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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x☒        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30,2017March 31, 2024
OR
¨☐        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-31721
AXIS CAPITAL HOLDINGS LIMITED
(Exact name of registrant as specified in its charter)
BERMUDA
Bermuda
(State or other jurisdiction of incorporation or organization)
98-0395986
(I.R.S. Employer Identification No.)
92 Pitts Bay Road, Pembroke, Bermuda HM 08
(Address of principal executive offices and zip code)
(441) 496-2600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common shares, par value $0.0125 per shareAXSNew York Stock Exchange
Depositary shares, each representing a 1/100th interest in a 5.50% Series E preferred shareAXS PRENew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x☒    No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x☒  No  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large"large accelerated filer”filer", “accelerated filer”"accelerated filer", “smaller"smaller reporting company”company", and “emerging"emerging growth company”company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerx
☒
    Accelerated filer¨☐
Non-accelerated filer¨ (do not check if a smaller reporting company)
☐
 Smaller reporting company¨☐
Emerging growth company¨☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨☐  No  x☒
As of October 31, 2017,At April 26, 2024, there were 83,158,962 Common Shares,84,659,970 common shares outstanding, $0.0125 par value per share, of the registrant outstanding.registrant.


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AXIS CAPITAL HOLDINGS LIMITED
INDEX TO FORM 10-Q




Page
PART I
Page
PART I
3
Item 1.
5
Item 2.
4948
Item 3.
8878
Item 4.
8879
PART II
8979
Item 1.
8979
Item 1A.
8979
Item 2.
9080
Item 5.
9180
Item 6.
9281
9382





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PART IFINANCIAL INFORMATION

PART I     FINANCIAL INFORMATION

This quarterly reportQuarterly Report on Form 10-Q contains forward-looking statements within the meaning of section 27A of the United States federal securities laws.Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts included in this report, including statements regarding our estimates, beliefs, expectations, intentions, strategies or projections are forward-looking statements. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the United States ("U.S.") federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as “may”"may", “should”"should", “could”"could", “anticipate”"anticipate", “estimate”"estimate", “expect”"expect", “plan”"plan", “believe”"believe", “predict”"predict", “potential”"potential", "intend" or similar expressions. These forward-looking statements are not historical facts, and “intend”. are based on current expectations, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond management's control.
Forward-looking statements contained in this report may include, but are not limited to, information regarding our estimates offor losses related to catastrophes and other large losses,loss expenses, measurements of potential losses in the fair value of our investment portfolio and derivative contracts, our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, the outcome of our strategic initiatives, our expectations regarding pricing, and other market and economic conditions including the liquidity of financial markets, developments in the commercial real estate market, inflation, our growth prospects, and valuations of the potential impact of movements in interest rates, equity prices, credit spreads, equity securities' prices, and foreign currency exchange rates.
Forward-looking statements only reflect our expectations and are not guarantees of performance.
These statements involve risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual events or results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to, the following:
the cyclical nature of the re(insurance) business leading to periods with excess underwriting capacity and unfavorable premium rates,
the occurrence and magnitude of natural and man-made disasters,
losses from war, terrorism and political unrest or other unanticipated losses,
actual claims exceeding our loss reserves,
general economic, capital and credit market conditions,
the failure of any of the loss limitation methods we employ,
the effects of emerging claims, coverage and regulatory issues, including uncertainty related to coverage definitions, limits, terms and conditions,
our inability to purchase reinsurance or collect amounts due to us,
the breach by third parties in our program business of their obligations to us,
difficulties with technology and/or data security,
the failure of our policyholders and intermediaries to pay premiums,
the failure of our cedants to adequately evaluate risks,
inability to obtain additional capital on favorable terms, or at all,
the loss of one or more key executives,
a decline in our ratings with rating agencies,
loss of business provided to us by our major brokers and credit risk due to our reliance on brokers,
changes in accounting policies or practices,
the use of industry catastrophe models and changes to these models,
changes in governmental regulations and potential government intervention in our industry,
failure to comply with certain laws and regulations relating to sanctions and foreign corrupt practices,
increased competition,
changes in the political environment of certain countries in which we operate or underwrite business including the United Kingdom's expected withdrawal from the European Union,
fluctuations in interest rates, credit spreads, equity prices and/or currency values,
the failure to successfully integrate acquired businesses or realize the expected synergies resulting from such acquisitions, and
the other matters set forth under Item 1A, ‘Risk Factors’ and Item 7, ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’ included in our Annual Report on Form 10-K for the year ended December 31, 2016.



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We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

In this Form 10-Q, references to "AXIS Capital" refer to AXIS Capital Holdings Limited and references to "we", "us", "our", "AXIS", the "Group" or the "Company" refer to AXIS Capital Holdings Limited and its direct and indirect subsidiaries and branches.
Summary of Risk Factors
Investing in our common stock involves substantial risks, and our ability to successfully operate our business is subject to numerous risks, including those that are generally associated with operating in the insurance and reinsurance industry. Some of the more significant material challenges and risks include the following:

Insurance Risk
•the cyclical nature of insurance and reinsurance business leading to periods with excess underwriting capacity and unfavorable premium rates;
•the occurrence and magnitude of natural and man-made disasters, including the potential increase of our exposure to natural catastrophe losses due to climate change and the potential for inherently unpredictable losses from man-made catastrophes, such as cyber-attacks;
•the effects of emerging claims, systemic risks, and coverage and regulatory issues, including increasing litigation and uncertainty related to coverage definitions, limits, terms and conditions;
•actual claims exceeding reserves for losses and loss expenses;
•losses related to the Israel-Hamas conflict and the associated conflict in the Red Sea, the Russian invasion of Ukraine, terrorism and political unrest, or other unanticipated losses;
•the adverse impact of social and economic inflation;
•the failure of any of the loss limitation methods we employ;
•the failure of our cedants to adequately evaluate risks;

Strategic Risk
•increased competition and consolidation in the insurance and reinsurance industry;
•changes in the political environment of certain countries in which we operate or underwrite business;
•the loss of business provided to us by major brokers;



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•a decline in our ratings with rating agencies;
•the loss of one or more of our key executives;
•increasing scrutiny and evolving expectations from investors, customers, regulators, policymakers and other stakeholders regarding environmental, social and governance matters;
•the adverse impact of contagious diseases (including COVID-19) on our business, results of operations, financial condition, and liquidity;

Credit and Market Risk
•the inability to purchase reinsurance or collect amounts due to us from reinsurance we have purchased;
•the failure of our policyholders or intermediaries to pay premiums;
•general economic, capital and credit market conditions, including banking and commercial real estate sector instability, financial market illiquidity and fluctuations in interest rates, credit spreads, equity securities' prices, and/or foreign currency exchange rates;
•breaches by third parties in our program business of their obligations to us;

Liquidity Risk
•the inability to access sufficient cash to meet our obligations when they are due;

Operational Risk
•changes in accounting policies or practices;
•the use of industry models and changes to these models;
•difficulties with technology and/or data security;
•the failure of the processes, people or systems that we rely on to maintain our operations and manage the operational risks inherent to our business, including those outsourced to third parties;

Regulatory Risk
•changes in governmental regulations and potential government intervention in our industry;
•inadvertent failure to comply with certain laws and regulations relating to sanctions, foreign corrupt practices, data protection and privacy; and

Risks Related to Taxation
•changes in tax laws.

Readers should carefully consider the risks noted above together with other factors including but not limited to those described under Item 1A, 'Risk Factors' in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), as those factors may be updated from time to time in our periodic and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov.

Website and Social Media Disclosure

We use our website (www.axiscapital.com) and our corporate LinkedIn (AXIS Capital) and X Corp. (@AXIS_Capital) accounts as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, e-mail alerts and other information about AXIS Capital may be received by those enrolled in our "E-mail Alerts" program, which can be found in the Investor Information section of our website (www.axiscapital.com). The contents of our website and social media channels are not part of this Quarterly Report on Form 10-Q.

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ITEM 1.     CONSOLIDATED FINANCIAL STATEMENTS

Page 
Page  
Consolidated Balance Sheets at September 30, 2017March 31, 2024 (Unaudited) and December 31, 20162023
6
Consolidated Statements of Operations for the three and nine months ended September 30, 2017March 31, 2024 and 20162023 (Unaudited)
7
Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017March 31, 2024 and 20162023 (Unaudited)
8
Consolidated Statements of Changes in Shareholders' Equity for the ninethree months ended September 30, 2017March 31, 2024 and 20162023 (Unaudited)
9
Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2024 and 20162023 (Unaudited)
10
Notes to Consolidated Financial Statements (Unaudited)
1112
Note 1 - Basis of Presentation and Significant Accounting Policies
1112
Note 2 - Business CombinationsSegment Information
13
Note 3 - Segment InformationInvestments
1415
Note 4 - Investments
16
Note 5 - Fair Value Measurements
2524
Note 65 - Derivative Instruments
3634
Note 76 - Reserve for Losses and Loss Expenses
3936
Note 87 - Earnings Per Common Share
4140
Note 8 - Share-Based Compensation
40
Note 9 - Share-Based CompensationShareholders' Equity
4243
Note 10 - Shareholders' EquityDebt and Financing Arrangements
44
Note 11 - Debt and Financing ArrangementsFederal Home Loan Bank Advances
4544
Note 12 - Commitments and Contingencies
4644
Note 13 - Other Comprehensive Income (Loss)
45
Note 14 - Related Party Transactions
46
Note 15 - Reorganization Expenses
46
Note 1416 - Subsequent EventsIncome Taxes
4746





























