve managerial judgments and are based upon historical information for the class of business, which includes historic loss ratios, market conditions, changes in pricing, policy terms and conditions, peer analysis, underwriting changes, changes in claims emergence and other factors that may influence expected ultimate losses. Over time, the actuarial estimates for our non-property lines of business generally become a blend of the Bornhuetter-Ferguson reported loss method (the “B-F method”) and the expected loss ratio method. The B-F method incorporates actual reported loss data and expected unreported losses, which is a function of the initial expected loss ratio and the expected loss emergence pattern, to determine an estimate of ultimate losses. The B-F method is often appropriate for lines of business where there is limited actual loss data and/or a relatively less stable pattern of loss emergence. For additional details on the B-F method, see “IV. Selected Excerpts from Allied World’s 2011 10-K Disclosure – Expected Loss Ratio Method” and “– B-F Method.”

These actuarial methods may be inappropriate for lines of business with very low frequency and high severity and in certain specific situations, such as catastrophe losses. In such situations, specific knowledge of the open claims, the underlying exposures, ceded reinsurance, litigation trends, the types of coverages involved and the changes in the frequency or severity of the claim may be used to establish reserves.

Multiple estimates of ultimate losses using a variety of actuarial methods are calculated for many of our classes of business for each year of loss experience. Our actuaries review each class of business and each year of loss experience and determine the most appropriate point estimate based upon the characteristics of the particular class of business and other relevant

 

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factors as described above. Once our actuaries make their determination of the most appropriate point estimate for each class of business and for each year of loss experience, both gross and net of reinsurance, this information is aggregated and presented to management for consideration in establishing the recorded reserves for losses and loss expenses.

Limitations of the Reserving Processes

Reserving actuaries, especially in personal lines and mid-market commercial lines companies, often employ standard actuarial loss development methods to project ultimate losses from triangles of paid and reported losses. These methods rely on an assumption that losses develop consistently from one year to the next, and for the expected loss ratio and B-F methods, on the assumption that an initial expected loss ratio and expected emergence pattern can be accurately selected. However, Allied World writes complex lines of business, including excess casualty insurance and reinsurance, which often do not have the consistent patterns of reported losses that personal lines and mid-market commercial lines companies do.

Projections of ultimate losses require a significant amount of estimation and judgment based on a variety of factors. We strongly caution against any assumption that standard loss projection techniques applied mechanically can alone be used to estimate ultimate losses for our data as the outcome of such a simplistic approach would lead to misleading results and inaccurate conclusions. Reasons to avoid simplistic projections include:

 

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Allied World has only been in existence since November 2001 and many of our GLTs lack sufficient actuarial credibility to project ultimate losses and do not have the history to accurately estimate the development of losses beyond ten years.

 

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Allied World acquired Darwin Professional Underwriters, Inc. and its subsidiaries (“Darwin”) in October 2008. The loss triangles from Darwin have been merged into Allied World’s GLTs. However, it is likely that the historical loss emergence patterns from the Darwin business are substantially different from the historical loss patterns of the business written by Allied World due to different attachment point profiles, different policy forms (nearly all Darwin policies are claims-made) and differing claims department philosophies.

 

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As many of our casualty lines can have relatively low frequency and relatively high severity losses, the absence or emergence of only a few losses can distort our paid and reported GLTs.

 

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Our U.S. direct insurance business has been generally growing faster than our international direct insurance business. The difference in the business mix between these two insurance businesses and the lower attachment point profile of the U.S. business can cause historical loss development not to be appropriate for future loss development.

 

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Some of our largest reinsurance treaties have special characteristics, such as loss corridors, annual aggregate deductibles or swing-rated premiums that cannot be considered in a simplistic aggregate projection.

 

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We have had changes in our underwriting philosophy over time, exiting or paring back some classes of business and in other classes changing coverage terms and conditions.

 

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Losses develop differently for different classes of business. The aim of the GLTs contained herein is to present our loss development experience in an informative format, while protecting proprietary Company information. Accordingly, we do not show our over 90 reserving classes, but rather have aggregated them into nine classes, which represent different geographies, pricing environments, legislative climates and policy forms and which will not be as homogeneous as our actual reserving classes would be if reported individually.

 

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Paid loss development patterns are considerably longer than the corresponding reported loss development patterns and can produce for many of our classes of business extremely volatile indications, particularly within the first several years of development.

 

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For several classes of business, pricing conditions have changed in recent years. The extrapolation of losses and loss expense ratios from prior periods to current periods would not be appropriate.

In addition to these factors, the global credit crisis and the effects of inflation (as discussed in more detail below) could adversely impact our ultimate losses and cause our projections and judgments regarding our expected loss reserves to differ materially from the ultimate losses we may incur.

Global Credit Crisis – Worldwide financial and housing markets have experienced extreme volatility and disruption in recent years. As a result of the global credit crisis, the following reserving classes have been impacted:

 

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direct insurance professional liability lines (primarily the 2007 and 2008 report years), and

 

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reinsurance professional liability lines (primarily the 2006 through 2008 treaty years).

There continues to be increased uncertainty around the ultimate losses for the years referenced above. This is mainly attributable to the higher volume of reported claims and the higher proportion of open claims for these years compared to earlier years at the same stage of development. In addition, these reported claims have caused higher reported losses and ALAE ratios for these years compared to earlier years at similar stages of development. As a result, the ultimate loss development patterns on these years may differ from prior years. The uncertainty is

 

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increased by the fact that we have relatively high average attachment points for many of these potential credit crisis-related claims for our direct insurance business and by the fact that we often provide D&O side A cover, for which we are required to provide coverage to directors and officer for claims alleging negligence or malfeasance if such claims are not indemnified by the insured.

Our reserves for these lines of business are based on a detailed analysis of all open claims that considers attachment points, exposed limits, coverage provided and litigation trends as well as quarterly, in-depth discussions with members of our claims department and underwriting staff.

Inflation – Losses and loss expense reserves can be impacted by social and judicial inflation. Higher than expected inflation can negatively impact the costs of claims as it may cause an increase in frequency (the number of actual claims) and severity (the average claim size). Though our reserving techniques factor in inflation through the use of expected loss ratios derived from our pricing models, which consider the effects of inflation, and through the use of industry loss development patterns that go back as far as 1984, losses and loss expense reserves can be impacted by unexpected changes in inflation rates. We do not explicitly account for excessive inflation in our reserves.

Treaty Year Projections

Data organized by treaty year assigns claims and premiums to the year in which the assumed reinsurance contract incepted. As such, a treaty year may cover claims spanning several accident years. This has two primary implications for estimating ultimate loss reserves. First, the payment and reporting patterns are generally slower to develop than for the data presented by accident year or report year. This means that it is even more critical that premium-based reserving methods, such as the expected loss ratio method or the B-F method, are used for the more recent years rather than loss development methods that can be distorted by small movements in actual paid or reported loss activity due to the application of large loss development factors. Second, treaty years for which premium is not fully earned require an adjustment to the indicated reserves to reflect only the portion of the ultimate treaty year losses that are associated with losses that have occurred prior to the evaluation date. This is typically done by developing an ultimate loss ratio estimate for the full treaty year and applying this loss ratio to the earned premiums from the treaty year.

 

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II. RECONCILIATION OF GLOBAL LOSS TRIANGLES TO DECEMBER 31, 2011 FINANCIAL STATEMENTS

The tables below provide a reconciliation of our presented GLTs to our audited financial statements as of and for the year ended December 31, 2010 and 2011, respectively.

(Expressed in U.S. dollars in thousands)

Paid Losses and Paid LAE in 2010 Calendar Year

 

Consolidated GLTs – net paid losses and ALAE1		$	525,004
Paid losses and paid ALAE from excluded catastrophes			51,835
Paid ULAE			19,219
Foreign exchange and other			677
Paid losses and paid LAE in 2010 calendar year per 10-K		$	596,734

Paid Losses and Paid LAE in 2011 Calendar Year

 

Consolidated GLTs – net paid losses and ALAE1		$	640,874
Paid losses and paid ALAE from excluded catastrophes			21,289
Paid ULAE			21,906
Foreign exchange and other			742
Paid losses and paid LAE in 2011 calendar year per 10-K		$	684,811

Incurred Losses and Incurred LAE in 2010 Calendar Year

 

Consolidated GLTs – net reported losses and ALAE1		$	611,369
Reported losses and reported ALAE from excluded catastrophes			46,642
Reported ULAE			19,219
Change in IBNR			34,929
Foreign exchange and other			(4,276	)
Incurred losses and incurred LAE in 2010 calendar year per 10-K		$	707,883

Incurred Losses and Incurred LAE in 2011 Calendar Year

 

Consolidated GLTs – net reported losses and ALAE1		$	835,518
Reported losses and reported ALAE from excluded catastrophes			48,073
Reported ULAE			21,906
Change in IBNR			61,024
Foreign exchange and other			(7,365	)
Incurred losses and incurred LAE in 2011 calendar year per 10-K		$	959,156

 

1.	Excludes losses from the following catastrophes: 2004 Hurricanes/Tropical Storms Charlie, Frances, Jeanne and Ivan; 2005 Hurricanes/Tropical Storms Katrina, Rita and Wilma; 2008 Hurricanes/Tropical Storms Gustav and Ike; 2010 Chilean Earthquake; 2011 Japan Earthquake/Tsunami.

 

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III. GLOBAL LOSS TRIANGLES

Basis of Presentation

For the basis of this presentation, we have split our data into nine classes of GLTs, four for our direct insurance business and five for our reinsurance business. They are listed below:

 

Direct Insurance Business		Reinsurance Business
•    Property		•    Property Catastrophe
•    General Casualty		•    Property Other
•    Professional Liability Lines		•    General Casualty
•    Healthcare		•    Professional Liability Lines
		•    Other Reinsurance
•    Our direct insurance general casualty business contains a mix of claims-made, occurrence-reported and occurrence policy forms.

 

General Casualty Distribution of Gross Premiums Written
Underwriting Year		Claims-Made				Occurrence- Reported				Occurrence				Total
2002			20.3	%			26.1	%			53.6	%			100.0	%
2003			16.6	%			30.0	%			53.4	%			100.0	%
2004			20.3	%			30.7	%			49.0	%			100.0	%
2005			14.4	%			35.2	%			50.4	%			100.0	%
2006			16.1	%			32.3	%			51.6	%			100.0	%
2007			16.5	%			35.5	%			48.0	%			100.0	%
2008			16.3	%			29.8	%			54.0	%			100.0	%
2009			11.1	%			21.6	%			67.2	%			100.0	%
2010			8.9	%			23.8	%			67.3	%			100.0	%
2011			11.0	%			15.6	%			73.4	%			100.0	%
Total			18.3	%			26.8	%			54.9	%			100.0	%

 

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Our reinsurance business classified as “other reinsurance” includes accident and health, workers’ compensation catastrophe coverage, motor business, aviation, crop and marine.

 

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Our reinsurance business is presented separately from our direct insurance business as we show the reinsurance classes on a treaty year basis. Many reinsurance treaties do not provide sufficient detail to split losses and loss adjustment expenses accurately by accident year or report year.

 

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Our nine classes were selected to create categories that were relatively homogeneous yet were not so small as to have insufficient actuarial credibility.

 

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Our GLTs are presented in thousands of U.S. dollars, reflecting conversions from local currencies based upon the date on which the transactions were entered into the Company’s systems.

Description of Data Presented

For each class of business, earned premiums are presented both gross and net of external reinsurance, with intercompany reinsurance transactions not being reflected in the GLTs. For classes of business within our reinsurance segment, these premiums are presented on a treaty year basis. For all other classes of business, the net earned premiums are presented on a calendar year basis. GLTs that show cumulative paid losses and ALAE, gross and net of reinsurance, are presented for each class of business. In addition, we present GLTs of cumulative reported losses and ALAE (paid plus case reserves) for each class of business. For the reinsurance segment’s classes of business, the GLTs are presented on a treaty year basis. For direct insurance business, property classes of business are presented on an accident year basis. Our general casualty classes of business are a blend of policies where losses can be triggered by either report date or accident date, so the paid and reported losses are a blend of report year and accident year data. The remaining casualty classes of business, including professional liability and healthcare, are presented on a report year basis. These conventions match the standard industry reserving practices for reinsurance and direct insurance, respectively.

Case reserves for Allied World’s reinsurance classes are generally established based upon reports received from ceding companies as we generally “follow their fortunes.” Additional case reserves may be established by Allied World to reflect our estimated ultimate cost of a loss. Any such additional case reserves have been included in the presented reinsurance GLTs.

The premiums in our reinsurance segment are often based upon estimates by the ceding companies. At the end of the treaty year, these estimates will be replaced by actual premiums. In addition, some of our reinsurance treaties may have premiums that are swing-rated subject to reinstatement premiums. The presented premium data is subject to future adjustments, either upwards or downwards, based upon these factors.

Large Losses

Loss development associated with the following five groups of catastrophic losses have been excluded from the GLTs for all lines except for property catastrophe reinsurance: (1) 2004 hurricanes, (2) 2005 hurricanes, (3) 2008 hurricanes, (4) 2010 Chile Earthquake and (5) 2011 Japanese Earthquake/Tsunami. These events have been excluded from the GLTs due to their magnitude in order to avoid distortions in the development factors and indicated reserve levels. Reserves for these events are not based on aggregate development statistics, but rather on ground-up, exposure-based assessments reflecting information provided by insureds and cedents on an insurance policy-by-policy and reinsurance contract-by-contract basis. Separate information is provided on these catastrophic events including gross and net paid losses, reported losses and IBNR as of December 31, 2011.

 

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GLT Class Details

Insurance Lines of Business

Property – Our property insurance GLTs are shown on both a gross and net of reinsurance basis (see pages 12 and 16). The vast majority of the ceded reinsurance we have purchased for our direct property class of business is written as quota share reinsurance, with a smaller portion written as facultative reinsurance. We have not removed losses associated with recoveries from any catastrophe covers as we have excluded major catastrophes already from the data. The major catastrophes removed from our property insurance GLTs, as well as from our “property other reinsurance” and our “other reinsurance” GLTs discussed below, include:

 

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2004 – Hurricanes/Tropical Storms Charlie, Frances, Jeanne and Ivan;

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2005 – Hurricanes/Tropical Storms Katrina, Rita and Wilma;

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2008 – Hurricanes/Tropical Storms Gustav and Ike;

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2010 – Chilean Earthquake; and

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2011 – Japan Earthquake/Tsunami.

It should be noted that we removed all property losses associated with these events, even after such storms may have weakened and moved inland. For our property insurance GLTs, the total amounts excluded from these storms are as follows:

 

		Gross								Net of Reinsurance
		Paid				Reported				Paid				Reported
		(Dollars in Millions)								(Dollars in Millions)
2004 Events		$	167.1			$	169.8			$	146.7			$	149.1
2005 Events		$	456.3			$	459.2			$	189.5			$	191.2
2008 Events		$	93.0			$	97.6			$	59.4			$	62.4
2010 Events		$	59.5			$	68.3			$	46.6			$	52.7
2011 Events		$	9.8			$	59.4			$	6.8			$	41.6

Our property book of business has shifted over time. Over the last several years, we have de-emphasized energy classes of business, which included such industry classes as mining, chemical plants, pulp and paper manufacturing and refiners. In addition, our Bermuda property book of business (which is included in the property insurance GLTs) has evolved from largely being a primary insurance account based book of business to where we now write many accounts on an excess basis.

General Casualty – Our general casualty insurance GLTs are shown on both a gross and net of reinsurance basis (see pages 13 and 17). Our Bermuda and European casualty books of business are comprised largely of Fortune 1000-type accounts with generally high attachment points with medians between $80 million and $100 million. Historically, about 55% to 57% of the earned premiums have come from occurrence policies. This percentage grew to 73% in 2011 as our business mix has shifted to more occurrence business as we expanded our U.S.

 

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underwriting platform. The vast majority of the ceded reinsurance we have purchased for the casualty class of business has been either quota share reinsurance or surplus treaty reinsurance. The general casualty book has changed over time, with pharmaceutical and energy classes being de-emphasized in Bermuda and with the business underwritten in the United States (which generally has a lower attachment point profile) shrinking in the 2005-2007 calendar years and growing in the 2008-2011 calendar years.

Professional Liability Lines – Our professional liability lines insurance GLTs are shown on both a gross and net of reinsurance basis (see pages 14 and 18). Professional liability lines include directors and officers liability, errors & omissions liability, D&O side A cover, employment practices liability insurance, crime and fiduciary liability business. Similar to our casualty lines of business, our Bermuda and European professional liability lines are comprised largely of Fortune 1000 and FTSE 1000-type accounts with generally high attachment points with medians between $80 million and $100 million. It is not uncommon for the Company to “ventilate” an account, which means the Company underwrites two excess layers with differing attachment points. Our U.S. professional liability book has a very different profile, with a portion of the business underwritten on a primary basis for smaller, non-Fortune 1000 accounts. Common classes include insurance agencies, psychologists/counselors and small law firms. Our professional liability lines book of business, excluding crime, is written on claims-made and occurrence-reported basis and virtually none of this business is written on an occurrence basis (regardless of where it is written). The crime insurance is written on a losses discovered basis.

Healthcare – Our healthcare insurance GLTs are shown on both a gross and net of reinsurance basis (see pages 15 and 19). Our healthcare book of business is written on a claims-made and occurrence-reported basis and has virtually no business written on occurrence policy forms. The Bermuda healthcare group writes gross lines of up to $25 million, with average attachment points of around $45 million. This business is largely comprised of large hospitals, but does include managed care organizations and healthcare systems. The U.S. healthcare business has a much lower attachment point profile than the international book of business, with much of the U.S. business being written on a primary basis. It includes smaller hospitals and hospital systems, managed care organizations and medical facilities such as home care providers, specialized surgery and rehabilitation centers, and outpatient clinics. Our Bermuda business has also begun to write accounts on a primary basis, although typically over a large deductible.

Reinsurance Lines of Business

Property Catastrophe – Our property catastrophe reinsurance GLTs are shown on both a gross and net of reinsurance basis (see pages 20 and 25). The vast majority of this business is excess-of-loss property catastrophe reinsurance. Typically, it has a relatively short tail.

Property Other – Our property other reinsurance GLTs are shown on both a gross and net of reinsurance basis (see pages 21 and 26). This line contains our entire property reinsurance book of business, excluding property catastrophe coverages, and is written as either excess-of-loss reinsurance or quota share reinsurance.

 

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General Casualty – Our general casualty reinsurance GLTs are shown on both a gross and net of reinsurance basis (see pages 22 and 27). This business is essentially comprised of any business that does not fit into the other casualty classes. It is largely umbrella casualty business that contains some workers’ compensation business. This business can be written as either excess-of-loss reinsurance or quota share reinsurance.

Professional Liability Lines – Our professional liability lines reinsurance GLTs are shown on both a gross and net of reinsurance basis (see pages 23 and 28). This business is largely written on a claims-made basis. Lines of business include employment practices liability insurance, medical malpractice, directors and officers, errors and omissions and miscellaneous professional classes and transactional risk liability. Some of our larger treaties can have complex structures, including swing-rated premiums, loss corridors and annual aggregate deductibles. This business is written as either excess-of-loss reinsurance or quota share reinsurance.

Other Reinsurance – Our other reinsurance GLTs are shown on both a gross and net of reinsurance basis (see pages 24 and 29). This business is a mixture of miscellaneous lines including accident and health (which is predominantly catastrophe driven), workers’ compensation catastrophe, aviation, crop and marine. The marine treaties were impacted by various hurricanes (specifically Ivan, Katrina, Rita, Ike and Gustav) which went through the Gulf of Mexico.

For our other reinsurance GLTs, the total amounts excluded from the 2004, 2005, 2008, 2010 and 2011 events discussed above are as follows:

 

		Gross								Net of Reinsurance
		Paid				Reported				Paid				Reported
		(Dollars in Millions)								(Dollars in Millions)
2004 Events		$	38.2			$	40.6			$	38.2			$	40.6
2005 Events		$	92.5			$	95.5			$	85.5			$	88.5
2008 Events		$	1.2			$	5.8			$	1.2			$	5.8
2010 Events		$	0.1			$	0.8			$	0.1			$	0.8
2011 Events		$	0.1			$	5.2			$	0.1			$	5.2

 

-11-

---

 

December 2011 Global Loss Triangles—Insurance Segment

Excluding large losses

U.S. dollars in thousands

Property Insurance (Gross of Ceded Reinsurance)

Cumulative Paid Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			2,584				29,354				46,287				51,590				56,582				56,687				56,776				56,675				56,700				56,701
2003			50,572				136,299				198,801				217,328				218,048				217,531				221,698				221,688				221,846
2004			38,251				153,141				203,006				217,517				229,205				232,011				233,997				234,829
2005			91,198				228,634				308,207				354,253				366,892				365,434				367,337
2006			30,040				103,621				172,546				201,132				208,659				210,277
2007			43,151				129,076				169,655				186,261				191,756
2008			75,528				155,973				198,875				210,168
2009			24,044				64,420				74,513
2010			44,677				107,035
2011			52,142
Reported Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			18,005				55,432				58,559				59,169				57,437				56,848				57,987				56,707				56,700				56,701
2003			146,467				208,054				228,434				232,111				227,106				224,146				222,856				222,651				222,550
2004			132,453				223,557				246,425				247,612				244,839				239,798				238,060				235,425
2005			224,245				353,712				382,922				384,183				382,139				370,420				368,929
2006			157,140				225,124				235,681				222,453				219,524				215,327
2007			189,533				227,570				227,509				220,583				221,004
2008			263,049				265,851				240,547				229,376
2009			89,871				89,489				88,410
2010			114,221				156,231
2011			156,249
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			9	%			28	%			30	%			30	%			29	%			29	%			30	%			29	%			29	%			29	%
2003			30	%			43	%			47	%			48	%			47	%			46	%			46	%			46	%			46	%
2004			23	%			40	%			44	%			44	%			43	%			42	%			42	%			42	%
2005			47	%			74	%			80	%			81	%			80	%			78	%			77	%
2006			36	%			51	%			53	%			50	%			50	%			49	%
2007			45	%			54	%			54	%			52	%			52	%
2008			74	%			74	%			67	%			64	%
2009			33	%			33	%			32	%
2010			49	%			68	%
2011			69	%

 

Accident Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			195,890				56,701				—				56,701				1				56,701				28.9	%			1
2003			483,719				221,846				703				222,550				177				222,727				46.0	%			881
2004			565,327				234,829				596				235,425				95				235,520				41.7	%			691
2005			476,481				367,337				1,591				368,929				141				369,070				77.5	%			1,733
2006			441,138				210,277				5,049				215,327				3,451				218,777				49.6	%			8,500
2007			423,468				191,756				29,248				221,004				2,982				223,986				52.9	%			32,230
2008			357,588				210,168				19,208				229,376				4,798				234,174				65.5	%			24,006
2009			272,873				74,513				13,897				88,410				4,143				92,553				33.9	%			18,040
2010			231,398				107,035				49,196				156,231				20,256				176,487				76.3	%			69,452
2011			225,599				52,142				104,106				156,249				63,968				220,216				97.6	%			168,074
Total			3,673,480				1,726,605				223,596				1,950,201				100,012				2,050,213				55.8	%			323,609

 

-12-

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December 2011 Global Loss Triangles—Insurance Segment

U.S. dollars in thousands

General Casualty Insurance (Gross of Ceded Reinsurance)

 

Cumulative Paid Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			0				0				185				464				2,848				4,691				5,591				6,574				7,802				8,662
2003			0				461				16,019				18,500				29,401				55,140				57,458				57,463				57,487
2004			0				21				90				634				5,507				8,516				19,470				24,754
2005			15				26,548				31,396				63,544				65,785				118,117				118,386
2006			—				274				2,591				34,249				84,696				108,738
2007			107				7,235				9,707				13,553				26,963
2008			1,319				8,351				26,339				47,500
2009			309				8,309				36,402
2010			1,045				61,109
2011			8,380
Reported Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			1,429				618				989				552				6,299				15,616				16,506				17,369				23,361				22,058
2003			23				13,124				25,852				33,579				58,980				59,141				57,667				57,575				57,537
2004			1,007				540				816				915				7,822				24,831				25,154				34,193
2005			30,852				109,619				113,339				119,923				124,573				124,781				123,362
2006			165				30,097				39,318				90,005				92,725				108,758
2007			4,131				15,419				15,970				32,500				37,670
2008			8,193				26,768				52,114				52,723
2009			1,876				35,225				49,792
2010			70,055				131,974
2011			34,513
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			2	%			1	%			1	%			1	%			7	%			18	%			19	%			20	%			27	%			25	%
2003			0	%			5	%			10	%			13	%			23	%			23	%			22	%			22	%			22	%
2004			0	%			0	%			0	%			0	%			2	%			7	%			8	%			10	%
2005			10	%			37	%			38	%			40	%			42	%			42	%			41	%
2006			0	%			11	%			14	%			33	%			34	%			39	%
2007			2	%			6	%			6	%			12	%			14	%
2008			3	%			11	%			21	%			22	%
2009			1	%			13	%			19	%
2010			24	%			45	%
2011			10	%

 

Accident Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			88,051				8,662				13,396				22,058				11,389				33,447				38.0	%			24,785
2003			257,017				57,487				50				57,537				35,364				92,901				36.1	%			35,414
2004			332,389				24,754				9,439				34,193				55,360				89,553				26.9	%			64,799
2005			297,511				118,386				4,977				123,362				72,328				195,690				65.8	%			77,304
2006			275,405				108,738				20				108,758				98,614				207,373				75.3	%			98,634
2007			264,680				26,963				10,707				37,670				123,771				161,441				61.0	%			134,478
2008			243,673				47,500				5,223				52,723				150,320				203,042				83.3	%			155,542
2009			265,068				36,402				13,391				49,792				161,039				210,831				79.5	%			174,429
2010			290,500				61,109				70,865				131,974				174,196				306,171				105.4	%			245,061
2011			333,184				8,380				26,133				34,513				210,221				244,733				73.5	%			236,353
Total			2,647,478				498,381				154,200				652,582				1,092,601				1,745,183				65.9	%			1,246,801

 

-13-

---

December 2011 Global Loss Triangles—Insurance Segment

U.S. dollars in thousands

Professional Liability Lines Insurance (Gross of Ceded Reinsurance)