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AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30,2017MARCH 31, 2024 (UNAUDITED) AND DECEMBER 31,2016 2023
20242023
 (in thousands)
Assets
Investments:
Fixed maturities, available for sale, at fair value
    (Amortized cost 2024: $12,714,210; 2023: $12,634,254
    Allowance for expected credit losses 2024: $4,237; 2023: $10,759)
$12,269,310 $12,234,742 
Fixed maturities, held to maturity, at amortized cost
    (Fair value 2024: $683,726; 2023: $675,851
    Allowance for expected credit losses 2024: $nil; 2023: $nil)
693,042 686,296 
Equity securities, at fair value
    (Cost 2024: $545,538; 2023: $543,833)
582,178 588,511 
 Mortgage loans, held for investment, at fair value
     (Allowance for expected credit losses 2024: $8,113; 2023: $6,220)
609,704 610,148 
Other investments, at fair value934,724 949,413 
Equity method investments182,594 174,634 
Short-term investments, at fair value75,879 17,216 
Total investments15,347,431 15,260,960 
Cash and cash equivalents1,143,951 953,476 
Restricted cash and cash equivalents697,623 430,509 
Accrued interest receivable107,131 106,055 
Insurance and reinsurance premium balances receivable
     (Allowance for expected credit losses 2024: $13,103; 2023: $11,997)
3,517,242 3,067,554 
Reinsurance recoverable on unpaid losses and loss expenses
     (Allowance for expected credit losses 2024: $37,888; 2023: $36,611)
6,503,188 6,323,083 
Reinsurance recoverable on paid losses and loss expenses472,660 575,847 
Deferred acquisition costs543,343 450,950 
Prepaid reinsurance premiums2,060,717 1,916,087 
Receivable for investments sold5,686 8,767 
Goodwill100,801 100,801 
Intangible assets184,155 186,883 
Operating lease right-of-use assets104,162 108,093 
Loan advances made345,065 305,222 
Other assets625,535 456,385 
Total assets$31,758,690 $30,250,672 
Liabilities
Reserve for losses and loss expenses$16,630,897 $16,434,018 
Unearned premiums5,353,827 4,747,602 
Insurance and reinsurance balances payable1,909,309 1,792,719 
Debt1,314,074 1,313,714 
Federal Home Loan Bank advances85,790 85,790 
Payable for investments purchased493,582 26,093 
Operating lease liabilities119,124 123,101 
Other liabilities346,932 464,439 
Total liabilities26,253,535 24,987,476 
Shareholders’ equity
Preferred shares550,000 550,000 
Common shares (shares issued 2024: 176,580; 2023: 176,580
    shares outstanding 2024: 84,687; 2023: 85,286)
2,206 2,206 
Additional paid-in capital2,368,144 2,383,030 
Accumulated other comprehensive income (loss)(411,849)(365,836)
Retained earnings6,790,558 6,440,528 
Treasury shares, at cost (2024: 91,893; 2023: 91,294)
(3,793,904)(3,746,732)
Total shareholders’ equity5,505,155 5,263,196 
Total liabilities and shareholders’ equity$31,758,690 $30,250,672 
 2017 2016
 (in thousands)
Assets   
Investments:   
Fixed maturities, available for sale, at fair value
(Amortized cost 2017: $11,043,394; 2016: $11,523,316)
$11,086,386
 $11,397,114
Equity securities, available for sale, at fair value
(Cost 2017: $563,110; 2016: $597,366)
659,751
 638,744
Mortgage loans, held for investment, at amortized cost and fair value360,381
 349,969
Other investments, at fair value830,253
 830,219
Equity method investments108,597
 116,000
Short-term investments, at amortized cost and fair value15,282
 127,461
Total investments13,060,650
 13,459,507
Cash and cash equivalents1,350,613
 1,039,494
Restricted cash and cash equivalents280,514
 202,013
Accrued interest receivable68,023
 74,971
Insurance and reinsurance premium balances receivable2,968,096
 2,313,512
Reinsurance recoverable on unpaid and paid losses2,360,821
 2,334,922
Deferred acquisition costs562,774
 438,636
Prepaid reinsurance premiums734,129
 556,344
Receivable for investments sold9,357
 14,123
Goodwill and intangible assets87,206
 85,049
Other assets335,967
 295,120
Total assets$21,818,150
 $20,813,691
    
Liabilities   
Reserve for losses and loss expenses$10,787,575
 $9,697,827
Unearned premiums3,521,063
 2,969,498
Insurance and reinsurance balances payable670,292
 493,183
Senior notes993,797
 992,950
Payable for investments purchased122,065
 62,550
Other liabilities268,659
 325,313
Total liabilities16,363,451
 14,541,321
    
Shareholders’ equity   
Preferred shares775,000
 1,126,074
Common shares (2017: 176,580; 2016: 176,580 shares issued and
2017: 83,157; 2016: 86,441 shares outstanding)
2,206
 2,206
Additional paid-in capital2,291,516
 2,299,857
Accumulated other comprehensive income (loss)141,613
 (121,841)
Retained earnings6,051,659
 6,527,627
Treasury shares, at cost (2017: 93,423; 2016: 90,139 shares)
(3,807,295) (3,561,553)
Total shareholders’ equity5,454,699
 6,272,370
    
Total liabilities and shareholders’ equity$21,818,150
 $20,813,691

See accompanying notes to Consolidated Financial Statements.


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AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDEDSEPTEMBER 30,2017 MARCH 31, 2024 AND 20162023



 Three months ended March 31,
20242023
 (in thousands, except per share amounts)
Revenues
Net premiums earned$1,258,041 $1,230,199 
Net investment income167,383 133,771 
Other insurance related income8,340 577 
Net investment gains (losses):
(Increase) decrease in allowance for expected credit losses4,664 (2,811)
Impairment losses(8)— 
Other realized and unrealized investment gains (losses)(13,863)(17,379)
Total net investment gains (losses)(9,207)(20,190)
Total revenues1,424,557 1,344,357 
Expenses
Net losses and loss expenses728,671 720,642 
Acquisition costs254,254 230,373 
General and administrative expenses163,373 166,811 
Foreign exchange losses (gains)(23,552)8,710 
Interest expense and financing costs17,147 16,894 
Reorganization expenses12,299 — 
    Amortization of intangible assets2,729 2,729 
Total expenses1,154,921 1,146,159 
Income before income taxes and interest in income (loss) of equity method investments269,636 198,198 
Income tax (expense) benefit124,654 (15,896)
Interest in income (loss) of equity method investments1,169 (2,205)
Net income395,459 180,097 
Preferred share dividends7,563 7,563 
Net income available to common shareholders$387,896 $172,534 
Per share data
Earnings per common share:
Earnings per common share$4.57 $2.03 
Earnings per diluted common share$4.53 $2.01 
Weighted average common shares outstanding84,879 84,864 
Weighted average diluted common shares outstanding85,693 85,853 

 Three months ended Nine months ended
 2017 2016 2017 2016
 (in thousands, except for per share amounts)
Revenues       
Net premiums earned$1,017,131
 $934,415
 $2,937,265
 $2,783,746
Net investment income95,169
 116,923
 299,899
 257,818
Other insurance related income (losses)(3,197) 5,944
 (4,420) 4,850
Bargain purchase gain—
 —
 15,044
 —
Net realized investment gains (losses):       
Other-than-temporary impairment ("OTTI") losses(5,412) (4,247) (13,493) (20,346)
Other realized investment gains (losses)20,044
 9,452
 (1,318) (19,949)
Total net realized investment gains (losses)14,632
 5,205
 (14,811) (40,295)
Total revenues1,123,735
 1,062,487
 3,232,977
 3,006,119
        
Expenses       
Net losses and loss expenses1,235,367
 532,328
 2,447,640
 1,663,584
Acquisition costs194,724
 189,810
 588,879
 559,570
General and administrative expenses124,629
 142,906
 433,704
 439,554
Foreign exchange losses (gains)32,510
 (13,795) 90,093
 (69,781)
Interest expense and financing costs12,835
 12,839
 38,377
 38,586
Transaction related expenses5,970
 —
 5,970
 —
Total expenses1,606,035
 864,088
 3,604,663
 2,631,513
        
Income (loss) before income taxes and interest in income (loss) of equity method investments(482,300) 198,399
 (371,686) 374,606
Income tax (expense) benefit25,877
 (9,352) 38,547
 (7,712)
Interest in loss of equity method investments(661) (2,434) (8,402) (2,434)
Net income (loss)(457,084) 186,613
 (341,541) 364,460
Preferred share dividends10,656
 9,969
 36,154
 29,906
Net income (loss) available to common shareholders$(467,740) $176,644
 $(377,695) $334,554
        
Per share data       
Net income (loss) per common share:       
Basic net income (loss)$(5.61) $1.97
 $(4.47) $3.64
Diluted net income (loss)$(5.61) $1.96
 $(4.47) $3.61
Weighted average number of common shares outstanding - basic83,305
 89,621
 84,479
 91,852
Weighted average number of common shares outstanding - diluted83,305
 90,351
 84,479
 92,579
Cash dividends declared per common share$0.38
 $0.35
 $1.14
 $1.05




See accompanying notes to Consolidated Financial Statements.


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AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDEDSEPTEMBER 30,2017 MARCH 31, 2024 AND 20162023

 Three months ended Nine months ended
 2017 2016 2017 2016
 (in thousands)
Net income (loss)$(457,084) $186,613
 $(341,541) $364,460
Other comprehensive income, net of tax:       
Available for sale investments:       
Unrealized investment gains arising during the period62,505
 36,336
 206,461
 238,656
Adjustment for reclassification of net realized investment (gains) losses and OTTI losses recognized in net income(13,286) (2,642) 10,169
 42,620
Unrealized investment gains arising during the period, net of reclassification adjustment49,219
 33,694
 216,630
 281,276
Foreign currency translation adjustment8,088
 1,722
 46,824
 5,694
Total other comprehensive income, net of tax57,307
 35,416
 263,454
 286,970
Comprehensive income (loss)$(399,777) $222,029
 $(78,087) $651,430
 Three months ended March 31,
 20242023
 (in thousands)
Net income$395,459 $180,097 
Other comprehensive income (loss), net of tax:
Available for sale investments:
Unrealized gains (losses) arising during the period for which an allowance for expected credit losses has not been recognized(60,059)134,567 
Unrealized gains (losses) arising during the period for which an allowance for expected credit losses has been recognized(418)13,622 
Adjustment for reclassification of net realized (gains) losses and impairment losses recognized in net income (loss)23,415 40,750 
Unrealized gains (losses) arising during the period, net of reclassification adjustment(37,062)188,939 
Foreign currency translation adjustment(8,951)(535)
Total other comprehensive income (loss), net of tax(46,013)188,404 
Comprehensive income$349,446 $368,501 





See accompanying notes to Consolidated Financial Statements.


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AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
FOR THE NINETHREE MONTHS ENDED SEPTEMBER 30, 2017MARCH 31, 2024 AND 20162023

Three months ended March 31,
Three months ended March 31,
Three months ended March 31,
2024
2024
2024
(in thousands)
Preferred shares
Balance at beginning and end of period
Balance at beginning and end of period
Balance at beginning and end of period
Common shares (par value)
Common shares (par value)
Common shares (par value)
Balance at beginning and end of period
Balance at beginning and end of period
Balance at beginning and end of period
Additional paid-in capital
Additional paid-in capital
Additional paid-in capital
Balance at beginning of period
Balance at beginning of period
Balance at beginning of period
Treasury shares reissued
Treasury shares reissued
Treasury shares reissued
2017 2016
(in thousands)
Preferred shares   
Balance at beginning of period$1,126,074
 $627,843
Shares repurchased(351,074) (2,843)
Balance at end of period775,000
 625,000
Share-based compensation expense
   
Common shares (par value)   
Balance at beginning of period2,206
 2,202
Shares issued—
 4
Balance at end of period2,206
 2,206
   
Additional paid-in capital   
Balance at beginning of period2,299,857
 2,241,388
Shares issued - common shares—
 (4)
Cost of treasury shares reissued(39,033) (19,647)
Settlement of accelerated share repurchase—
 60,000
Share-based compensation expense
Share-based compensation expense30,692
 26,129
Balance at end of period2,291,516
 2,307,866
   
Accumulated other comprehensive income   
Balance at beginning of period(121,841) (188,465)
Unrealized gains (losses) on available for sale investments, net of tax:   
Balance at beginning of period(82,323) (149,585)
Unrealized gains arising during the period, net of reclassification adjustment216,630
 281,276
Balance at end of period134,307
 131,691
Cumulative foreign currency translation adjustments, net of tax:   
Balance at beginning of period(39,518) (38,880)
Foreign currency translation adjustment46,824
 5,694
Balance at end of period7,306
 (33,186)
Balance at end of period141,613
 98,505
   
Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss)
Balance at beginning of period
Balance at beginning of period
Balance at beginning of period
Unrealized gains (losses) on available for sale investments, net of tax:
Unrealized gains (losses) on available for sale investments, net of tax:
Unrealized gains (losses) on available for sale investments, net of tax:
Balance at beginning of period
Balance at beginning of period
Balance at beginning of period
Unrealized gains (losses) arising during the period, net of reclassification adjustment
Unrealized gains (losses) arising during the period, net of reclassification adjustment
Unrealized gains (losses) arising during the period, net of reclassification adjustment
Balance at end of period
Balance at end of period
Balance at end of period
Cumulative foreign currency translation adjustments, net of tax:
Cumulative foreign currency translation adjustments, net of tax:
Cumulative foreign currency translation adjustments, net of tax:
Balance at beginning of period
Balance at beginning of period
Balance at beginning of period
Foreign currency translation adjustment
Foreign currency translation adjustment
Foreign currency translation adjustment
Balance at end of period
Balance at end of period
Balance at end of period
Balance at end of period
Balance at end of period
Balance at end of period
Retained earnings
Retained earnings
Retained earnings   
Balance at beginning of period6,527,627
 6,194,353
Net income (loss)(341,541) 364,460
Preferred share dividends(36,154) (29,906)
Common share dividends(98,273) (98,334)
Balance at beginning of period
Balance at beginning of period
Net income
Net income
Net income
Preferred share dividends (1)
Preferred share dividends (1)
Preferred share dividends (1)
Common share dividends (1)
Common share dividends (1)
Common share dividends (1)
Balance at end of period
Balance at end of period
Balance at end of period6,051,659
 6,430,573
   
Treasury shares, at cost   
Treasury shares, at cost
Treasury shares, at cost
Balance at beginning of period(3,561,553) (3,010,439)
Shares repurchased for treasury(285,659) (449,086)
Cost of treasury shares reissued39,917
 21,033
Balance at beginning of period
Balance at beginning of period
Shares repurchased
Shares repurchased
Shares repurchased
Shares reissued
Shares reissued
Shares reissued
Balance at end of period
Balance at end of period
Balance at end of period(3,807,295) (3,438,492)
   
Total shareholders’ equity$5,454,699
 $6,025,658
   
Total shareholders’ equity
Total shareholders’ equity


(1) Refer to Note 9 'Shareholders' Equity' for details on dividends declared and paid related to the Company's common and preferred shares.



See accompanying notes to Consolidated Financial Statements.


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AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINETHREE MONTHS ENDEDSEPTEMBER 30,2017 MARCH 31, 2024 AND 20162023
Three months ended March 31,
20242023
 (in thousands)
Cash flows from operating activities:
Net income$395,459 $180,097 
Adjustments to reconcile net income to net cash provided by operating activities:
Net investment (gains) losses9,207 20,190 
Net realized and unrealized gains on other investments(4,973)(486)
Amortization of fixed maturities(8,630)(2,425)
Interest in (income) loss of equity method investments(1,169)2,205 
Other amortization and depreciation14,257 14,971 
Share-based compensation expense, net of cash payments13,670 8,935 
Changes in:
Accrued interest receivable(1,411)(3,826)
Reinsurance recoverable on unpaid losses and loss expenses(186,791)6,675 
Reinsurance recoverable on paid losses and loss expenses98,362 (58,631)
Deferred acquisition costs(94,737)(88,700)
Prepaid reinsurance premiums(144,311)(80,592)
Reserve for losses and loss expenses209,390 150,410 
Unearned premiums611,974 462,751 
Insurance and reinsurance balances, net(267,456)(314,642)
Other items(258,702)(56,368)
Net cash provided by operating activities384,139 240,564 
Cash flows from investing activities:
Purchases of:
Fixed maturities, available for sale(2,450,714)(1,614,005)
Fixed maturities, held to maturity(46,534)(20,001)
Equity securities(76,270)(77,560)
Mortgage loans(1,552)(14,030)
Other investments(18,368)(26,308)
Equity method investments(6,791)— 
Short-term investments(82,199)(54,895)
Proceeds from the sale of:
Fixed maturities, available for sale2,367,906 1,330,744 
Equity securities97,434 13,162 
Other investments38,027 14,825 
Short-term investments19,325 44,949 
Proceeds from redemption of fixed maturities, available for sale435,700 221,094 
Proceeds from redemption of fixed maturities, held to maturity39,791 1,596 
Proceeds from redemption of short-term investments4,510 10,520 
Proceeds from the repayment of mortgage loans211 5,206 
Proceeds from the (purchase) sale of other assets, net(8,208)5,299 
Loan advances made(101,229)(18,130)
Net cash provided by (used in) investing activities211,039 (177,534)
Cash flows from financing activities:
Repurchase of common shares - open market(61,607)— 
Taxes paid on withholding shares(14,121)(15,945)
Dividends paid - common shares(40,208)(40,323)
Dividends paid - preferred shares(7,563)(7,563)
Federal Home Loan Bank advances, net— 5,250 
Net cash used in financing activities(123,499)(58,581)
Effect of exchange rate changes on foreign currency cash, cash equivalents and restricted cash(14,090)193 
Increase in cash, cash equivalents and restricted cash457,589 4,642 
Cash, cash equivalents and restricted cash - beginning of period1,383,985 1,174,653 
Cash, cash equivalents and restricted cash - end of period$1,841,574 $1,179,295 

 2017 2016
 (in thousands)
Cash flows from operating activities:   
Net income (loss)$(341,541) $364,460
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Net realized investment losses14,811
 40,295
Net realized and unrealized gains on other investments(56,759) (23,117)
Amortization of fixed maturities32,528
 51,660
Interest in loss of equity method investments8,402
 2,434
Other amortization and depreciation19,279
 17,370
Share-based compensation expense, net of cash payments1,516
 28,580
Non-cash foreign exchange losses

24,149
 —
Bargain purchase gain(15,044) —
Changes in:   
Accrued interest receivable8,730
 3,286
Reinsurance recoverable balances60,522
 (163,212)
Deferred acquisition costs(123,961) (73,759)
Prepaid reinsurance premiums(178,464) (184,648)
Reserve for loss and loss expenses918,511
 216,828
Unearned premiums540,108
 682,686
Insurance and reinsurance balances, net(465,436) (623,170)
Other items(135,266) (74,383)
Net cash provided by operating activities312,085
 265,310
    
Cash flows from investing activities:   
Purchases of:   
Fixed maturities(6,250,608) (6,624,573)
Equity securities(108,804) (295,827)
Mortgage loans(20,812) (131,087)
Other investments(135,526) (177,500)
Equity method investments(1,000) (103,548)
Short-term investments(20,792) (81,479)
Proceeds from the sale of:   
Fixed maturities5,354,398
 6,067,663
Equity securities232,755
 296,182
Other investments203,896
 170,111
Short-term investments19,284
 67,408
Proceeds from redemption of fixed maturities1,546,998
 977,852
Proceeds from redemption of short-term investments116,261
 8,185
Proceeds from the repayment of mortgage loans

10,702
 4,808
Purchase of other assets(25,842) (19,055)
Change in restricted cash and cash equivalents(78,501) (42,445)
Purchase of subsidiary, net(73,067) —
Net cash provided by investing activities769,342
 116,695
    
Cash flows from financing activities:   
Repurchase of common shares(290,496) (389,086)
Dividends paid - common shares(102,868) (100,670)
Repurchase of preferred shares(351,074) (2,843)
Dividends paid - preferred shares(42,188) (29,940)
Proceeds from issuance of common shares—
 8
Net cash used in financing activities(786,626) (522,531)
    
Effect of exchange rate changes on foreign currency cash and cash equivalents16,318
 593
Increase (decrease) in cash and cash equivalents311,119
 (139,933)
Cash and cash equivalents - beginning of period1,039,494
 988,133
Cash and cash equivalents - end of period$1,350,613
 $848,200
    
Supplemental disclosures of cash flow information: Non-cash foreign exchange losses are attributable to the reclassification of the cumulative translation adjustment related to AXIS Specialty Australia from accumulated other comprehensive income to foreign exchange losses due to the wind-down of this operation which was substantially complete as of March 31, 2017. Also refer to Note 7 'Reserve for Losses and Loss Expenses' and Note 13 'Other Comprehensive Income'.