Cumulative Paid Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			—				10				61				5,225				13,909				45,884				59,860				59,930				59,944				59,984
2003			20				80				603				802				6,002				16,936				17,238				26,397				26,479
2004			15				683				7,406				29,477				30,403				39,004				48,452				48,571
2005			95				3,328				7,370				23,528				24,320				44,267				44,547
2006			296				6,850				44,815				59,330				88,030				97,134
2007			1,401				12,296				41,310				66,992				77,189
2008			2,750				22,943				46,656				103,602
2009			6,051				31,866				52,805
2010			9,628				43,527
2011			15,398
Reported Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			—				2,010				7,062				23,775				28,000				47,706				60,648				59,930				59,944				59,984
2003			60				243				858				6,255				33,468				41,460				44,712				42,038				43,597
2004			434				1,692				8,106				32,701				55,437				55,592				61,361				60,795
2005			3,931				15,625				48,363				51,426				50,281				58,062				58,190
2006			41,225				52,944				92,820				120,819				133,887				185,213
2007			11,223				47,137				111,624				143,673				135,584
2008			17,483				86,164				126,011				175,230
2009			20,752				62,075				79,290
2010			30,731				70,603
2011			47,148
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			0	%			3	%			12	%			40	%			47	%			80	%			102	%			101	%			101	%			101	%
2003			0	%			0	%			0	%			3	%			14	%			17	%			19	%			18	%			18	%
2004			0	%			1	%			3	%			10	%			17	%			17	%			19	%			19	%
2005			1	%			4	%			14	%			15	%			14	%			16	%			17	%
2006			10	%			13	%			23	%			31	%			34	%			47	%
2007			3	%			11	%			26	%			33	%			31	%
2008			4	%			19	%			28	%			38	%
2009			4	%			12	%			16	%
2010			6	%			15	%
2011			10	%

 

Accident Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			59,558				59,984				—				59,984				6,309				66,293				111.3	%			6,309
2003			237,656				26,479				17,118				43,597				30,543				74,139				31.2	%			47,660
2004			321,801				48,571				12,224				60,795				28,580				89,376				27.8	%			40,804
2005			352,174				44,547				13,643				58,190				41,190				99,380				28.2	%			54,833
2006			395,104				97,134				88,079				185,213				95,149				280,362				71.0	%			183,228
2007			431,009				77,189				58,395				135,584				134,853				270,437				62.7	%			193,248
2008			457,068				103,602				71,627				175,230				158,502				333,732				73.0	%			230,129
2009			506,027				52,805				26,485				79,290				268,908				348,198				68.8	%			295,393
2010			475,222				43,527				27,076				70,603				268,543				339,146				71.4	%			295,619
2011			478,865				15,398				31,751				47,148				281,151				328,299				68.6	%			312,902
Total			3,714,483				569,236				346,398				915,634				1,313,727				2,229,361				60.0	%			1,660,125

 

-14-

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December 2011 Global Loss Triangles—Insurance Segment

U.S. dollars in thousands

Healthcare Insurance (Gross of Ceded Reinsurance)

Cumulative Paid Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			—				835				2,158				3,209				5,533				8,008				8,020				8,023				8,025				8,025
2003			1				4,202				11,148				13,777				14,724				18,198				18,756				20,074				20,104
2004			2				852				5,892				9,738				12,694				13,229				13,379				13,786
2005			277				2,861				4,941				10,255				11,122				11,692				13,475
2006			381				4,009				5,864				12,839				16,034				19,443
2007			944				7,190				17,307				20,125				23,303
2008			793				9,776				18,469				28,147
2009			6,586				16,658				27,066
2010			2,139				12,035
2011			1,933
Reported Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			130				1,350				5,450				8,985				8,910				8,444				8,121				8,086				8,046				8,042
2003			345				11,153				20,246				20,723				20,529				23,625				23,160				23,420				23,793
2004			1,849				6,406				12,190				14,720				14,999				16,045				15,928				15,944
2005			5,566				11,649				15,497				14,435				13,384				13,710				14,639
2006			5,666				11,753				13,222				17,022				19,082				24,650
2007			3,773				15,281				24,537				37,172				39,822
2008			3,801				19,115				33,315				40,263
2009			10,999				29,590				48,429
2010			11,731				38,113
2011			10,754
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			0	%			3	%			14	%			23	%			22	%			21	%			20	%			20	%			20	%			20	%
2003			0	%			15	%			27	%			27	%			27	%			31	%			30	%			31	%			31	%
2004			2	%			5	%			10	%			12	%			12	%			13	%			13	%			13	%
2005			4	%			9	%			11	%			11	%			10	%			10	%			11	%
2006			4	%			8	%			9	%			11	%			13	%			16	%
2007			3	%			10	%			17	%			25	%			27	%
2008			2	%			11	%			20	%			24	%
2009			6	%			15	%			25	%
2010			5	%			17	%
2011			5	%

 

Accident Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			39,904				8,025				16				8,042				2,245				10,287				25.8	%			2,261
2003			76,140				20,104				3,689				23,793				5,293				29,085				38.2	%			8,982
2004			120,800				13,786				2,158				15,944				10,316				26,260				21.7	%			12,474
2005			136,577				13,475				1,164				14,639				16,039				30,678				22.5	%			17,202
2006			150,401				19,443				5,207				24,650				17,350				42,000				27.9	%			22,558
2007			147,720				23,303				16,519				39,822				26,297				66,119				44.8	%			42,816
2008			170,600				28,147				12,116				40,263				50,517				90,780				53.2	%			62,633
2009			197,314				27,066				21,364				48,429				57,148				105,577				53.5	%			78,511
2010			222,171				12,035				26,078				38,113				90,548				128,661				57.9	%			116,626
2011			228,445				1,933				8,821				10,754				125,752				136,506				59.8	%			134,573
Total			1,490,071				167,317				97,133				264,450				401,502				665,953				44.7	%			498,636

 

-15-

---

 

December 2011 Global Loss Triangles—Insurance Segment

Excluding large losses

U.S. dollars in thousands

Property Insurance (Net of Ceded Reinsurance)

 

Cumulative Paid Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			2,572				27,085				39,606				43,638				48,955				49,063				49,154				49,054				49,066				49,067
2003			49,208				118,094				163,485				175,303				175,715				175,379				179,293				179,283				179,378
2004			25,256				94,518				131,352				141,420				148,139				149,307				150,467				150,907
2005			40,373				99,880				138,713				161,091				165,024				165,290				166,393
2006			12,871				46,209				76,773				87,886				93,293				94,060
2007			20,325				62,106				79,511				86,918				89,091
2008			38,751				84,955				109,698				117,040
2009			15,993				42,846				50,242
2010			29,325				67,717
2011			31,763
Reported Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			15,359				48,581				50,631				50,905				49,787				49,206				50,347				49,066				49,066				49,067
2003			130,863				173,192				187,840				187,279				182,859				180,769				179,873				179,676				179,641
2004			83,824				136,345				156,171				159,157				156,810				153,693				152,326				151,247
2005			99,789				152,456				173,462				173,122				172,390				167,846				167,108
2006			65,486				96,268				101,170				99,127				97,845				96,643
2007			91,985				107,261				107,409				105,592				105,695
2008			153,019				152,847				136,537				128,392
2009			59,002				61,663				61,079
2010			70,760				99,637
2011			109,474
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			9	%			28	%			29	%			30	%			29	%			29	%			29	%			29	%			29	%			29	%
2003			37	%			49	%			53	%			53	%			51	%			51	%			50	%			50	%			50	%
2004			25	%			41	%			47	%			48	%			47	%			46	%			46	%			45	%
2005			44	%			67	%			76	%			76	%			76	%			74	%			74	%
2006			34	%			50	%			53	%			52	%			51	%			51	%
2007			51	%			59	%			60	%			59	%			59	%
2008			88	%			88	%			79	%			74	%
2009			41	%			43	%			43	%
2010			56	%			78	%
2011			78	%

 

Accident Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			171,696				49,067				—				49,067				1				49,067				28.6	%			1
2003			356,275				179,378				263				179,641				86				179,726				50.4	%			349
2004			333,170				150,907				341				151,247				(93	)			151,155				45.4	%			248
2005			226,828				166,393				715				167,108				53				167,161				73.7	%			767
2006			190,783				94,060				2,584				96,643				1,384				98,027				51.4	%			3,967
2007			180,460				89,091				16,604				105,695				1,499				107,194				59.4	%			18,102
2008			173,790				117,040				11,352				128,392				2,870				131,262				75.5	%			14,222
2009			142,872				50,242				10,837				61,079				2,950				64,029				44.8	%			13,787
2010			127,037				67,717				31,920				99,637				14,010				113,647				89.5	%			45,930
2011			139,644				31,763				77,711				109,474				46,904				156,378				112.0	%			124,615
Total			2,042,554				995,658				152,325				1,147,983				69,663				1,217,645				59.6	%			221,988

 

-16-

---

 

December 2011 Global Loss Triangles—Insurance Segment

U.S. dollars in thousands

General Casualty Insurance (Net of Ceded Reinsurance)

Cumulative Paid Loss & ALAE

 

Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			0				0				185				464				2,848				4,691				5,591				6,574				7,802				8,662
2003			0				461				16,018				18,499				29,401				55,139				57,457				57,462				57,486
2004			0				14				77				506				5,053				7,545				16,465				21,746
2005			15				26,496				31,126				60,576				62,700				93,736				93,977
2006			—				266				2,570				29,999				56,694				72,659
2007			90				6,212				7,646				11,171				23,180
2008			1,114				5,663				18,971				35,915
2009			308				5,891				25,347
2010			932				33,959
2011			6,911
Reported Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			1,429				618				989				552				6,299				15,616				16,506				17,369				23,361				22,058
2003			23				13,124				25,852				33,578				58,980				59,140				57,666				57,574				57,536
2004			1,007				533				803				668				7,208				21,354				21,803				30,832
2005			30,852				85,663				89,087				95,511				100,049				100,281				98,800
2006			165				27,081				35,290				61,938				63,445				72,671
2007			4,081				13,364				13,836				28,498				31,557
2008			5,543				19,509				39,067				39,434
2009			1,875				23,928				32,781
2010			46,228				81,263
2011			29,292
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			2	%			1	%			1	%			1	%			7	%			18	%			19	%			20	%			27	%			25	%
2003			0	%			6	%			11	%			14	%			25	%			25	%			25	%			25	%			25	%
2004			0	%			0	%			0	%			0	%			3	%			8	%			8	%			11	%
2005			13	%			36	%			38	%			40	%			42	%			42	%			42	%
2006			0	%			13	%			16	%			29	%			30	%			34	%
2007			2	%			7	%			7	%			15	%			16	%
2008			3	%			12	%			24	%			24	%
2009			1	%			14	%			19	%
2010			24	%			42	%
2011			13	%

 

Accident Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			88,051				8,662				13,396				22,058				11,389				33,447				38.0	%			24,785
2003			233,589				57,486				50				57,536				32,047				89,583				38.4	%			32,097
2004			271,160				21,746				9,086				30,832				44,908				75,740				27.9	%			53,994
2005			236,587				93,977				4,823				98,800				57,357				156,157				66.0	%			62,180
2006			214,376				72,659				12				72,671				77,823				150,494				70.2	%			77,835
2007			192,097				23,180				8,377				31,557				88,900				120,457				62.7	%			97,277
2008			162,750				35,915				3,519				39,434				98,432				137,866				84.7	%			101,951
2009			172,403				25,347				7,435				32,781				104,431				137,213				79.6	%			111,866
2010			195,238				33,959				47,303				81,263				112,594				193,856				99.3	%			159,897
2011			222,485				6,911				22,381				29,292				133,544				162,836				73.2	%			155,925
Total			1,988,737				379,842				116,382				496,224				761,426				1,257,650				63.2	%			877,807

 

-17-

---

December 2011 Global Loss Triangles—Insurance Segment

U.S. dollars in thousands

Professional Liability Lines Insurance (Net of Ceded Reinsurance)

Cumulative Paid Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			—				10				61				5,225				13,909				45,884				59,860				59,930				59,944				59,984
2003			20				80				603				799				5,997				15,424				15,727				24,885				24,967
2004			15				681				7,403				29,464				30,384				38,983				48,431				48,537
2005			95				3,328				7,272				18,291				19,043				40,954				41,214
2006			266				4,296				34,123				48,611				70,853				79,956
2007			1,312				11,982				36,732				56,952				66,212
2008			2,728				20,856				38,433				81,913
2009			5,938				30,737				51,066
2010			9,575				43,230
2011			15,277
Reported Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			—				2,010				7,062				23,775				28,000				47,706				60,648				59,930				59,944				59,984
2003			60				243				858				6,252				31,963				39,947				43,200				40,526				42,085
2004			434				1,690				8,102				32,688				55,417				55,570				61,340				60,761
2005			3,931				12,613				40,988				43,748				42,802				54,727				54,855
2006			41,109				40,424				77,728				97,820				112,069				162,521
2007			10,557				30,869				79,692				107,002				112,600
2008			15,136				72,016				104,703				144,350
2009			20,418				59,130				74,956
2010			30,527				68,359
2011			46,038
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			0	%			3	%			12	%			40	%			47	%			80	%			102	%			101	%			101	%			101	%
2003			0	%			0	%			0	%			3	%			14	%			17	%			19	%			17	%			18	%
2004			0	%			1	%			3	%			11	%			18	%			18	%			20	%			20	%
2005			1	%			4	%			13	%			13	%			13	%			17	%			17	%
2006			12	%			12	%			23	%			28	%			33	%			47	%
2007			3	%			9	%			23	%			31	%			32	%
2008			4	%			21	%			31	%			42	%
2009			5	%			15	%			19	%
2010			9	%			19	%
2011			13	%

 

Accident Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			59,558				59,984				—				59,984				6,309				66,293				111.3	%			6,309
2003			232,141				24,967				17,118				42,085				29,814				71,898				31.0	%			46,931
2004			304,642				48,537				12,224				60,761				27,287				88,048				28.9	%			39,511
2005			326,766				41,214				13,641				54,855				39,203				94,058				28.8	%			52,844
2006			343,955				79,956				82,565				162,521				86,784				249,305				72.5	%			169,349
2007			349,563				66,212				46,389				112,600				114,017				226,618				64.8	%			160,406
2008			342,659				81,913				62,437				144,350				121,091				265,441				77.5	%			183,528
2009			386,143				51,066				23,890				74,956				201,801				276,757				71.7	%			225,691
2010			355,472				43,230				25,128				68,359				190,208				258,567				72.7	%			215,336
2011			354,153				15,277				30,760				46,038				195,744				241,782				68.3	%			226,504
Total			3,055,051				512,357				314,152				826,509				1,012,259				1,838,768				60.2	%			1,326,411

 

-18-

---

December 2011 Global Loss Triangles—Insurance Segment

U.S. dollars in thousands

Healthcare Insurance (Net of Ceded Reinsurance)

Cumulative Paid Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			—				835				2,158				3,209				5,533				8,008				8,020				8,023				8,025				8,025
2003			1				4,202				11,148				13,777				14,724				18,198				18,756				20,074				20,104
2004			2				841				5,881				9,727				12,683				13,218				13,368				13,775
2005			237				2,681				4,577				9,493				10,026				10,549				11,912
2006			308				2,652				4,428				8,749				11,948				14,604
2007			934				6,029				15,608				18,396				21,564
2008			789				7,893				15,849				25,510
2009			4,581				14,167				24,529
2010			2,135				12,031
2011			1,904
Reported Loss & ALAE
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			130				1,350				5,450				8,985				8,910				8,444				8,121				8,086				8,046				8,042
2003			345				11,153				20,246				20,723				20,529				23,625				23,160				23,420				23,793
2004			1,846				6,395				12,054				14,584				14,863				15,909				15,917				15,933
2005			5,197				10,142				13,483				12,473				11,766				12,116				12,937
2006			4,267				8,926				10,239				12,740				14,827				17,791
2007			3,603				13,040				22,295				31,659				34,971
2008			3,786				16,754				29,522				35,819
2009			8,941				26,830				45,245
2010			11,044				37,423
2011			10,493
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			0	%			3	%			14	%			23	%			22	%			21	%			20	%			20	%			20	%			20	%
2003			0	%			15	%			27	%			28	%			27	%			31	%			31	%			31	%			32	%
2004			2	%			6	%			10	%			13	%			13	%			14	%			14	%			14	%
2005			4	%			9	%			11	%			11	%			10	%			10	%			11	%
2006			3	%			7	%			8	%			10	%			12	%			14	%
2007			3	%			11	%			19	%			27	%			30	%
2008			3	%			13	%			22	%			27	%
2009			6	%			18	%			30	%
2010			7	%			22	%
2011			6	%

 

Accident Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			39,904				8,025				16				8,042				2,245				10,287				25.8	%			2,261
2003			75,002				20,104				3,689				23,793				5,293				29,085				38.8	%			8,982
2004			114,883				13,775				2,158				15,933				10,316				26,249				22.8	%			12,474
2005			118,565				11,912				1,025				12,937				13,828				26,765				22.6	%			14,853
2006			124,024				14,604				3,187				17,791				14,862				32,653				26.3	%			18,048
2007			117,774				21,564				13,406				34,971				21,035				56,006				47.6	%			34,442
2008			131,336				25,510				10,309				35,819				37,610				73,429				55.9	%			47,919
2009			150,032				24,529				20,715				45,245				40,189				85,434				56.9	%			60,904
2010			169,427				12,031				25,392				37,423				63,173				100,596				59.4	%			88,565
2011			173,172				1,904				8,590				10,493				93,850				104,343				60.3	%			102,440
Total			1,214,118				153,959				88,488				242,447				302,400				544,847				44.9	%			390,888

 

-19-

---

 

December 2011 Global Loss Triangles—Reinsurance Segment

U.S. dollars in thousands

Property Catastrophe Reinsurance (Gross of Ceded Reinsurance)

 

Cumulative Paid Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			101				2,131				4,161				4,194				4,310				4,310				4,336				4,336				4,336				4,336
2003			3,977				6,251				6,882				6,831				6,843				7,235				7,237				7,237				7,237
2004			17,379				47,475				55,350				57,786				59,259				60,040				60,489				60,852
2005			35,255				121,814				141,709				148,497				151,206				152,497				152,998
2006			710				8,912				9,671				9,829				9,903				9,917
2007			3,999				12,770				12,511				12,767				12,561
2008			15,798				26,979				30,619				32,007
2009			269				905				2,977
2010			3,798				54,580
2011			22,254
Reported Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			3,041				5,163				4,370				4,390				4,372				4,371				4,356				4,356				4,336				4,336
2003			6,172				7,561				7,009				6,920				6,939				7,235				7,237				7,237				7,237
2004			33,642				56,808				59,396				60,325				60,712				61,073				60,889				61,110
2005			130,142				151,004				151,495				153,665				154,739				155,285				155,383
2006			3,275				9,580				9,885				10,172				10,131				10,136
2007			17,051				15,664				13,584				13,412				12,847
2008			31,318				32,595				33,106				33,901
2009			2,557				5,613				5,246
2010			32,490				86,547
2011			89,719
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			9	%			15	%			13	%			13	%			13	%			13	%			13	%			13	%			13	%			13	%
2003			10	%			13	%			12	%			12	%			12	%			12	%			12	%			12	%			12	%
2004			51	%			86	%			90	%			91	%			92	%			92	%			92	%			92	%
2005			155	%			180	%			181	%			183	%			185	%			185	%			185	%
2006			5	%			14	%			15	%			15	%			15	%			15	%
2007			25	%			19	%			16	%			16	%			15	%
2008			64	%			49	%			50	%			51	%
2009			4	%			7	%			6	%
2010			31	%			64	%
2011			64	%

 

Treaty Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			33,846				4,336				0				4,336				—				4,336				12.8	%			0
2003			58,868				7,237				0				7,237				—				7,237				12.3	%			0
2004			66,178				60,852				258				61,110				36				61,145				92.4	%			293
2005			83,838				152,998				2,385				155,383				423				155,806				185.8	%			2,808
2006			67,029				9,917				218				10,136				16				10,152				15.1	%			235
2007			83,675				12,561				286				12,847				19				12,866				15.4	%			306
2008			66,980				32,007				1,895				33,901				517				34,418				51.4	%			2,412
2009			82,605				2,977				2,269				5,246				252				5,498				6.7	%			2,521
2010			134,389				54,580				31,967				86,547				12,309				98,856				73.6	%			44,276
2011			139,719				22,254				67,465				89,719				43,308				133,028				95.2	%			110,774
Total			817,127				359,719				106,743				466,462				56,881				523,343				64.0	%			163,624

 

-20-

---

 

December 2011 Global Loss Triangles—Reinsurance Segment

Excluding large losses

U.S. dollars in thousands

Property Other Reinsurance (Gross of Ceded Reinsurance)

 

Cumulative Paid Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			1,994				14,146				21,254				24,533				26,202				27,034				27,241				27,550				27,573				27,588
2003			1,794				9,960				13,446				16,264				17,931				18,421				18,892				19,262				19,340
2004			949				7,461				11,995				14,439				15,598				17,294				17,210				17,405
2005			5,111				23,166				29,796				31,025				42,623				46,347				46,594
2006			3,793				17,679				23,689				27,465				29,525				29,862
2007			717				8,668				12,738				14,733				15,753
2008			3,920				10,738				12,479				14,966
2009			4,664				12,112				18,692
2010			5,835				20,289
2011			4,003
Reported Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			3,082				17,552				26,185				27,026				27,589				27,756				27,588				27,715				27,606				27,628
2003			6,313				14,931				17,064				19,609				19,904				19,931				20,437				19,891				19,427
2004			7,729				9,571				14,654				16,236				16,650				17,180				17,493				17,538
2005			6,675				33,802				43,645				45,360				45,571				46,163				46,136
2006			9,307				23,794				30,449				30,525				30,085				30,377
2007			3,360				23,153				24,853				23,927				23,660
2008			9,627				15,156				15,746				16,123
2009			11,574				20,126				21,982
2010			13,219				34,080
2011			16,736
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			16	%			28	%			41	%			42	%			43	%			43	%			43	%			43	%			43	%			43	%
2003			18	%			22	%			24	%			28	%			29	%			30	%			31	%			30	%			29	%
2004			15	%			13	%			20	%			22	%			22	%			23	%			23	%			23	%
2005			15	%			43	%			57	%			59	%			59	%			60	%			60	%
2006			19	%			35	%			45	%			45	%			44	%			45	%
2007			14	%			57	%			60	%			57	%			56	%
2008			42	%			46	%			48	%			49	%
2009			51	%			58	%			62	%
2010			39	%			69	%
2011			38	%

 

Treaty Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			64,253				27,588				40				27,628				3				27,631				43.0	%			43
2003			66,185				19,340				87				19,427				9				19,436				29.4	%			96
2004			75,094				17,405				133				17,538				494				18,032				24.0	%			627
2005			76,953				46,594				(457	)			46,136				183				46,319				60.2	%			(274	)
2006			68,054				29,862				515				30,377				229				30,606				45.0	%			744
2007			41,930				15,753				7,907				23,660				753				24,413				58.2	%			8,660
2008			33,097				14,966				1,158				16,123				631				16,755				50.6	%			1,789
2009			35,454				18,692				3,290				21,982				1,015				22,997				64.9	%			4,305
2010			49,289				20,289				13,790				34,080				6,358				40,437				82.0	%			20,148
2011			43,746				4,003				12,733				16,736				25,678				42,414				97.0	%			38,412
Total			554,055				214,492				39,195				253,687				35,353				289,040				52.2	%			74,548

 

-21-

---

December 2011 Global Loss Triangles—Reinsurance Segment

U.S. dollars in thousands

General Casualty Reinsurance (Gross of Ceded Reinsurance)

Cumulative Paid Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			329				3,688				7,670				10,682				13,471				15,290				16,500				17,685				18,347				18,481
2003			705				3,063				5,962				11,466				21,916				26,087				27,838				30,357				32,877
2004			648				1,088				6,331				11,850				21,718				28,466				37,451				40,561
2005			119				1,584				9,500				19,705				31,410				41,416				50,092
2006			944				6,183				20,496				34,804				43,454				51,094
2007			3				3,135				10,113				26,839				39,243
2008			29				1,468				13,077				22,515
2009			460				3,523				15,146
2010			519				23,603
2011			849
Reported Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			346				5,531				10,970				18,737				19,011				19,864				20,694				19,214				19,906				19,931
2003			1,588				8,176				11,853				21,884				28,983				29,495				32,262				33,460				36,363
2004			1,357				9,104				14,286				23,228				36,173				44,570				45,306				48,468
2005			2,055				11,283				23,806				34,636				44,890				51,272				55,714
2006			2,493				19,012				37,046				49,952				55,620				62,495
2007			1,033				9,706				34,826				47,229				58,048
2008			1,591				13,743				37,550				48,234
2009			1,256				18,727				35,753
2010			9,864				43,094
2011			2,714
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			10	%			20	%			33	%			56	%			57	%			59	%			62	%			57	%			59	%			59	%
2003			7	%			10	%			12	%			22	%			29	%			29	%			32	%			33	%			36	%
2004			3	%			8	%			11	%			19	%			29	%			36	%			37	%			39	%
2005			4	%			8	%			15	%			22	%			29	%			33	%			36	%
2006			5	%			15	%			29	%			39	%			43	%			49	%
2007			2	%			7	%			25	%			33	%			41	%
2008			4	%			11	%			29	%			37	%
2009			2	%			12	%			23	%
2010			17	%			28	%
2011			5	%

 

Treaty Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			33,679				18,481				1,450				19,931				1,164				21,095				62.6	%			2,614
2003			100,546				32,877				3,487				36,363				5,285				41,648				41.4	%			8,771
2004			123,437				40,561				7,906				48,468				14,723				63,190				51.2	%			22,629
2005			155,833				50,092				5,623				55,714				18,090				73,805				47.4	%			23,713
2006			128,270				51,094				11,401				62,495				24,538				87,033				67.9	%			35,939
2007			143,071				39,243				18,805				58,048				45,760				103,808				72.6	%			64,565
2008			130,755				22,515				25,719				48,234				50,004				98,238				75.1	%			75,722
2009			156,825				15,146				20,607				35,753				77,064				112,817				71.9	%			97,671
2010			153,762				23,603				19,491				43,094				70,173				113,267				73.7	%			89,664
2011			55,959				849				1,866				2,714				39,062				41,776				74.7	%			40,927
Total			1,182,138				294,461				116,353				410,814				345,862				756,676				64.0	%			462,215

 

-22-

---

 