See accompanying notes to Consolidated Financial Statements.


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AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

Supplemental disclosures of cash flow information:
Income taxes paid (refund)$6,796 $(2,403)
Interest paid$17,504 $17,110 

Supplemental disclosures of cash flow information:
In 2024,$48 million related to a loan advanced to Monarch Point Re (ISA 2023) Ltd. ("Monarch Point Re") was repaid and was treated as a non-cash activity in the consolidated statement of cash flows. In addition, $46 million related to reinsurance balances payables due to Monarch Point Re under the retrocession agreement and $4 million related to ceded losses and loss expenses due from Monarch Point Re under the retrocession agreement were settled and both were treated as a non-cash activity in the consolidated statement of cash flows. Further, $6 million related to interest on the loan advanced to Monarch Point Re was received in advance and was treated as a non-cash activity in the consolidated statement of cash flows.
In 2024, $25 million related to a loan advanced to a third party reinsurer was repaid and $25 million related to reinsurance balances payables due to the third party reinsurer under the retrocession agreement was settled and both were treated as non-cash activities in the consolidated statement of cash flows (refer to Note 10 'Debt').
In 2023, $31 million related to a loan advanced to a third party reinsurer was repaid and was treated as a non-cash activity in the consolidated statement of cash flows. In addition, $31 million related to reinsurance balances payables due to the third party reinsurer under the retrocession agreement and $5 million related to ceded losses and loss expenses due from the party reinsurer under the retrocession agreement were settled and both were treated as a non-cash activity in the consolidated statement of cash flows.


See accompanying notes to Consolidated Financial Statements.

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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.    BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES



1.BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Basis of Presentation


These interimunaudited consolidated financial statements include the accounts of AXIS Capital Holdings Limited (“AXIS Capital”(the "financial statements") and its subsidiaries (herein referred to as “we,” “us,” “our,” or the “Company”).

The consolidated balance sheet at September 30,2017 and the consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for the periods ended September 30,2017 and 2016 have not been audited. The balance sheet at December 31, 2016 is derived from our audited financial statements.

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. Generally Accepted Accounting Principles (“U.S. GAAP”GAAP") for interim financial information and with the U.S. Securities and Exchange Commission's (“SEC”("SEC") instructions to Form 10-Q and Article 10 of Regulation S-X.S-X and include AXIS Capital Holdings Limited ("AXIS Capital") and its subsidiaries (the "Company"). Accordingly, they do not include all of the information and footnotesnotes required by U.S. GAAP for complete financial statements. This Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and related notes included in AXIS Capital's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC.

In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of ourthe Company's financial position and results of operations for the periods presented.

The results of operations for any interim period are not necessarily indicative of the results for a full year. All inter-company accounts and transactions have been eliminated.


The followingTo facilitate comparison of information should be readacross periods, certain reclassifications have been made to prior year amounts to conform to the current year's presentation. At March 31, 2024, the Company presented loan advances made in conjunction with our Annual Report on Form 10-K for2023 separately in the year ended December 31, 2016. consolidated statements of cash flows. These loan advances made were previously included in insurance and reinsurance balances payable in the consolidated statements of cash flows. This presentation was adopted to facilitate comparison to loan advances made in 2024. This reclassification did not impact results of operations, financial condition or liquidity.
Tabular dollar and share amounts are in thousands, exceptwith the exception of per share amounts. All amounts are reported in U.S. dollars.


Significant Accounting Policies


There were no notable changes in ourto the Company's significant accounting policies subsequent to ourits Annual Report on Form 10-K for the year ended December 31, 2016.2023.

New Accounting Standards Adopted in 2017

Stock Compensation - Improvements to Employee Share-Based Payment Accounting

Effective January 1, 2017, the Company adopted Accounting Standards Update ("ASU" ) ASU 2016-09, "Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting" which simplifies several aspects of the accounting for share-based payments to employees including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance requires all excess tax benefits and tax deficiencies to be recognized in the income statement with the tax effects of exercised or vested awards to be treated as discrete items in the reporting period in which they occur. Excess tax benefits should be classified along with other income tax cash flows as an operating activity on the statement of cash flows. In addition, companies will be required to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The guidance allows withholding up to the maximum statutory tax rates in the applicable jurisdictions to cover income taxes on share-based compensation awards without requiring liability classification. Cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. The adoption of this guidance did not have a material impact on our results of operations, financial condition and liquidity.

Issued Accounting Standards Not Yet Adopted

Revenue From Contracts With Customers

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)". This guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts are not in scope of the new guidance). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for





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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.BASIS OF PRESENTATION AND ACCOUNTING POLICIES (CONTINUED)

those goods or services. In August 2015, the FASB delayed the effective date by one year through the issuance of ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date". This guidance is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2016. Accounting for insurance contracts is outside the scope of ASU 2014-09. The Company generates an insignificant amount of fee income, primarily from strategic capital partners, which is reported in other insurance related income (losses) in the Consolidated Statements of Operations and is subject to this accounting standard update. The Company's current accounting policy to recognize fee income in the period when related services are performed, principally aligns with this update. As a result, the Company does not expect the adoption of this guidance to have a material impact on our results of operations, financial condition and liquidity.

Recently Issued Accounting Standards Not Yet Adopted

Premium Amortization on Purchased Callable Debt Securities

In March 2017, the FASB issued ASU 2017-08 "Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20) - Premium Amortization on Purchased Callable Debt Securities" which shortens the amortization period for certain purchased callable debt securities held at a premium. This guidance is effective for interim and annual reporting periods, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of this guidance on our results of operations, financial condition and liquidity.

Stock Compensation - Scope of Modification Accounting

In May 2017, the FASB issued ASU 2017-09 "Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting" to provide clarity and reduce diversity in practice of applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. This ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The guidance states that an entity should account for the effects of a modification unless all the following are met: (1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this Update. This guidance is effective for interim and annual reporting periods, beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact of this guidance on our results of operations, financial condition and liquidity.



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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


2.    BUSINESS COMBINATIONSSEGMENT INFORMATION

On April 1, 2017 ("the closing date" or the "acquisition date"), the Company acquired a 100% ownership interest in Compagnie Belge d'Assurances Aviation NV/SA (“Aviabel”). Aviabel is an insurer operating under Belgian law that has its head office in Belgium, a branch office in the Netherlands and a re-insurance company, Aviabel RE S.A. (“Aviabel RE”), in Luxembourg. The Company acquired Aviabel to increase its scale and relevance in the global aviation market.

The purchase price was allocated to the acquired assets and liabilities of Aviabel based on estimated fair values on the closing date. Consequently, the Company recognized investments with a fair value of $182 million, reserves for losses and loss expenses with a fair value of $79 million, and a bargain purchase gain of $15 million. The bargain purchase gain arose as the fair values of the net identifiable assets acquired exceeded the fair value of the consideration transferred at the acquisition date.

The allocation of the purchase price was based on information included in unaudited financial statements prepared by Aviabel's management at March 31, 2017. The allocation is subject to change if additional information becomes available within the measurement period, which cannot exceed 12 months from the acquisition date. The fair values of the acquired assets and liabilities may be subject to adjustments, which may impact the amounts recorded for the acquired assets and liabilities, as well as the bargain purchase gain.

The underwriting results of Aviabel are included in the underwriting results of the Company's insurance segment from the acquisition date.






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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3.SEGMENT INFORMATION

Our underwriting operations are organized around ourits global underwriting platforms, AXIS Insurance and AXIS Re, therefore we haveRe. The Company has determined that we have it has two reportable segments, insurance and reinsurance. We doThe Company does not allocate ourits assets by segment, with the exception of goodwill and intangible assets, as we evaluate the underwriting results of each segment separately from the results of our investment portfolio.assets.

Insurance
Our
The Company's insurance segment providesoffers specialty insurance coverageproducts to a variety of niche markets on a worldwide basis. The product lines in this segment are professional lines, property, liability, cyber, marine terrorism,and aviation, accident and health, and credit and political risk, professional lines, liability and accident and health.risk.

Reinsurance
Our
The Company's reinsurance segment provides non-life treaty reinsurance to insurance companies on a worldwide basis. The product lines in this segment are catastrophe, property,liability, accident and health, professional lines, credit and surety, motor, liability, agriculture, engineering and marine and other. The reinsurance segment also writes derivative based risk management products designed to address weatheraviation, and commodity price risks.run-off lines which include catastrophe and property lines of business that the Company placed into run-off in 2022 and engineering lines of business that the Company placed into run-off in 2020.