December 2011 Global Loss Triangles—Reinsurance Segment

U.S. dollars in thousands

Professional Liability Lines Reinsurance (Gross of Ceded Reinsurance)

Cumulative Paid Loss & ALAE

Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			—				915				1,676				4,405				10,898				12,884				14,202				15,561				16,061				16,838
2003			0				191				1,274				3,207				12,429				16,125				21,385				24,308				26,798
2004			9				345				5,373				10,445				19,634				24,920				31,103				32,512
2005			8				786				6,852				22,841				35,126				43,205				48,780
2006			1				711				7,112				20,428				34,442				46,932
2007			5				1,263				11,453				41,735				69,029
2008			37				2,140				10,455				25,184
2009			17				1,675				6,595
2010			24				2,064
2011			19
Reported Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			—				3,594				12,221				21,012				22,717				22,060				22,297				21,292				19,469				19,553
2003			65				1,599				13,981				21,047				29,125				29,219				33,173				33,043				34,729
2004			819				7,902				20,205				33,619				36,122				35,884				42,934				41,564
2005			456				6,067				22,581				46,077				50,876				55,740				61,260
2006			71				8,619				26,873				50,886				66,537				70,039
2007			227				17,507				75,722				118,166				134,239
2008			2,684				15,190				38,738				61,121
2009			295				6,314				17,184
2010			502				5,216
2011			165
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			0	%			9	%			26	%			46	%			49	%			48	%			48	%			46	%			42	%			42	%
2003			0	%			2	%			15	%			22	%			29	%			29	%			33	%			33	%			35	%
2004			2	%			7	%			17	%			28	%			30	%			30	%			36	%			35	%
2005			1	%			3	%			11	%			22	%			24	%			27	%			30	%
2006			0	%			5	%			14	%			26	%			34	%			36	%
2007			0	%			9	%			36	%			55	%			62	%
2008			5	%			9	%			21	%			33	%
2009			1	%			5	%			13	%
2010			2	%			5	%
2011			1	%

 

Treaty Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			46,264				16,838				2,716				19,553				1,838				21,391				46.2	%			4,554
2003			99,740				26,798				7,931				34,729				7,688				42,417				42.5	%			15,619
2004			119,286				32,512				9,052				41,564				7,414				48,978				41.1	%			16,466
2005			207,060				48,780				12,480				61,260				26,949				88,209				42.6	%			39,429
2006			194,857				46,932				23,107				70,039				48,517				118,556				60.8	%			71,624
2007			215,061				69,029				65,210				134,239				32,838				167,077				77.7	%			98,048
2008			183,841				25,184				35,938				61,121				80,254				141,375				76.9	%			116,192
2009			133,923				6,595				10,590				17,184				77,990				95,174				71.1	%			88,580
2010			98,259				2,064				3,152				5,216				62,071				67,287				68.5	%			65,223
2011			26,122				19				146				165				17,190				17,355				66.4	%			17,336
Total			1,324,413				274,751				170,320				445,072				362,750				807,821				61.0	%			533,070

 

-23-

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December 2011 Global Loss Triangles—Reinsurance Segment

Excluding large losses

U.S. dollars in thousands

Other Reinsurance (Gross of Ceded Reinsurance)

Cumulative Paid Loss & ALAE

Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			52				1,225				2,576				3,222				3,687				4,081				4,191				4,439				4,466				4,475
2003			15				886				2,373				3,294				4,452				4,656				4,602				4,660				4,728
2004			43				5,115				8,048				10,943				9,076				9,470				9,876				10,582
2005			278				3,943				9,184				7,919				10,600				12,078				12,797
2006			68				2,821				5,666				6,959				7,881				8,455
2007			279				4,098				7,242				8,936				10,047
2008			534				4,050				7,972				10,335
2009			121				3,515				5,635
2010			73				2,048
2011			2,365
Reported Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			270				3,065				4,472				4,580				4,963				4,700				4,691				4,629				4,623				4,609
2003			54				887				2,614				4,643				5,266				5,158				4,929				4,872				4,905
2004			134				8,197				9,085				11,931				10,545				9,696				9,826				9,694
2005			304				11,551				11,472				10,788				11,522				12,312				14,221
2006			258				7,408				9,169				10,549				10,728				10,841
2007			841				7,432				9,808				10,708				10,667
2008			1,072				9,821				12,870				11,804
2009			326				5,150				8,298
2010			988				4,660
2011			4,845
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty		Months of Development
Year		12				24				36				48				60				72				84				96				108				120
2002			19	%			28	%			39	%			38	%			41	%			39	%			39	%			38	%			38	%			38	%
2003			2	%			7	%			13	%			23	%			26	%			26	%			25	%			24	%			24	%
2004			1	%			27	%			24	%			32	%			28	%			26	%			26	%			26	%
2005			2	%			33	%			28	%			26	%			28	%			30	%			34	%
2006			2	%			23	%			28	%			32	%			33	%			33	%
2007			4	%			19	%			25	%			27	%			27	%
2008			6	%			30	%			38	%			35	%
2009			2	%			15	%			25	%
2010			4	%			11	%
2011			10	%

 

Treaty		Earned				Loss & ALAE
Year		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			12,192				4,475				134				4,609				526				5,135				42.1	%			660
2003			20,108				4,728				177				4,905				1,115				6,021				29.9	%			1,292
2004			37,616				10,582				(888	)			9,694				4,358				14,052				37.4	%			3,469
2005			41,296				12,797				1,425				14,221				6,603				20,824				50.4	%			8,028
2006			32,966				8,455				2,387				10,841				4,261				15,103				45.8	%			6,648
2007			39,485				10,047				620				10,667				3,669				14,337				36.3	%			4,290
2008			33,543				10,335				1,469				11,804				2,220				14,024				41.8	%			3,689
2009			33,755				5,635				2,664				8,298				210				8,508				25.2	%			2,873
2010			41,405				2,048				2,612				4,660				2,795				7,454				18.0	%			5,407
2011			49,145				2,365				2,481				4,845				14,081				18,926				38.5	%			16,561
Total			341,511				71,466				13,079				84,546				39,838				124,384				36.4	%			52,917

 

-24-

---

 

December 2011 Global Loss Triangles—Reinsurance Segment

U.S. dollars in thousands

Property Catastrophe Reinsurance (Net of Ceded Reinsurance)

 

Cumulative Paid Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			101				2,131				4,161				4,194				4,310				4,310				4,336				4,336				4,336				4,336
2003			3,977				6,251				6,882				6,831				6,843				7,235				7,237				7,237				7,237
2004			17,379				47,475				55,350				57,786				58,813				59,457				59,741				60,097
2005			35,255				99,502				106,468				111,778				113,039				112,992				113,330
2006			710				8,912				9,671				9,829				9,903				9,917
2007			3,999				12,770				12,511				12,767				12,561
2008			15,798				26,979				30,619				32,007
2009			269				905				2,977
2010			3,798				54,580
2011			22,254
Reported Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			3,041				5,163				4,370				4,390				4,372				4,371				4,356				4,356				4,336				4,336
2003			6,172				7,561				7,009				6,920				6,939				7,235				7,237				7,237				7,237
2004			33,642				56,808				59,396				60,325				60,267				60,490				60,141				60,355
2005			130,142				128,692				116,254				116,946				116,572				115,780				115,715
2006			3,275				9,580				9,885				10,172				10,131				10,136
2007			17,051				15,664				13,584				13,412				12,847
2008			31,318				32,595				33,106				33,901
2009			2,557				5,613				5,246
2010			32,490				86,547
2011			89,719
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			9	%			15	%			13	%			13	%			13	%			13	%			13	%			13	%			13	%			13	%
2003			10	%			13	%			12	%			12	%			12	%			12	%			12	%			12	%			12	%
2004			58	%			98	%			102	%			104	%			104	%			104	%			103	%			104	%
2005			186	%			184	%			166	%			167	%			167	%			166	%			166	%
2006			5	%			15	%			15	%			15	%			15	%			15	%
2007			25	%			19	%			16	%			16	%			15	%
2008			64	%			50	%			50	%			51	%
2009			4	%			7	%			6	%
2010			31	%			64	%
2011			64	%

 

Treaty Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			33,846				4,336				0				4,336				—				4,336				12.8	%			0
2003			58,868				7,237				0				7,237				—				7,237				12.3	%			0
2004			58,128				60,097				258				60,355				(285	)			60,071				103.3	%			(27	)
2005			69,898				113,330				2,385				115,715				452				116,167				166.2	%			2,837
2006			65,966				9,917				218				10,136				16				10,152				15.4	%			235
2007			83,608				12,561				286				12,847				19				12,866				15.4	%			306
2008			66,898				32,007				1,895				33,901				517				34,418				51.4	%			2,412
2009			82,525				2,977				2,269				5,246				252				5,498				6.7	%			2,521
2010			134,372				54,580				31,967				86,547				12,309				98,856				73.6	%			44,276
2011			139,717				22,254				67,465				89,719				43,308				133,028				95.2	%			110,774
Total			793,826				319,297				106,743				426,040				56,589				482,629				60.8	%			163,332

 

-25-

---

 

December 2011 Global Loss Triangles—Reinsurance Segment

Excluding large losses

U.S. dollars in thousands

Property Other Reinsurance (Net of Ceded Reinsurance)

 

Cumulative Paid Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			1,994				14,146				21,254				24,533				26,202				27,034				27,241				27,550				27,573				27,588
2003			1,794				9,960				13,446				16,264				17,931				18,421				18,892				19,262				19,340
2004			949				7,461				11,995				14,439				15,598				17,294				17,210				17,405
2005			5,111				23,166				29,796				31,025				42,623				46,347				46,594
2006			3,793				17,679				23,689				27,465				29,525				29,862
2007			717				8,668				12,738				14,733				15,753
2008			3,920				10,738				12,479				14,966
2009			4,664				12,112				18,692
2010			5,835				20,289
2011			4,003
Reported Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			3,082				17,552				26,185				27,026				27,589				27,756				27,588				27,715				27,606				27,628
2003			6,313				14,931				17,064				19,609				19,904				19,931				20,437				19,891				19,427
2004			7,729				9,571				14,654				16,236				16,650				17,180				17,493				17,538
2005			6,675				33,802				43,645				45,360				45,571				46,163				46,136
2006			9,307				23,794				30,449				30,525				30,085				30,377
2007			3,360				23,153				24,853				23,927				23,660
2008			9,627				15,156				15,746				16,123
2009			11,574				20,126				21,982
2010			13,219				34,080
2011			16,736
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			16	%			28	%			41	%			42	%			43	%			43	%			43	%			43	%			43	%			43	%
2003			18	%			22	%			24	%			28	%			29	%			30	%			31	%			30	%			29	%
2004			15	%			13	%			20	%			22	%			22	%			23	%			23	%			23	%
2005			15	%			44	%			59	%			61	%			61	%			62	%			62	%
2006			20	%			35	%			45	%			45	%			44	%			45	%
2007			14	%			57	%			60	%			57	%			56	%
2008			44	%			48	%			50	%			51	%
2009			51	%			58	%			62	%
2010			39	%			69	%
2011			38	%

 

Treaty Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			64,253				27,588				40				27,628				3				27,631				43.0	%			43
2003			66,185				19,340				87				19,427				9				19,436				29.4	%			96
2004			75,094				17,405				133				17,538				494				18,032				24.0	%			627
2005			74,493				46,594				(457	)			46,136				183				46,319				62.2	%			(274	)
2006			67,628				29,862				515				30,377				229				30,606				45.3	%			744
2007			41,930				15,753				7,907				23,660				753				24,413				58.2	%			8,660
2008			31,765				14,966				1,158				16,123				631				16,755				52.7	%			1,789
2009			35,454				18,692				3,290				21,982				1,015				22,997				64.9	%			4,305
2010			49,289				20,289				13,790				34,080				6,358				40,437				82.0	%			20,148
2011			43,746				4,003				12,733				16,736				25,678				42,414				97.0	%			38,412
Total			549,837				214,492				39,195				253,687				35,353				289,040				52.6	%			74,548

 

-26-

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December 2011 Global Loss Triangles—Reinsurance Segment

U.S. dollars in thousands

General Casualty Reinsurance (Net of Ceded Reinsurance)

 

Cumulative Paid Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			329				3,688				7,670				10,682				13,471				15,290				16,500				17,685				18,347				18,481
2003			705				3,063				5,962				11,466				21,916				26,087				27,838				30,357				32,877
2004			648				1,088				6,331				11,850				21,718				28,466				37,451				40,561
2005			119				1,584				9,500				19,705				31,410				41,416				50,092
2006			944				6,183				20,496				34,804				43,454				51,094
2007			3				3,135				10,113				26,839				39,243
2008			29				1,468				13,077				22,515
2009			460				3,523				15,146
2010			519				23,603
2011			849
Reported Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			346				5,531				10,970				18,737				19,011				19,864				20,694				19,214				19,906				19,931
2003			1,588				8,176				11,853				21,884				28,983				29,495				32,262				33,460				36,363
2004			1,357				9,104				14,286				23,228				36,173				44,570				45,306				48,468
2005			2,055				11,283				23,806				34,636				44,890				51,272				55,714
2006			2,493				19,012				37,046				49,952				55,620				62,495
2007			1,033				9,706				34,826				47,229				58,048
2008			1,591				13,743				37,550				48,234
2009			1,256				18,727				35,753
2010			9,864				43,094
2011			2,714
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			10	%			20	%			33	%			56	%			57	%			59	%			62	%			57	%			59	%			59	%
2003			7	%			10	%			12	%			22	%			29	%			29	%			32	%			33	%			36	%
2004			3	%			8	%			11	%			19	%			29	%			36	%			37	%			39	%
2005			4	%			8	%			15	%			22	%			29	%			33	%			36	%
2006			5	%			15	%			29	%			39	%			43	%			49	%
2007			2	%			7	%			25	%			33	%			41	%
2008			4	%			11	%			29	%			37	%
2009			2	%			12	%			23	%
2010			17	%			28	%
2011			5	%

 

Treaty Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			33,679				18,481				1,450				19,931				1,164				21,095				62.6	%			2,614
2003			100,546				32,877				3,487				36,363				5,285				41,648				41.4	%			8,771
2004			123,437				40,561				7,906				48,468				14,723				63,190				51.2	%			22,629
2005			155,833				50,092				5,623				55,714				18,090				73,805				47.4	%			23,713
2006			128,270				51,094				11,401				62,495				24,538				87,033				67.9	%			35,939
2007			143,071				39,243				18,805				58,048				45,760				103,808				72.6	%			64,565
2008			130,755				22,515				25,719				48,234				50,004				98,238				75.1	%			75,722
2009			156,825				15,146				20,607				35,753				77,064				112,817				71.9	%			97,671
2010			153,762				23,603				19,491				43,094				70,173				113,267				73.7	%			89,664
2011			55,959				849				1,866				2,714				39,062				41,776				74.7	%			40,927
Total			1,182,138				294,461				116,353				410,814				345,862				756,676				64.0	%			462,215

 

-27-

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December 2011 Global Loss Triangles—Reinsurance Segment

U.S. dollars in thousands

Professional Liability Lines Reinsurance (Net of Ceded Reinsurance)

Cumulative Paid Loss & ALAE

 

Treaty		Months of Development
Year		12				24				36				48				60				72				84				96				108				120
2002			—				915				1,676				4,405				10,898				12,884				14,202				15,561				16,061				16,838
2003			0				191				1,274				3,207				12,429				16,125				21,385				24,308				26,798
2004			9				345				5,373				10,445				19,634				24,920				31,103				32,512
2005			8				786				6,852				22,841				35,126				43,205				48,780
2006			1				711				7,112				20,428				34,442				46,932
2007			5				1,263				11,453				41,735				69,029
2008			37				2,140				10,455				25,184
2009			17				1,675				6,595
2010			24				2,064
2011			19
Reported Loss & ALAE
Treaty		Months of Development
Year		12				24				36				48				60				72				84				96				108				120
2002			—				3,594				12,221				21,012				22,717				22,060				22,297				21,292				19,469				19,553
2003			65				1,599				13,981				21,047				29,125				29,219				33,173				33,043				34,729
2004			819				7,902				20,205				33,619				36,122				35,884				42,934				41,564
2005			456				6,067				22,581				46,077				50,876				55,740				61,260
2006			71				8,619				26,873				50,886				66,537				70,039
2007			227				17,507				75,722				118,166				134,239
2008			2,684				15,190				38,738				61,121
2009			295				6,314				17,184
2010			502				5,216
2011			165
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty		Months of Development
Year		12				24				36				48				60				72				84				96				108				120
2002			0	%			9	%			26	%			46	%			49	%			48	%			48	%			46	%			42	%			42	%
2003			0	%			2	%			15	%			22	%			29	%			29	%			33	%			33	%			35	%
2004			2	%			7	%			17	%			28	%			30	%			30	%			36	%			35	%
2005			1	%			3	%			11	%			22	%			24	%			27	%			30	%
2006			0	%			5	%			14	%			26	%			34	%			36	%
2007			0	%			9	%			36	%			55	%			62	%
2008			5	%			9	%			21	%			33	%
2009			1	%			5	%			13	%
2010			2	%			5	%
2011			1	%

 

Treaty		Earned				Loss & ALAE
Year		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			46,264				16,838				2,716				19,553				1,838				21,391				46.2	%			4,554
2003			99,740				26,798				7,931				34,729				7,688				42,417				42.5	%			15,619
2004			119,286				32,512				9,052				41,564				7,414				48,978				41.1	%			16,466
2005			207,060				48,780				12,480				61,260				26,949				88,209				42.6	%			39,429
2006			194,857				46,932				23,107				70,039				48,517				118,556				60.8	%			71,624
2007			215,061				69,029				65,210				134,239				32,838				167,077				77.7	%			98,048
2008			183,841				25,184				35,938				61,121				80,254				141,375				76.9	%			116,192
2009			133,923				6,595				10,590				17,184				77,990				95,174				71.1	%			88,580
2010			98,259				2,064				3,152				5,216				62,071				67,287				68.5	%			65,223
2011			26,122				19				146				165				17,190				17,355				66.4	%			17,336
Total			1,324,413				274,751				170,320				445,072				362,750				807,821				61.0	%			533,070

 

-28-

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December 2011 Global Loss Triangles—Reinsurance Segment

Excluding large losses

U.S. dollars in thousands

Other Reinsurance (Net of Ceded Reinsurance)

 

Cumulative Paid Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			52				1,225				2,576				3,222				3,687				4,081				4,191				4,439				4,466				4,475
2003			15				886				2,373				3,294				4,452				4,656				4,602				4,660				4,728
2004			24				4,699				6,910				9,525				7,585				7,963				8,368				9,075
2005			265				3,772				8,768				7,471				10,158				11,573				12,292
2006			68				2,821				5,666				6,959				7,881				8,455
2007			279				4,098				7,242				8,936				10,047
2008			534				4,050				7,972				10,335
2009			121				3,515				5,635
2010			73				2,048
2011			2,365
Reported Loss & ALAE
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			270				3,065				4,472				4,580				4,963				4,700				4,691				4,629				4,623				4,609
2003			54				887				2,614				4,643				5,266				5,158				4,929				4,872				4,905
2004			37				7,097				7,476				10,324				9,038				8,188				8,319				8,186
2005			278				11,206				10,817				10,337				11,080				11,801				13,710
2006			258				7,408				9,169				10,549				10,728				10,841
2007			841				7,432				9,808				10,708				10,667
2008			1,072				9,821				12,870				11,804
2009			326				5,150				8,298
2010			988				4,660
2011			4,845
Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty Year		Months of Development
		12				24				36				48				60				72				84				96				108				120
2002			19	%			28	%			39	%			38	%			41	%			39	%			39	%			38	%			38	%			38	%
2003			2	%			7	%			13	%			23	%			26	%			26	%			25	%			24	%			24	%
2004			0	%			30	%			24	%			34	%			30	%			27	%			27	%			27	%
2005			2	%			34	%			28	%			27	%			29	%			31	%			36	%
2006			2	%			23	%			28	%			32	%			33	%			33	%
2007			4	%			20	%			25	%			27	%			27	%
2008			6	%			30	%			39	%			35	%
2009			2	%			15	%			25	%
2010			4	%			12	%
2011			10	%

 

Treaty Year		Earned				Loss & ALAE
		Premium				Paid				Case O/S				Reported				IBNR				Ultimate				Ult. Ratio				Unpaid
2002			12,192				4,475				134				4,609				526				5,135				42.1	%			660
2003			20,108				4,728				177				4,905				1,115				6,021				29.9	%			1,292
2004			30,815				9,075				(888	)			8,186				4,358				12,544				40.7	%			3,469
2005			38,561				12,292				1,419				13,710				6,609				20,319				52.7	%			8,028
2006			32,786				8,455				2,387				10,841				4,261				15,103				46.1	%			6,648
2007			39,225				10,047				620				10,667				3,669				14,337				36.6	%			4,290
2008			33,261				10,335				1,469				11,804				2,220				14,024				42.2	%			3,689
2009			33,425				5,635				2,664				8,298				210				8,508				25.5	%			2,873
2010			39,516				2,048				2,612				4,660				2,795				7,454				18.9	%			5,407
2011			48,551				2,365				2,481				4,845				14,081				18,926				39.0	%			16,561
Total			328,440				69,454				13,073				82,527				39,844				122,371				37.3	%			52,917

 

-29-

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December 2011 Global Loss Triangles—Insurance Segment

Excluding large losses on Property

U.S. dollars in thousands

Premium—Gross of ceded reinsurance

 

Cal/Acc		Property								General Casualty								Prof. Liab. Lines								Healthcare
Year		Written				Earned				Written				Earned				Written				Earned				Written				Earned
2002			376,526				195,890				166,995				88,051				141,612				59,558				73,076				39,904
2003			554,735				483,719				305,812				257,017				301,271				237,656				95,630				76,140
2004			547,959				565,327				352,392				332,389				358,020				321,801				142,160				120,800
2005			412,879				476,481				289,364				297,511				372,460				352,174				137,074				136,577
2006			463,900				441,138				276,940				275,405				434,999				395,104				156,698				150,401
2007			391,018				423,468				252,902				264,680				452,245				431,009				153,567				147,720
2008			327,491				357,588				235,939				243,673				498,544				457,068				184,055				170,600
2009			243,193				272,873				287,085				265,068				489,872				506,027				210,422				197,314
2010			224,453				231,398				311,987				290,500				469,036				475,222				228,810				222,171
2011			244,636				225,599				379,287				333,184				507,553				478,865				235,559				228,445
Total			3,786,790				3,673,480				2,858,703				2,647,478				4,025,614				3,714,483				1,617,052				1,490,071
Loss & ALAE—Gross of ceded reinsurance
Accident		Property								General Casualty								Prof. Liab. Lines								Healthcare
Year		Paid				Reported				Paid				Reported				Paid				Reported				Paid				Reported
2002			56,701				56,701				8,662				22,058				59,984				59,984				8,025				8,042
2003			221,846				222,550				57,487				57,537				26,479				43,597				20,104				23,793
2004			234,829				235,425				24,754				34,193				48,571				60,795				13,786				15,944
2005			367,337				368,929				118,386				123,362				44,547				58,190				13,475				14,639
2006			210,277				215,327				108,738				108,758				97,134				185,213				19,443				24,650
2007			191,756				221,004				26,963				37,670				77,189				135,584				23,303				39,822
2008			210,168				229,376				47,500				52,723				103,602				175,230				28,147				40,263
2009			74,513				88,410				36,402				49,792				52,805				79,290				27,066				48,429
2010			107,035				156,231				61,109				131,974				43,527				70,603				12,035				38,113
2011			52,142				156,249				8,380				34,513				15,398				47,148				1,933				10,754
Total			1,726,605				1,950,201				498,381				652,582				569,236				915,634				167,317				264,450

 

-30-

---

 

December 2011 Global Loss Triangles—Insurance Segment

Excluding large losses on Property

U.S. dollars in thousands

 

Premium—Net of ceded reinsurance
Cal/Acc Year		Property								General Casualty								Prof. Liab. Lines								Healthcare
		Written				Earned				Written				Earned				Written				Earned				Written				Earned
2002			300,021				171,696				166,995				88,051				141,612				59,558				73,076				39,904
2003			383,345				356,275				260,049				233,589				287,807				232,141				93,126				75,002
2004			308,623				333,170				283,537				271,160				330,199				304,642				126,731				114,883
2005			170,895				226,828				228,477				236,587				322,937				326,766				106,857				118,565
2006			193,652				190,783				211,686				214,376				362,190				343,955				124,109				124,024
2007			176,420				180,460				173,099				192,097				346,657				349,563				120,773				117,774
2008			169,889				173,790				150,779				162,750				386,010				342,659				149,237				131,336
2009			123,011				142,872				195,581				172,403				367,364				386,143				165,738				150,032
2010			132,548				127,037				207,783				195,238				355,963				355,472				175,110				169,427
2011			160,551				139,644				262,885				222,485				379,019				354,153				177,464				173,172
Total			2,118,955				2,042,554				2,140,872				1,988,737				3,279,759				3,055,051				1,312,222				1,214,118
Loss & ALAE—Net of ceded reinsurance
Accident Year		Property								General Casualty								Prof. Liab. Lines								Healthcare
		Paid				Reported				Paid				Reported				Paid				Reported				Paid				Reported
2002			49,067				49,067				8,662				22,058				59,984				59,984				8,025				8,042
2003			179,378				179,641				57,486				57,536				24,967				42,085				20,104				23,793
2004			150,907				151,247				21,746				30,832				48,537				60,761				13,775				15,933
2005			166,393				167,108				93,977				98,800				41,214				54,855				11,912				12,937
2006			94,060				96,643				72,659				72,671				79,956				162,521				14,604				17,791
2007			89,091				105,695				23,180				31,557				66,212				112,600				21,564				34,971
2008			117,040				128,392				35,915				39,434				81,913				144,350				25,510				35,819
2009			50,242				61,079				25,347				32,781				51,066				74,956				24,529				45,245
2010			67,717				99,637				33,959				81,263				43,230				68,359				12,031				37,423
2011			31,763				109,474				6,911				29,292				15,277				46,038				1,904				10,493
Total			995,658				1,147,983				379,842				496,224				512,357				826,509				153,959				242,447

 

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December 2011 Global Loss Triangles—Reinsurance Segment

Excluding large losses on Property Other and Other

U.S. dollars in thousands

 