The following tables summarizepresent the underwriting results of ourthe Company's reportable segments, as well as the carrying valuesamounts of allocated goodwill and intangible assets:

   2017 2016 
 Three months ended and at September 30,Insurance Reinsurance Total Insurance Reinsurance Total 
              
 Gross premiums written$744,366
 $441,208
 $1,185,574
 $675,430
 $284,532
 $959,962
 
 Net premiums written500,022
 332,721
 832,743
 433,131
 162,300
 595,431
 
 Net premiums earned496,004
 521,127
 1,017,131
 444,691
 489,724
 934,415
 
 Other insurance related income (losses)526
 (3,723) (3,197) 39
 5,905
 5,944
 
 Net losses and loss expenses(628,865) (606,502) (1,235,367) (273,226) (259,102) (532,328) 
 Acquisition costs(74,231) (120,493) (194,724) (61,755) (128,055) (189,810) 
 General and administrative expenses(75,038) (21,658) (96,696) (84,588) (29,635) (114,223) 
 Underwriting income (loss)$(281,604) $(231,249) (512,853) $25,161
 $78,837
 103,998
 
              
 Corporate expenses    (27,933)     (28,683) 
 Net investment income    95,169
     116,923
 
 Net realized investment gains    14,632
     5,205
 
 Foreign exchange (losses) gains    (32,510)     13,795
 
 Interest expense and financing costs    (12,835)     (12,839) 
 Transaction related expenses    (5,970)     —
 
 Income (loss) before income taxes and interest in income (loss) of equity method investments    $(482,300)     $198,399
 
              
 Net loss and loss expense ratio126.8% 116.4% 121.5% 61.4% 52.9% 57.0% 
 Acquisition cost ratio15.0% 23.1% 19.1% 13.9% 26.1% 20.3% 
 General and administrative expense ratio15.1% 4.2% 12.3% 19.1% 6.1% 15.3% 
 Combined ratio156.9% 143.7% 152.9% 94.4% 85.1% 92.6% 
              
 Goodwill and intangible assets$87,206
 $—
 $87,206
 $85,501
 $—
 $85,501
 
              


























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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3.SEGMENT INFORMATION (CONTINUED)


2.    SEGMENT INFORMATION (CONTINUED)
  20242023
Three months ended and at March 31,InsuranceReinsuranceTotalInsuranceReinsuranceTotal
Gross premiums written$1,574,505$1,079,922$2,654,427$1,415,612$966,364$2,381,976
Net premiums written1,022,354699,7191,722,073882,576725,7801,608,356
Net premiums earned917,946340,0951,258,041816,456413,7431,230,199
Other insurance related income218,3198,34054523577
Net losses and loss expenses(496,864)(231,807)(728,671)(449,467)(271,175)(720,642)
Acquisition costs(176,029)(78,225)(254,254)(147,058)(83,315)(230,373)
Underwriting-related general and administrative expenses(122,087)(15,706)(137,793)(116,630)(23,765)(140,395)
Underwriting income$122,987$22,676145,663$103,355$36,011139,366
Net investment income167,383133,771
Net investment gains (losses)(9,207)(20,190)
Corporate expenses(25,580)(26,416)
Foreign exchange (losses) gains23,552(8,710)
Interest expense and financing costs(17,147)(16,894)
Reorganization expenses(12,299)—
Amortization of intangible assets(2,729)(2,729)
Income before income taxes and interest in income (loss) of equity method investments269,636198,198
Income tax (expense) benefit124,654(15,896)
Interest in income (loss) of equity method investments1,169(2,205)
Net income395,459180,097
Preferred share dividends7,5637,563
Net income available to common shareholders$387,896$172,534
Net losses and loss expenses ratio54.1 %68.2 %57.9 %55.1 %65.5 %58.6 %
Acquisition cost ratio19.2 %23.0 %20.2 %18.0 %20.1 %18.7 %
General and administrative expense ratio13.3 %4.6 %13.0 %14.2 %5.8 %13.6 %
Combined ratio86.6 %95.8 %91.1 %87.3 %91.4 %90.9 %
Goodwill and intangible assets$284,956$—$284,956$295,872$—$295,872



14
   2017 2016 
 Nine months ended and at September 30,Insurance Reinsurance Total Insurance Reinsurance Total 
              
 Gross premiums written$2,234,395
 $2,225,377
 $4,459,772
 $2,112,796
 $2,126,762
 $4,239,558
 
 Net premiums written1,533,029
 1,764,689
 3,297,718
 1,433,058
 1,855,529
 3,288,587
 
 Net premiums earned1,448,270
 1,488,995
 2,937,265
 1,322,649
 1,461,097
 2,783,746
 
 Other insurance related income (losses)1,077
 (5,497) (4,420) (57) 4,907
 4,850
 
 Net losses and loss expenses(1,241,495) (1,206,145) (2,447,640) (853,771) (809,813) (1,663,584) 
 Acquisition costs(223,665) (365,214) (588,879) (184,982) (374,588) (559,570) 
 General and administrative expenses(253,308) (82,474) (335,782) (252,652) (99,980) (352,632) 
 Underwriting income (loss)$(269,121) $(170,335) (439,456) $31,187
 $181,623
 212,810
 
              
 Corporate expenses    (97,922)     (86,922) 
 Net investment income    299,899
     257,818
 
 Net realized investment losses    (14,811)     (40,295) 
 Foreign exchange (losses) gains    (90,093)     69,781
 
 Interest expense and financing costs    (38,377)     (38,586) 
 Bargain purchase gain    15,044
     —
 
 Transaction related expenses    (5,970)     —
 
 Income (loss) before income taxes and interest in income (loss) of equity method investments    $(371,686)     $374,606
 
              
 Net loss and loss expense ratio85.7% 81.0% 83.3% 64.6% 55.4% 59.8% 
 Acquisition cost ratio15.4% 24.5% 20.0% 14.0% 25.6% 20.1% 
 General and administrative expense ratio17.6% 5.6% 14.8% 19.0% 6.9% 15.8% 
 Combined ratio118.7% 111.1% 118.1% 97.6% 87.9% 95.7% 
              
 Goodwill and intangible assets$87,206
 $—
 $87,206
 $85,501
 $—
 $85,501
 
              
              



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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.INVESTMENTS


3.    INVESTMENTS
a)     Fixed Maturities, and EquitiesAvailable for Sale


The following table provides the amortized cost or cost and fair values of ourthe Company's fixed maturities classified as available for sale:
Amortized
cost
Allowance for expected credit lossesGross
unrealized
gains
Gross
unrealized
losses
Fair
value
At March 31, 2024
Available for sale
U.S. government and agency$2,649,595 $— $1,590 $(57,468)$2,593,717 
Non-U.S. government757,162 (17)4,851 (23,798)738,198 
Corporate debt5,095,372 (3,973)37,431 (212,892)4,915,938 
Agency RMBS(1)
1,684,869 — 4,273 (103,522)1,585,620 
CMBS(2)
870,433 — 545 (50,585)820,393 
Non-agency RMBS152,322 (198)518 (12,650)139,992 
ABS(3)
1,336,681 (49)2,148 (20,875)1,317,905 
Municipals(4)
167,776 — 371 (10,600)157,547 
Total fixed maturities, available for sale$12,714,210 $(4,237)$51,727 $(492,390)$12,269,310 
At December 31, 2023    
Available for sale
U.S. government and agency$3,049,445 $— $13,211 $(55,128)$3,007,528 
Non-U.S. government729,761 (30)13,089 (18,861)723,959 
Corporate debt4,651,654 (10,438)49,434 (216,478)4,474,172 
Agency RMBS(1)
1,706,204 — 11,495 (83,038)1,634,661 
CMBS(2)
897,553 — 551 (58,408)839,696 
Non-agency RMBS165,910 (194)713 (13,033)153,396 
ABS(3)
1,265,187 (50)2,855 (25,021)1,242,971 
Municipals(4)
168,540 (47)414 (10,548)158,359 
Total fixed maturities, available for sale$12,634,254 $(10,759)$91,762 $(480,515)$12,234,742 
(1)Residential mortgage-backed securities ("RMBS") originated by U.S. government-sponsored agencies.
(2)Commercial mortgage-backed securities ("CMBS").
(3)Asset-backed securities ("ABS") include debt tranched securities collateralized primarily by auto loans, student loans, credit card receivables and equities were as follows:collateralized loan obligations ("CLOs").
(4)Municipals include bonds issued by states, municipalities and political subdivisions.




  
Amortized
Cost or
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Non-credit
OTTI
in AOCI(5)
 
            
 At September 30, 2017          
 Fixed maturities          
 U.S. government and agency$1,556,963
 $2,729
 $(12,374) $1,547,318
 $—
 
 Non-U.S. government568,223
 13,961
 (8,544) 573,640
 —
 
 Corporate debt4,460,337
 65,230
 (21,600) 4,503,967
 —
 
 
Agency RMBS(1)
2,313,096
 12,218
 (18,492) 2,306,822
 —
 
 
CMBS(2)
665,520
 5,954
 (1,738) 669,736
 —
 
 Non-Agency RMBS42,653
 1,968
 (804) 43,817
 (867) 
 
ABS(3)
1,285,080
 4,572
 (782) 1,288,870
 —
 
 
Municipals(4)
151,522
 1,379
 (685) 152,216
 —
 
 Total fixed maturities$11,043,394
 $108,011
 $(65,019) $11,086,386
 $(867) 
            
 Equity securities          
 Common stocks$13,980
 $1,415
 $(569) $14,826
   
 Exchange-traded funds365,412
 88,782
 —
 454,194
   
 Bond mutual funds183,718
 8,686
 (1,673) 190,731
   
 Total equity securities$563,110
 $98,883
 $(2,242) $659,751
   
            
 At December 31, 2016          
 Fixed maturities          
 U.S. government and agency$1,681,425
 $1,648
 $(27,004) $1,656,069
 $—
 