Premium—Gross of ceded reinsurance
Treaty Year		Property Catastrophe								Property Other								General Casualty								Prof. Liab. Lines								Other
		Written				Earned				Written				Earned				Written				Earned				Written				Earned				Written				Earned
2002			33,846				33,846				64,253				64,253				33,679				33,679				46,264				46,264				12,192				12,192
2003			58,868				58,868				66,185				66,185				100,546				100,546				99,740				99,740				20,108				20,108
2004			66,178				66,178				75,094				75,094				123,437				123,437				119,286				119,286				37,616				37,616
2005			83,838				83,838				76,953				76,953				155,833				155,833				207,060				207,060				41,296				41,296
2006			67,029				67,029				68,054				68,054				128,270				128,270				194,857				194,857				32,966				32,966
2007			83,675				83,675				41,930				41,930				143,099				143,071				215,061				215,061				39,485				39,485
2008			66,980				66,980				33,097				33,097				130,829				130,755				183,841				183,841				33,543				33,543
2009			82,605				82,605				35,454				35,454				156,825				156,825				133,923				133,923				33,755				33,755
2010			135,615				134,389				50,348				49,289				187,478				153,762				108,264				98,259				42,233				41,405
2011			194,871				139,719				68,128				43,746				158,517				55,959				75,627				26,122				74,529				49,145
Total			873,504				817,127				579,497				554,055				1,318,514				1,182,138				1,383,923				1,324,413				367,723				341,511
Loss & ALAE—Gross of ceded reinsurance
Treaty Year		Property Catastrophe								Property Other								General Casualty								Prof. Liab. Lines								Other
		Paid				Reported				Paid				Reported				Paid				Reported				Paid				Reported				Paid				Reported
2002			4,336				4,336				27,588				27,628				18,481				19,931				16,838				19,553				4,475				4,609
2003			7,237				7,237				19,340				19,427				32,877				36,363				26,798				34,729				4,728				4,905
2004			60,852				61,110				17,405				17,538				40,561				48,468				32,512				41,564				10,582				9,694
2005			152,998				155,383				46,594				46,136				50,092				55,714				48,780				61,260				12,797				14,221
2006			9,917				10,136				29,862				30,377				51,094				62,495				46,932				70,039				8,455				10,841
2007			12,561				12,847				15,753				23,660				39,243				58,048				69,029				134,239				10,047				10,667
2008			32,007				33,901				14,966				16,123				22,515				48,234				25,184				61,121				10,335				11,804
2009			2,977				5,246				18,692				21,982				15,146				35,753				6,595				17,184				5,635				8,298
2010			54,580				86,547				20,289				34,080				23,603				43,094				2,064				5,216				2,048				4,660
2011			22,254				89,719				4,003				16,736				849				2,714				19				165				2,365				4,845
Total			359,719				466,462				214,492				253,687				294,461				410,814				274,751				445,072				71,466				84,546

 

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December 2011 Global Loss Triangles—Reinsurance Segment

Excluding large losses on Property Other and Other

U.S. dollars in thousands

Premium — Net of ceded reinsurance

 

Treaty		Property Catastrophe								Property Other								General Casualty								Prof. Liab. Lines								Other
Year		Written				Earned				Written				Earned				Written				Earned				Written				Earned				Written				Earned
2002			33,846				33,846				64,253				64,253				33,679				33,679				46,264				46,264				12,192				12,192
2003			58,868				58,868				66,185				66,185				100,546				100,546				99,740				99,740				20,108				20,108
2004			58,128				58,128				75,094				75,094				123,437				123,437				119,286				119,286				30,815				30,815
2005			69,898				69,898				74,493				74,493				155,833				155,833				207,060				207,060				38,561				38,561
2006			65,966				65,966				67,628				67,628				128,270				128,270				194,857				194,857				32,786				32,786
2007			83,608				83,608				41,930				41,930				143,099				143,071				215,061				215,061				39,225				39,225
2008			66,898				66,898				31,765				31,765				130,829				130,755				183,841				183,841				33,261				33,261
2009			82,525				82,525				35,454				35,454				156,825				156,825				133,923				133,923				33,425				33,425
2010			135,598				134,372				50,348				49,289				187,478				153,762				108,264				98,259				40,344				39,516
2011			194,869				139,717				68,128				43,746				158,517				55,959				75,627				26,122				73,503				48,551
Total			850,203				793,826				575,278				549,837				1,318,514				1,182,138				1,383,923				1,324,413				354,220				328,440
Loss & ALAE — Net of ceded reinsurance
Treaty		Property Catastrophe								Property Other								General Casualty								Prof. Liab. Lines								Other
Year		Paid				Reported				Paid				Reported				Paid				Reported				Paid				Reported				Paid				Reported
2002			4,336				4,336				27,588				27,628				18,481				19,931				16,838				19,553				4,475				4,609
2003			7,237				7,237				19,340				19,427				32,877				36,363				26,798				34,729				4,728				4,905
2004			60,097				60,355				17,405				17,538				40,561				48,468				32,512				41,564				9,075				8,186
2005			113,330				115,715				46,594				46,136				50,092				55,714				48,780				61,260				12,292				13,710
2006			9,917				10,136				29,862				30,377				51,094				62,495				46,932				70,039				8,455				10,841
2007			12,561				12,847				15,753				23,660				39,243				58,048				69,029				134,239				10,047				10,667
2008			32,007				33,901				14,966				16,123				22,515				48,234				25,184				61,121				10,335				11,804
2009			2,977				5,246				18,692				21,982				15,146				35,753				6,595				17,184				5,635				8,298
2010			54,580				86,547				20,289				34,080				23,603				43,094				2,064				5,216				2,048				4,660
2011			22,254				89,719				4,003				16,736				849				2,714				19				165				2,365				4,845
Total			319,297				426,040				214,492				253,687				294,461				410,814				274,751				445,072				69,454				82,527

 

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IV. SELECTED EXCERPTS FROM ALLIED WORLD’S 2011 10-K DISCLOSURE

The reserve for losses and loss expenses is comprised of two main elements: outstanding loss reserves, also known as “case reserves,” and reserves for IBNR. Outstanding loss reserves relate to known claims and represent management’s best estimate of the likely loss settlement. Thus, there is a significant amount of estimation involved in determining the likely loss payment. IBNR reserves require judgment because they relate primarily to unreported events that, based on industry information, management’s experience and actuarial evaluation, can reasonably be expected to have occurred and are reasonably likely to result in a loss to our company. IBNR reserves also relate to estimated development of reported events that based on industry information, management’s experience and actuarial evaluation, can reasonably be expected to reach our attachment point and are reasonably likely to result in a loss to our company. We also include changes in the values of claims that have been reported to us but are not yet settled. Each claim is settled individually based upon its merits and it is not unusual for a claim to take years after being reported to settle, especially if legal action is involved. As a result, reserves for losses and loss expenses include significant estimates for IBNR reserves.

The reserve for IBNR is estimated by management for each line of business based on various factors, including underwriters’ expectations about loss experience, actuarial analysis, comparisons with the results of industry benchmarks and loss experience to date. The reserve for IBNR is calculated as the ultimate amount of losses and loss expenses less cumulative paid losses and loss expenses and case reserves. Our actuaries employ generally accepted actuarial methodologies to determine estimated ultimate loss reserves.

While management believes that our case reserves and IBNR are sufficient to cover losses assumed by us, there can be no assurance that losses will not deviate from our reserves, possibly by material amounts. The methodology of estimating loss reserves is periodically reviewed to ensure that the assumptions made continue to be appropriate. To the extent actual reported losses exceed estimated losses, the carried estimate of the ultimate losses will be increased (i.e., unfavorable reserve development), and to the extent actual reported losses are less than estimated losses, the carried estimate of ultimate losses will be reduced (i.e., favorable reserve development). We record any changes in our loss reserve estimates and the related reinsurance recoverables in the periods in which they are determined.

The estimate of reserves for our property insurance and property reinsurance lines of business relies primarily on traditional loss reserving methodologies, utilizing selected paid and reported loss development factors. In the property lines of business, claims are generally reported and paid within a relatively short period of time (“shorter tail lines”) during and following the policy coverage period. This generally enables us to determine with greater certainty our estimate of ultimate losses and loss expenses.

Our casualty insurance and casualty reinsurance lines of business include general liability risks, healthcare and professional liability risks. Claims may be reported or settled several years after the coverage period has terminated for these lines of business (“longer tail lines”), which increases uncertainties of our reserve estimates in such lines. In addition, our attachment points for these longer tail lines are often relatively high, making reserving for these lines of business more difficult than shorter tail lines due to having to estimate whether the severity of the

 

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estimated losses will exceed our attachment point. We establish a case reserve when sufficient information is gathered to make a reasonable estimate of the liability, which often requires a significant amount of information and time. Due to the lengthy reporting pattern of these casualty lines, reliance is placed on industry benchmarks supplemented by our own experience. For expected loss ratio selections, we are giving greater consideration to our existing experience supplemented with analysis of loss trends, rate changes and experience of peer companies.

Our reinsurance treaties are reviewed individually, based upon individual characteristics and loss experience emergence. Loss reserves on assumed reinsurance have unique features that make them more difficult to estimate than direct insurance. We establish loss reserves upon receipt of advice from a cedent that a reserve is merited. Our claims staff may establish additional loss reserves where, in their judgment, the amount reported by a cedent is potentially inadequate. The following are the most significant features that make estimating loss reserves on assumed reinsurance difficult:

 

•

Reinsurers have to rely upon the cedents and reinsurance intermediaries to report losses in a timely fashion.

 

•

Reinsurers must rely upon cedents to price the underlying business appropriately.

 

•

Reinsurers have less predictable loss emergence patterns than direct insurers, particularly when writing excess-of-loss reinsurance.

For excess-of-loss reinsurance, cedents generally are required to report losses that either exceed 50% of the retention, have a reasonable probability of exceeding the retention or meet serious injury reporting criteria. All reinsurance claims that are reserved are reviewed at least every six months. For quota share reinsurance treaties, cedents are required to give a periodic statement of account, generally monthly or quarterly. These periodic statements typically include information regarding written premiums, earned premiums, unearned premiums, ceding commissions, brokerage amounts, applicable taxes, paid losses and outstanding losses. They can be submitted 60 to 90 days after the close of the reporting period. Some quota share reinsurance treaties have specific language regarding earlier notice of serious claims.

Reinsurance generally has a greater time lag than direct insurance in the reporting of claims. The time lag is caused by the claim first being reported to the cedent, then the intermediary (such as a broker) and finally the reinsurer. This lag can be up to six months or longer in certain cases. There is also a time lag because the insurer may not be required to report claims to the reinsurer until certain reporting criteria are met. In some instances this could be several years while a claim is being litigated. We use reporting factors based on data from the Reinsurance Association of America to adjust for time lags. We also use historical treaty-specific reporting factors when applicable. Loss and premium information are entered into our reinsurance system by our claims department and our accounting department on a timely basis.

We record the individual case reserves sent to us by the cedents through the reinsurance intermediaries. Individual claims are reviewed by our reinsurance claims department and adjusted as deemed appropriate. The loss data received from the intermediaries is checked for

 

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reasonableness and for known events. Details of the loss listings are reviewed during routine claim audits.

The expected loss ratios that we assign to each treaty are based upon analysis and modeling performed by a team of actuaries. The historical data reviewed by the team of pricing actuaries is considered in setting the reserves for each cedent. The historical data in the submissions is matched against our carried reserves for our historical treaty years.

Loss reserves do not represent an exact calculation of liability. Rather, loss reserves are estimates of what we expect the ultimate resolution and administration of claims will cost. These estimates are based on actuarial and statistical projections and on our assessment of currently available data, as well as estimates of future trends in claims severity and frequency, judicial theories of liability and other factors. Loss reserve estimates are refined as experience develops and as claims are reported and resolved. In addition, the relatively long periods between when a loss occurs and when it may be reported to our claims department for our casualty insurance and casualty reinsurance lines of business increase the uncertainties of our reserve estimates in such lines.

We utilize a variety of standard actuarial methods in our analysis. The selections from these various methods are based on the loss development characteristics of the specific line of business. For lines of business with long reporting periods such as casualty reinsurance, we may rely more on an expected loss ratio method (as described below) until losses begin to develop. For lines of business with short reporting periods such as property insurance, we may rely more on a paid loss development method (as described below) as losses are reported relatively quickly. The actuarial methods we utilize include:

Paid Loss Development Method. We estimate ultimate losses by calculating past paid loss development factors and applying them to exposure periods with further expected paid loss development. The paid loss development method assumes that losses are paid at a consistent rate. The paid loss development method provides an objective test of reported loss projections because paid losses contain no reserve estimates. In some circumstances, paid losses for recent periods may be too varied for accurate predictions. For many coverages, especially casualty coverages, claim payments are made slowly and it may take years for claims to be fully reported and settled. These payments may be unreliable for determining future loss projections because of shifts in settlement patterns or because of large settlements in the early stages of development. Choosing an appropriate “tail factor” to determine the amount of payments from the latest development period to the ultimate development period may also require considerable judgment, especially for coverages that have long payment patterns. As we have limited payment history, we have had to supplement our paid loss development patterns with appropriate benchmarks.

Reported Loss Development Method. We estimate ultimate losses by calculating past reported loss development factors and applying them to exposure periods with further expected reported loss development. Since reported losses include payments and case reserves, changes in both of these amounts are incorporated in this method. This approach provides a larger volume of data to estimate ultimate losses than the paid loss development method. Thus, reported loss patterns may be less varied than paid loss patterns, especially for coverages that have historically been paid out over a long period of time but for which claims are reported relatively early and have case loss reserve estimates established. This method assumes that reserves have been

 

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established using consistent practices over the historical period that is reviewed. Changes in claims handling procedures, large claims or significant numbers of claims of an unusual nature may cause results to be too varied for accurate forecasting. Also, choosing an appropriate “tail factor” to determine the change in reported loss from the latest development period to the ultimate development period may require considerable judgment. As we have limited reported history, we have had to supplement our reported loss development patterns with appropriate benchmarks.

Expected Loss Ratio Method. To estimate ultimate losses under the expected loss ratio method, we multiply earned premiums by an expected loss ratio. The expected loss ratio is selected utilizing industry data, historical company data and professional judgment. This method is particularly useful for new insurance companies or new lines of business where there are no historical losses or where past loss experience is not credible.

Bornhuetter-Ferguson Paid Loss Method. The Bornhuetter-Ferguson paid loss method is a combination of the paid loss development method and the expected loss ratio method. The amount of losses yet to be paid is based upon the expected loss ratios and the expected percentage of losses unpaid. These expected loss ratios are modified to the extent paid losses to date differ from what would have been expected to have been paid based upon the selected paid loss development pattern. This method avoids some of the distortions that could result from a large development factor being applied to a small base of paid losses to calculate ultimate losses. This method will react slowly if actual loss ratios develop differently because of major changes in rate levels, retentions or deductibles, the forms and conditions of reinsurance coverage, the types of risks covered or a variety of other changes.

B-F Method. The B-F method is similar to the Bornhuetter-Ferguson paid loss method with the exception that it uses reported losses and reported loss development factors.

Since 2007, we adjusted our reliance on actuarial methods utilized for certain casualty lines of business and loss years within our U.S. insurance and international insurance segments from using a blend of the B-F method and the expected loss ratio method to using only the B-F method. Also since 2008, we began adjusting our reliance on actuarial methods utilized for certain other casualty lines of business and loss years within all of our operating segments including the reinsurance segment, by placing greater reliance on the B-F method than on the expected loss ratio method. Placing greater reliance on more responsive actuarial methods for certain casualty lines of business and loss years within each of our operating segments is a natural progression as we mature as a company and gain sufficient historical experience of our own that allows us to further refine our estimate of the reserve for losses and loss expenses. We believe utilizing only the B-F method for older loss years will more accurately reflect the reported loss activity we have had thus far in our ultimate loss ratio selections, and will better reflect how the ultimate losses will develop over time. We will continue to utilize the expected loss ratio method for the most recent loss years until we have sufficient historical experience to utilize other acceptable actuarial methodologies.

We expect that the trend of placing greater reliance on more responsive actuarial methods, for example from the expected loss ratio method to the B-F method, to continue as both (1) our loss years mature and become more statistically reliable and (2) as we build databases of our internal loss development patterns. The expected loss ratio remains a key assumption as the

 

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Bornhuetter-Ferguson methods rely upon an expected loss ratio selection and a loss development pattern selection.

The key assumptions used to arrive at our best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, selection of benchmarks and reported and paid loss emergence patterns. Our reporting factors and expected loss ratios are based on a blend of our own experience and industry benchmarks for longer tailed business and primarily our own experience for shorter tail business. The benchmarks selected were those that we believe are most similar to our underwriting business.

Our expected loss ratios for shorter tail lines change from year to year. As our losses from shorter tail lines of business are reported relatively quickly, we select our expected loss ratios for the most recent years based upon our actual loss ratios for our older years adjusted for rate changes, inflation, cost of reinsurance and average storm activity. For the shorter tail lines, we initially used benchmarks for reported and paid loss emergence patterns. As we mature as a company, we have begun supplementing those benchmark patterns with our actual patterns as appropriate. For the longer tail lines, we continue to use benchmark patterns, although we update the benchmark patterns as additional information is published regarding the benchmark data.

For shorter tail lines, the primary assumption that changed during both 2011 as compared to 2010 and 2010 as compared to 2009 as it relates to prior year losses was actual paid and reported loss emergence patterns were generally less severe than estimated for each year due to lower frequency and severity of reported losses. As a result of this change, we recognized net favorable prior year reserve development in both 2011 and 2010. We believe recognition of the reserve changes in the period they were recorded was appropriate since a pattern of reported losses had not emerged and the loss years were previously too immature to deviate from the expected loss ratio method in prior periods.

The selection of the expected loss ratios for the longer tail lines is our most significant assumption. Due to the lengthy reporting pattern of longer tail lines, we supplement our own experience with industry benchmarks of expected loss ratios and reporting patterns in addition to our own experience. For our longer tail lines, the primary assumption that changed during both 2011 as compared to 2010 and 2010 as compared to 2009 as it relates to prior year losses was using the Bornhuetter-Ferguson loss development method for certain casualty lines of business and loss years as discussed above. This method calculated a lower projected loss ratio based on loss emergence patterns to date. As a result of the change in the expected loss ratio, we recognized net favorable prior year reserve development in 2011, 2010 and 2009. We believe that recognition of the reserve changes in the period they were recorded was appropriate since a pattern of reported losses had not emerged and the loss years were previously too immature to deviate from the expected loss ratio method in prior periods.

 

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V. GLOSSARY

 

Accident year		The year in which the event occurred that triggers a claim to us. All years referred to are years ending December 31.
ALAE		Allocated loss adjustment expense, which is an estimate of the associated external expenses to be incurred in settling a claim. ALAE includes the costs of third party loss assessors and legal experts.
Assumed reinsurance		That portion of a risk that a reinsurer accepts from an insurer in return for a stated premium.
Attachment point		The loss point of which an insurance or reinsurance policy becomes operative and below which any losses are retained by either the insured or other insurers or reinsurers, as the case may be.
Case reserves		Loss reserves, established with respect to specific, individual reported claims.
Casualty lines		Insurance that is primarily concerned with losses due to injuries to persons and liability imposed on the insured for such injury or for damage to the property of others.
Cede, cedent or ceding company		When an insurer transfers some or all of its risk to a reinsurer, it “cedes” business and is referred to as the “ceding company” or “cedent.”
Claims-made policies		A liability policy covering all claims first advised during the term of the insurance policy, regardless of when the loss itself was sustained.
Deductible		The amount of exposure an insured retains on any one risk or group of risks. The term may apply to an insurance policy, where the insured is an individual or business, or a reinsurance contract, where the insured is an insurance company. See “Retention.”
D&O side A cover		Insurance that provides liability

 

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		coverage to directors and officers for non-indemnified losses arising from their negligence or malfeasance. Coverage applies only if the directors and officers are not indemnified by their company for such loss. Such coverage is provided on both an excess basis (i.e., policy attaches after all underlying policy limits are exhausted) and on a “difference-in-conditions” basis (i.e., policy drops down and attaches at a lower attachment point due to the failure or inability of the underlying policy(ies) to pay the loss).
Earned premiums		That portion of premiums written that applies to the expired portion of the policy term. Earned premiums are recognized as revenues under both statutory accounting practice and accounting principles generally accepted in the United States of America.
Employment practices liability insurance		Insurance that primarily provides liability coverage to organizations and their employees for losses arising from acts of discrimination, harassment and retaliation against current and prospective employees of the organization.
Excess or Excess layer		Insurance to cover losses in one or more layers above a certain amount with losses below that amount usually covered by the insured’s primary policy and its self-insured retention.
Excess-of-loss reinsurance		Reinsurance that indemnifies the insured against all or a specified portion of losses over a specified amount or retention.
Facultative reinsurance		The reinsurance of all or a portion of the insurance provided by a single policy. Each policy reinsured is separately negotiated.
Fiduciary liability insurance		Insurance that primarily provides liability coverage to fiduciaries of employee benefit and welfare plans for losses arising from the breach of

 

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		any fiduciary duty owed to plan beneficiaries.
Global loss triangles		A table of loss experience showing total losses for a certain period at regular valuation dates, reflecting the change in amounts as claims mature. Older periods in the table will have one more entry than the next youngest period, leading to the triangle shape of the data in the table.
Healthcare lines		Insurance coverage, often referred to as medical malpractice insurance, which addresses liability risks of doctors, surgeons, nurses, other healthcare professionals and the institutions (hospitals, clinics, etc.), in which they practice.
Incurred but not reported (“IBNR”) reserves		Reserves established by us for claims that have occurred but have not yet been reported to us as well as for changes in the values of claims that have been reported to us but are not yet settled.
LAE		The total of ALAE and ULAE.
Loss corridor		A mechanism contained in a reinsurance treaty that requires the cedent to be responsible for a certain amount of the ultimate net loss that is above the company’s designated retention and below the designated limit, and which would otherwise be reimbursed under the treaty. Loss corridors are employed to mitigate the volatility of reinsurance agreements.
Loss development		The difference between the original loss as initially reserved by an insurer or reinsurer and its subsequent evaluation at a later date or at the time of its closure. Loss development occurs because of inflation and time lags between the occurrence of claims and the time they are actually reported to an insurer or reinsurer. To account for these increases, a “loss development factor” or multiplier is usually applied to a claim or group of claims in an effort to more accurately

 

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		project the ultimate amount that will be paid.
Losses and loss expense ratio		Derived by dividing net losses and loss expenses by net earned premiums.
Losses and loss expenses		“Losses” are an occurrence that is the basis for submission or payment of a claim. Losses may be covered, limited or excluded from coverage, depending on the terms of the insurance policy or other insurance or reinsurance contracts. “Loss expenses” are the expenses incurred by an insurance or reinsurance company in settling a loss.
Losses discovered basis		Covers losses that are discovered by the insured during the policy period and a specified period thereafter (unless replaced with similar insurance), no matter when the loss occurred and it does not matter if the insured had prior coverage.
Net limits		The amount that an insurer or reinsurer will insure or reinsure for a specified risk, a portfolio of risks or on a single insured entity, less any applicable reinsurance purchased by such insurer or reinsurer. The term also refers to the maximum amount of benefit payable for a given claim or occurrence.
Occurrence policies		A liability policy covering all claims arising from an event that takes place during the policy period, regardless of when the claim is reported to us.
Occurrence-reported policies		A liability policy covering all claims arising from an event that takes place after a date specified in the policy and the claims must be reported to the insurer during the policy period.
Paid losses		Claim amounts paid to insureds or ceding companies.
Primary insurance		Insurance that absorbs the losses immediately above the insured’s retention layer. A primary insurer will pay up to a certain dollar amount of losses over the insured’s retention, at

 

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		which point a higher layer excess insurer will be liable for additional losses. The coverage terms of a primary insurance layer typically assume an element of regular loss frequency.
Professional liability		Insurance that provides liability coverage to directors and officers, attorneys, doctors, accountants and other professionals who offer services to the general public and claim expertise in a particular area greater than the ordinary layperson for their negligence or malfeasance.
Quota share reinsurance		A proportional reinsurance treaty in which the ceding company cedes an agreed-on percentage of every risk it insures that falls within a class or classes of business subject to the treaty.
Reinsurance		The practice whereby one insurer, called the reinsurer, in consideration of a premium paid to that reinsurer, agrees to indemnify another insurer, called the ceding company, for part or all of the liability of the ceding company under one or more policies or contracts of insurance that it has issued.
Report year		The year in which a claim is reported to us. All years referred to are years ending December 31.
Reserves		Liabilities established by insurers and reinsurers to reflect the estimated cost of claims incurred that the insurer or reinsurer will ultimately be required to pay. Reserves are established for losses and for loss expenses, and consist of case reserves and IBNR reserves. As the term is used in this report, “reserves” are meant to include reserves for both losses and for loss expenses.
Retention		The amount of exposure an insured retains on any one risk or group of risks. The term may apply to an insurance policy, where the insured is an individual or business, or a

 

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		reinsurance contract, where the insured is an insurance company. See “Deductible.”
Short tail		Lines of business where claims are generally reported and paid within a relatively short period of time following the policy coverage period.
Surplus treaty reinsurance		Reinsurance contracts under which the ceding company agrees to cede and the reinsurer agrees to assume part of every risk that exceeds the ceding company’s predetermined retention limit. The reinsurer shares in premiums and losses in the same proportion as it shares in the total policy limits of the risk.
Swing-rated premium		Earned premiums from a “swing-rated” reinsurance contract, which is a contract that links the ultimate amount of ceded premium to the ultimate loss ratio on the reinsured business. This type of reinsurance contract enables the cedent to retain a greater portion of premium if the ultimate loss ratio develops at a level below the initial loss threshold set by the reinsurers, but requires a higher amount of ceded premium if the ultimate loss ratio develops above the initial threshold.
Treaties		Reinsurance contracts under which the ceding company agrees to cede and the reinsurer agrees to assume risks of a particular class or classes of business.
Treaty year		The year in which the contract incepts. Exposure from contracts incepting during the current treaty year will potentially affect both the current accident year as well future accident years.
ULAE		Means unallocated loss adjustment expenses, which are an assessment of the internal expenses required to settle claims.
Ultimate loss		Total of all expected settlement amounts, whether paid or reserved

 

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		together with any associated loss adjustment expenses, and is the estimated total amount of loss at the measurement date. For purposes of this report, “ultimate loss” is the sum of paid losses, case reserves and IBNR.

 

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