 Non-U.S. government613,282
 2,206
 (49,654) 565,834
 —
 
 Corporate debt4,633,834
 42,049
 (75,140) 4,600,743
 —
 
 
Agency RMBS(1)
2,487,837
 13,275
 (35,977) 2,465,135
 —
 
 
CMBS(2)
664,368
 5,433
 (3,564) 666,237
 —
 
 Non-Agency RMBS57,316
 1,628
 (2,023) 56,921
 (823) 
 
ABS(3)
1,221,813
 3,244
 (2,843) 1,222,214
 —
 
 
Municipals(4)
163,441
 1,510
 (990) 163,961
 —
 
 Total fixed maturities$11,523,316
 $70,993
 $(197,195) $11,397,114
 $(823) 
            
 Equity securities          
 Common stocks$379
 $41
 $(342) $78
   
 Exchange-traded funds463,936
 53,405
 (2,634) 514,707
   
 Bond mutual funds133,051
 —
 (9,092) 123,959
   
 Total equity securities$597,366
 $53,446
 $(12,068) $638,744
   
            
15
(1)Residential mortgage-backed securities (RMBS) originated by U.S. government-sponsored agencies.
(2)Commercial mortgage-backed securities (CMBS).
(3)Asset-backed securities (ABS) include debt tranched securities collateralized primarily by auto loans, student loans, credit cards, and other asset types. This asset class also includes collateralized loan obligations (CLOs) and collateralized debt obligations (CDOs).
(4)Municipals include bonds issued by states, municipalities and political subdivisions.
(5)Represents the non-credit component of the other-than-temporary impairment (OTTI) losses, adjusted for subsequent sales, maturities and redemptions. It does not include the change in fair value subsequent to the impairment measurement date.




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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.INVESTMENTS (CONTINUED)


3.    INVESTMENTS (CONTINUED)
In the normal course of investing activities, we actively manage allocations to non-controlling tranches of structured securities (variable interests) issued by Variable Interest Entities ("VIEs"). These structured securities include RMBS, CMBS and ABS and are included in the above table. Additionally, within our other investments portfolio, we invest in limited partnerships (hedge funds, direct lending funds, private equity funds and real estate funds) and CLO equity tranched securities, which are variable interests issued by VIEs (see Note 4(c)). For these variable interests, we do not have the power to direct the activities that are most significant to the economic performance of the VIEs therefore we are not the primary beneficiary of any of these VIEs. Our maximum exposure to loss on these interests is limited to the amount of our investment. We have not provided financial or other support with respect to these structured securities other than our original investment.

Contractual Maturities


The contractual maturities of fixed maturities are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

  
Amortized
Cost
 
Fair
Value
 
% of Total
Fair Value
 
        
 At September 30, 2017      
 Maturity      
 Due in one year or less$434,283
 $432,662
 4.0% 
 Due after one year through five years3,834,452
 3,850,174
 34.7% 
 Due after five years through ten years2,258,136
 2,276,190
 20.5% 
 Due after ten years210,174
 218,115
 2.0% 
  6,737,045
 6,777,141
 61.2% 
 Agency RMBS2,313,096
 2,306,822
 20.8% 
 CMBS665,520
 669,736
 6.0% 
 Non-Agency RMBS42,653
 43,817
 0.4% 
 ABS1,285,080
 1,288,870
 11.6% 
 Total$11,043,394
 $11,086,386
 100.0% 
        
 At December 31, 2016      
 Maturity      
 Due in one year or less$313,287
 $305,972
 2.8% 
 Due after one year through five years3,906,190
 3,850,149
 33.8% 
 Due after five years through ten years2,546,299
 2,510,975
 22.0% 
 Due after ten years326,206
 319,511
 2.8% 
  7,091,982
 6,986,607
 61.4% 
 Agency RMBS2,487,837
 2,465,135
 21.6% 
 CMBS664,368
 666,237
 5.8% 
 Non-Agency RMBS57,316
 56,921
 0.5% 
 ABS1,221,813
 1,222,214
 10.7% 
 Total$11,523,316
 $11,397,114
 100.0% 
        
The table below provides the contractual maturities of fixed maturities classified as available for sale:

Amortized
cost
Fair
value
% of Total
fair value
At March 31, 2024
Maturity
Due in one year or less$435,592 $427,428 3.6 %
Due after one year through five years5,891,599 5,759,009 46.9 %
Due after five years through ten years2,164,623 2,046,280 16.7 %
Due after ten years178,091 172,683 1.4 %
 8,669,905 8,405,400 68.6 %
Agency RMBS1,684,869 1,585,620 12.9 %
CMBS870,433 820,393 6.7 %
Non-agency RMBS152,322 139,992 1.1 %
ABS1,336,681 1,317,905 10.7 %
Total$12,714,210 $12,269,310 100.0 %
At December 31, 2023
Maturity
Due in one year or less$474,557 $463,789 3.6 %
Due after one year through five years5,902,571 5,790,493 47.3 %
Due after five years through ten years2,064,619 1,954,449 16.0 %
Due after ten years157,653 155,287 1.3 %
 8,599,400 8,364,018 68.2 %
Agency RMBS1,706,204 1,634,661 13.4 %
CMBS897,553 839,696 6.9 %
Non-agency RMBS165,910 153,396 1.3 %
ABS1,265,187 1,242,971 10.2 %
Total$12,634,254 $12,234,742 100.0 %






16
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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.INVESTMENTS (CONTINUED)


3.    INVESTMENTS (CONTINUED)
Gross Unrealized Losses


The following table summarizes fixed maturities, and equitiesavailable for sale in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:
  12 months or greaterLess than 12 monthsTotal
  
Fair
value
Unrealized
losses
Fair
value
Unrealized
losses
Fair
value
Unrealized
losses
At March 31, 2024
Fixed maturities, available for sale
U.S. government and agency$657,958 $(40,409)$1,669,439 $(17,059)$2,327,397 $(57,468)
Non-U.S. government224,688 (20,529)274,043 (3,269)498,731 (23,798)
Corporate debt2,337,348 (202,913)862,666 (9,979)3,200,014 (212,892)
Agency RMBS810,334 (96,973)414,071 (6,549)1,224,405 (103,522)
CMBS665,150 (47,233)86,723 (3,352)751,873 (50,585)
Non-agency RMBS86,352 (12,562)15,966 (88)102,318 (12,650)
ABS447,941 (19,575)343,163 (1,300)791,104 (20,875)
Municipals124,038 (10,203)7,081 (397)131,119 (10,600)
Total fixed maturities, available for sale$5,353,809 $(450,397)$3,673,152 $(41,993)$9,026,961 $(492,390)
At December 31, 2023      
Fixed maturities, available for sale
U.S. government and agency$846,503 $(42,465)$867,733 $(12,663)$1,714,236 $(55,128)
Non-U.S. government233,038 (18,178)115,112 (683)348,150 (18,861)
Corporate debt2,623,304 (210,512)240,813 (5,966)2,864,117 (216,478)
Agency RMBS778,656 (80,070)218,606 (2,968)997,262 (83,038)
CMBS703,411 (54,856)75,242 (3,552)778,653 (58,408)
Non-agency RMBS98,483 (13,013)10,017 (20)108,500 (13,033)
ABS879,743 (24,747)83,582 (274)963,325 (25,021)
Municipals129,969 (10,156)6,238 (392)136,207 (10,548)
Total fixed maturities, available for sale$6,293,107 $(453,997)$1,617,343 $(26,518)$7,910,450 $(480,515)
   12 months or greater Less than 12 months Total 
   
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
              
 At September 30, 2017            
 Fixed maturities            
 U.S. government and agency$161,425
 $(5,641) $1,207,943
 $(6,733) $1,369,368
 $(12,374) 
 Non-U.S. government61,872
 (7,354) 163,477
 (1,190) 225,349
 (8,544) 
 Corporate debt412,832
 (12,553) 990,308
 (9,047) 1,403,140
 (21,600) 
 Agency RMBS350,010
 (8,130) 1,126,956
 (10,362) 1,476,966
 (18,492) 
 CMBS13,919
 (238) 221,941
 (1,500) 235,860
 (1,738) 
 Non-Agency RMBS8,342
 (803) 222
 (1) 8,564
 (804) 
 ABS16,816
 (409) 323,886
 (373) 340,702
 (782) 
 Municipals23,339
 (474) 40,913
 (211) 64,252
 (685) 
 Total fixed maturities$1,048,555
 $(35,602) $4,075,646
 $(29,417) $5,124,201
 $(65,019) 
              
 Equity securities            
 Common stocks$33
 $(135) $2,939
 $(434) $2,972
 $(569) 
 Exchange-traded funds—
 —
 —
 —
 —
 —
 
 Bond mutual funds—
 —
 24,145
 (1,673) 24,145
 (1,673) 
 Total equity securities$33
 $(135) $27,084
 $(2,107) $27,117
 $(2,242) 
              
 At December 31, 2016            
 Fixed maturities            
 U.S. government and agency$54,051
 $(2,729) $1,340,719
 $(24,275) $1,394,770
 $(27,004) 
 Non-U.S. government149,360
 (38,683) 283,796
 (10,971) 433,156
 (49,654) 
 Corporate debt230,218
 (30,652) 1,948,976
 (44,488) 2,179,194
 (75,140) 
 Agency RMBS76,694
 (1,101) 1,724,170
 (34,876) 1,800,864
 (35,977) 
 CMBS84,640
 (749) 193,499
 (2,815) 278,139
 (3,564) 
 Non-Agency RMBS13,642
 (1,752) 7,194
 (271) 20,836
 (2,023) 
 ABS362,110
 (1,950) 266,763
 (893) 628,873
 (2,843) 
 Municipals774
 (29) 68,598
 (961) 69,372
 (990) 
 Total fixed maturities$971,489
 $(77,645) $5,833,715
 $(119,550) $6,805,204
 $(197,195) 
              
 Equity securities            
 Common stocks$—
 $—
 $37
 $(342) $37
 $(342) 
 Exchange-traded funds4,959
 (461) 87,760
 (2,173) 92,719
 (2,634) 
 Bond mutual funds—
 —
 123,954
 (9,092) 123,954
 (9,092) 
 Total equity securities$4,959
 $(461) $211,751
 $(11,607) $216,710
 $(12,068) 
              





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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.INVESTMENTS (CONTINUED)

Fixed Maturities

At September 30,2017, 1,625March 31, 2024, 4,138 fixed maturities (2016: 1,881)(2023: 3,535) were in an unrealized loss position of $65$492 million (2016: $197(2023: $481 million), of which $6$11 million (2016: $15 million) (2023: $13 million) was related to securities below investment grade or not rated.


At September 30,2017March 31, 2024, 403 (2016: 330) securities3,004 fixed maturities (2023: 3,212) had been in a continuous unrealized loss position for 12twelve months or greater and had a fair value of $1,049$5,354 million (2016(2023: $971 million)$6,293 million). Following our credit impairment review, we concluded that these securities as well as the remaining securities in an

The unrealized loss position in the above tablees of $492 million (2023: $481 million) were temporarily impaired at September 30,2017,due to non-credit factors and were expected to recover in valuebe recovered as the related securities approach maturity. Further, at September 30,2017, we

At March 31, 2024, the Company did not intend to sell thesethe securities in an unrealized loss position and it is more likely than not that wethe Company will not be required to sell these securities before the anticipated recovery of their amortized costs.



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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3.    INVESTMENTS (CONTINUED)
b)     Fixed Maturities, Held to Maturity
The following table provides the amortized cost and fair values of the Company's fixed maturities classified as held to maturity:
Amortized
cost
Allowance for expected credit lossesNet carrying valueGross
unrealized
gains
Gross
unrealized
losses
Fair
value
At March 31, 2024
Held to maturity
Corporate debt$100,217 $— $100,217 $177 $(9,360)$91,034 
ABS(1)
592,825 — 592,825 270 (403)592,692 
Total fixed maturities, held to maturity$693,042 $— $693,042 $447 $(9,763)$683,726 
At December 31, 2023    
Held to maturity
Corporate debt$95,200 $— $95,200 $298 $(8,827)$86,671 
ABS(1)
591,096 — 591,096 5 (1,921)589,180 
Total fixed maturities, held to maturity$686,296 $— $686,296 $303 $(10,748)$675,851 
(1)Asset-backed securities ("ABS") include debt tranched securities collateralized primarily by collateralized loan obligations ("CLOs").

At March 31, 2024, fixed maturities, held to maturity of $693 million (2023: $686 million) were presented net of an allowance for expected credit losses of $nil (2023: $nil).

The Company's ABS, held to maturity consist of CLO debt tranched securities. The Company uses a scenario-based approach to review its CLO debt portfolio and reviews subordination levels of these securities to determine their ability to absorb credit losses of the underlying collateral. If losses are forecast to be below the subordination level for a tranche held by the Company, the security is determined not to have a credit loss. At March 31, 2024, the allowance for credit losses expected to be recognized over the life of the Company's ABS, held to maturity was $nil.

To estimate expected credit losses for corporate debt securities, held to maturity, the Company's projected cash flows are primarily driven by assumptions regarding the severity of loss, which is a function of the probability of default and projected recovery rates. The Company's default and recovery rates are based on credit ratings, credit analysis and macroeconomic forecasts. At March 31, 2024, the allowance for credit losses expected to be recognized over the life of the Company's corporate debt, held to maturity was $nil.
Contractual Maturities
Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. ABS classified as held to maturity had a carrying value of $593 million (2023: $591 million).
Corporate debt classified as held to maturity with a net carrying value of $17 million (2023: $nil) is due between 1 year and 3 years and corporate debt classified as held to maturity with a net carrying value of $83 million (2023: $95 million) is due between 3 years and 10 years.


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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3.    INVESTMENTS (CONTINUED)
c)     Equity Securities
The following table provides the cost and fair values of the Company's equity securities:
Cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
At March 31, 2024
Equity securities
Common stocks$2,843 $25 $(416)$2,452 
Preferred stocks5,654 161 (113)5,702 
Exchange-traded funds188,548 99,734 (1,116)287,166 
Bond mutual funds348,493 2,327 (63,962)286,858 
Total equity securities$545,538 $102,247 $(65,607)$582,178 
At December 31, 2023   
Equity securities
Common stocks$2,843 $101 $(398)$2,546 
Preferred stocks5,496 218 (113)5,601 
Exchange-traded funds182,989 105,858 (1,572)287,275 
Bond mutual funds352,505 4,119 (63,535)293,089 
Total equity securities$543,833 $110,296 $(65,618)$588,511 


d)     Mortgage Loans

The following table provides details of the Company's mortgage loans, held for investment:
  
March 31, 2024December 31, 2023
  
Carrying value% of TotalCarrying value% of Total
Mortgage loans, held for investment:
Commercial$617,817 101 %$616,368 101 %
Allowance for expected credit losses(8,113)(1 %)(6,220)(1)%
Total mortgage loans, held for investment$609,704 100 %$610,148 100 %

The primary credit quality indicators for commercial mortgage loans are the debt service coverage ratio which compares a property’s net operating income to amounts needed to service the principal and interest due under the loan, (generally, the lower the debt service coverage ratio, the higher the risk of experiencing a credit loss) and the loan-to-value ratio which compares the unpaid principal balance of the loan to the estimated fair value of the underlying collateral (generally, the higher the loan-to-value ratio, the higher the risk of experiencing a credit loss). The debt service coverage ratio and loan-to-value ratio, as well as the values utilized in calculating these ratios, are updated quarterly.

The Company has a high quality mortgage loan portfolio with a weighted average debt service coverage ratio of 1.9x (2023: 1.9x) and a weighted average loan-to-value ratio of 71% (2023: 71%). At March 31, 2024, and 2023 there were no past due amounts associated with the commercial mortgage loans held by the Company.



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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3.    INVESTMENTS (CONTINUED)
On a quarterly basis, collateral dependent mortgage loans (e.g., when the borrower is experiencing financial difficulty, including when foreclosure is reasonably possible or probable) are evaluated individually for credit losses. The allowance for expected credit losses for a collateral dependent loan is established as the excess of amortized cost over the estimated fair value of the loan's underlying collateral, less selling cost when foreclosure is probable. Accordingly, the change in the estimated fair value of collateral dependent loans, which are evaluated individually for credit losses, is recognized as a change in the allowance for expected credit losses which is recorded in net investment gains (losses).

At March 31, 2024, there are three collateral dependent loans with estimated loan-to-value ratios in excess of 100%, resulting in an allowance for expected credit loss of $8 million (2023: $6 million).

e)     Other Investments

The following table provides a summary of the Company's other investments, together with additional information relating to the liquidity of each category:
Fair value
Redemption frequency
(if currently eligible)
  Redemption  
  notice period  
At March 31, 2024    
Multi-strategy funds$24,950 3 %Quarterly60-90 days
Direct lending funds168,987 18 %
Quarterly(1)
90 days
Private equity funds309,399 33 %n/an/a
Real estate funds309,545 33 %
Quarterly(2), Annually(3)
45-90 days
CLO-Equities4,986 — %n/an/a
Other privately held investments116,857 13 %n/an/a
Total other investments$934,724 100 % 
At December 31, 2023    
Multi-strategy funds$24,619 3 %Quarterly60-90 days
Direct lending funds192,270 20 %
Quarterly(1)
90 days
Private equity funds301,712 32 %n/an/a
Real estate funds317,325 33 %
Quarterly(2), Annually(3)
45-90 days
CLO-Equities5,300 1 %n/an/a
Other privately held investments108,187 11 %n/an/a
Total other investments$949,413 100 %  
     
n/a - not applicable
(1) Applies to one fund with a fair value of $13 million (2023: $17 million).
(2) Applies to one fund with a fair value of $64 million (2023: $66 million).
(3) Applies to one fund with a fair value of $24 million (2023: $25 million).

Two common redemption restrictions which may impact the Company's ability to redeem multi-strategy funds are gates and lockups. A gate is a suspension of redemptions which may be implemented by the general partner or investment manager of the fund in order to defer, in whole or in part, the redemption request in the event the aggregate amount of redemption requests exceeds a predetermined percentage of the fund's net assets which may otherwise hinder the general partner or investment manager's ability to liquidate holdings in an orderly fashion in order to generate the cash necessary to fund extraordinarily large redemption payouts. A lockup period is the initial amount of time an investor is contractually required to hold the security before having the ability to redeem. During the three months ended March 31, 2024 and 2023, neither of these restrictions impacted the Company's redemption requests. At March 31, 2024, there were no multi-strategy fund holdings (2023: $nil) where the Company is still within the lockup period. 



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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3.    INVESTMENTS (CONTINUED)
At March 31, 2024, the Company had $28 million (2023: $28 million) of unfunded commitments as a limited partner in multi-strategy hedge funds. Once the full amount of committed capital has been called by the General Partner of each of these funds, the assets will not be fully returned until after the completion of the funds' investment term. These funds have investment terms ranging from two years to the dissolution of the underlying fund.

At March 31, 2024, the Company had $190 million (2023: $192 million) of unfunded commitments as a limited partner in direct lending funds. Once the full amount of committed capital has been called by the General Partner of each of these funds, the assets will not be fully returned until the completion of the fund's investment term. These funds have investment terms ranging from four to ten years and the General Partners of certain funds have the option to extend the term by up to three years.

At March 31, 2024, the Company had $134 million (2023: $145 million) of unfunded commitments as a limited partner in private equity funds. The life of the funds is subject to the dissolution of the underlying funds. The Company expects the overall holding period to be over six years.
At March 31, 2024, the Company had $105 million (2023: $107 million) of unfunded commitments as a limited partner in real estate funds. These funds include an open-ended fund and funds with investment terms ranging from two years to the dissolution of the underlying fund.
At March 31, 2024, the Company had $23 million (2023: $30 million) of unfunded commitments as a limited partner in three private company investment funds focusing on financial services technology companies with an emphasis on insurance technology companies ("private company investment funds"). Two of these funds have investment terms of 5 years and one fund has an investment term of 10 years.

f)     Equity Method Investments

During 2023, the Company paid $22 million to acquire 18% of the common equity of Monarch Point Re (ISAC) Ltd. and Monarch Point Re (ISA 2023) Ltd., a collateralized reinsurance company formed under the laws of Bermuda as an incorporated segregated accounts company under the Incorporated Segregated Accounts Companies Act 2019, as amended (the "ISAC Act"). During 2024, the Company paid $7 million to acquire 18% of the common equity of Monarch Point Re (ISA 2024) Ltd., (Monarch Point Re (ISAC) Ltd., Monarch Point Re (ISA 2023) Ltd. and Monarch Point Re (ISA 2024) Ltd., individually or collectively "Monarch Point Re").

Monarch Point Re is an independent reinsurer jointly sponsored by the Company and Stone Point Credit, LLC ("Stone Point").

The Company retrocedes a diversified portfolio of casualty reinsurance business to Monarch Point Re and Stone Point serves as its investment manager. As an investor, the Company expects to benefit from underwriting fees generated by Monarch Point Re and the income and capital appreciation Stone Point seeks to deliver through its investment management services.

Monarch Point Re is not a Variable Interest Entity ("VIE") that is required to be included in the Company's consolidated financial statements. The Company accounts for its ownership interest in Monarch Point Re under the equity method of accounting.

During 2016, the Company paid $108 million including direct transaction costs to acquire 19% of the common equity of Harrington Reinsurance Holdings Limited ("Harrington"), the parent company of Harrington Re Ltd. ("Harrington Re"), an independent reinsurance company jointly sponsored by the Company and The Blackstone Group L.P. ("Blackstone").

Through long-term service agreements, the Company serves as Harrington Re's reinsurance underwriting manager and Blackstone serves as exclusive investment management service provider. As an investor, the Company expects to benefit from underwriting profit generated by Harrington Re and the income and capital appreciation Blackstone seeks to deliver through its investment management services. In addition, the Company has entered into an arrangement with Blackstone under which underwriting and investment related fees will be shared equally.

Harrington is not a VIE that is required to be included in the Company's consolidated financial statements. The Company accounts for its ownership interest in Harrington under the equity method of accounting. The Company's proportionate share of the underlying equity in net assets resulted in a basis difference of $5 million which represents initial transactions costs.


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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3.    INVESTMENTS (CONTINUED)
g)     Variable Interest Entities

In the normal course of investing activities, the Company actively manages allocations to non-controlling tranches of structured securities which are variable interests issued by VIEs. These structured securities include RMBS, CMBS and ABS.

The Company also invests in limited partnerships which represent 74% of the Company's other investments. The investments in limited partnerships include multi-strategy funds, direct lending funds, private equity funds, real estate funds and CLO equity tranched securities, which are variable interests issued by VIEs (refer to Note 3(e) 'Other Investments').

The Company does not have the power to direct the activities that are most significant to the economic performance of these VIEs. Therefore, the Company is not the primary beneficiary of these VIEs. The maximum exposure to loss on these interests is limited to the amount of commitment made by the Company. The Company has not provided financial or other support to these structured securities other than the original investment.

h)     Net Investment Income

Net investment income was derived from the following sources:
  
Three months ended March 31,
  
20242023
Fixed maturities$139,396 $118,262 
Other investments5,673 486 
Equity securities2,762 2,455 
Mortgage loans9,130 8,386 
Cash and cash equivalents13,661 10,012 
Short-term investments3,463 1,660 
Gross investment income174,085 141,261 
Investment expenses(6,702)(7,490)
Net investment income$167,383 $133,771 



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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3.    INVESTMENTS (CONTINUED)
i)     Net Investment Gains (Losses)

The following table provides an analysis of net investment gains (losses):
  Three months ended March 31,
  20242023
Gross realized investment gains
Fixed maturities and short-term investments$14,399 $12,370 
Equity securities30,626 1,517 
Gross realized investment gains45,025 13,887 
Gross realized investment losses
Fixed maturities and short-term investments(43,932)(53,649)
Equity securities(7,712)(396)
Gross realized investment losses(51,644)(54,045)
(Increase) decrease in allowance for expected credit losses, fixed maturities, available for sale6,522 (911)
(Increase) decrease in allowance for expected credit losses, mortgage loans(1,858)(1,900)
Impairment losses(1)
(8)— 
Change in fair value of investment derivatives(2)
795 (947)
Net unrealized gains (losses) on equity securities(8,039)23,726 
Net investment losses$(9,207)$(20,190)
(1) Related to instances where the Company intends to sell securities or it is more likely than not that the Company will be required to sell securities before their anticipated recovery.
(2) Refer to Note 5 'Derivative Instruments'.

The following table provides a reconciliation of the beginning and ending balances of the allowance for expected credit losses on fixed maturities classified as available for sale:
  Three months ended March 31,
  20242023
Balance at beginning of period$10,759 $11,733 
Expected credit losses on securities where credit losses were not previously recognized31 613 
Additions (reductions) for expected credit losses on securities where credit losses were previously recognized(1,553)919 
Impairments of securities which the Company intends to sell or more likely than not will be required to sell— — 
Securities sold/redeemed/matured(5,000)(620)
Balance at end of period$4,237 $12,645 


 j)    Reverse Repurchase Agreements

At March 31, 2024, the Company held $53 million (2023: $12 million) of reverse repurchase agreements. These loans are fully collateralized, are generally outstanding for a short period of time and are presented on a gross basis as part of cash and cash equivalents in the Company's consolidated balance sheets. The required collateral for these loans is either cash or U.S. Treasuries at a minimum rate of 102% of the loan principal. Upon maturity, the Company receives principal and interest income. The Company monitors the estimated fair value of the securities loaned and borrowed on a daily basis with additional collateral obtained as necessary throughout the duration of the transaction.

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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.    FAIR VALUE MEASUREMENTS
Fair Value Hierarchy

Fair value is defined as the price to sell an asset or transfer a liability (i.e., the "exit price") in an orderly transaction between market participants. U.S. GAAP prescribes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement. The hierarchy is broken down into three levels as follows:

•Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

•Level 2 - Valuations based on quoted prices in active markets for similar assets or liabilities, quoted prices for identical assets or liabilities in inactive markets, or for which significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.

•Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The unobservable inputs reflect the Company's judgments about assumptions that market participants might use.

The availability of observable inputs can vary from financial instrument to financial instrument and is affected by a wide variety of factors including, for example, the type of financial instrument, whether the financial instrument is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment.

Accordingly, the degree of judgment exercised by management in determining fair value is greatest for financial instruments categorized as Level 3. In periods of market dislocation, the observability of prices and inputs may be reduced for many financial instruments. This may lead the Company to change the selection of valuation technique (from market to cash flow approach) or may cause the Company to use multiple valuation techniques to estimate the fair value of a financial instrument. This circumstance could cause an instrument to be reclassified between levels within the fair value hierarchy.

Valuation Techniques

The valuation techniques, including significant inputs and assumptions generally used to determine the fair values of the Company's financial instruments as well as the classification of the fair values of its financial instruments in the fair value hierarchy are described in detail below.

Fixed Maturities

At each valuation date, the Company uses the market approach valuation technique to estimate the fair value of its fixed maturities portfolio, where possible. The market approach includes, but is not limited to, prices obtained from third-party pricing services for identical or comparable securities and the use of "pricing matrix models" using observable market inputs such as yield curves, credit risks and spreads, measures of volatility, and prepayment speeds. Pricing from third-party pricing services is sourced from multiple vendors, where available, and the Company maintains a vendor hierarchy by asset type based on historical pricing experience and vendor expertise. Where prices are unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers who are active in the corresponding markets. The valuation techniques including significant inputs and assumptions generally used to determine the fair values of the Company's fixed maturities by asset class as well as the classifications of the fair values of these securities in the fair value hierarchy are described in detail below.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.    FAIR VALUE MEASUREMENTS (CONTINUED)
U.S. Government and Agency

U.S. government and agency securities consist primarily of bonds issued by the U.S. Treasury and mortgage pass-through agencies such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. As the fair values of U.S. Treasury securities are based on unadjusted quoted market prices in active markets, the fair values of these securities are classified as Level 1. The fair values of U.S. government agency securities are determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads are observable market inputs, the fair values of U.S. government agency securities are classified as Level 2.

Non-U.S. Government

Non-U.S. government securities include bonds issued by non-U.S. governments and their agencies along with supranational organizations (collectively also known as sovereign debt securities). The fair values of these securities are based on prices obtained from international indices or valuation models that include inputs such as interest rate yield curves, cross-currency basis index spreads and country credit spreads for structures similar to the sovereign bond in terms of issuer, maturity and seniority. As the significant inputs used to price these securities are observable market inputs, the fair values of non-U.S. government securities are classified as Level 2.

Corporate Debt

Corporate debt securities consist primarily of investment grade debt of a wide variety of corporate issuers and industries. The fair values of these securities are generally determined using the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and broker-dealer quotes. As the yields for the risk-free yield curve and the spreads are observable market inputs, the fair values of corporate debt securities are generally classified as Level 2. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, the fair values of these securities are classified as Level 3.

Agency RMBS

Agency RMBS consist of bonds issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. The fair values of these securities are priced using a mortgage pool specific model which uses daily inputs from the active to be announced market and the spread associated with each mortgage pool based on vintage. As the significant inputs used to price these securities are observable market inputs, the fair values of Agency RMBS are classified as Level 2.

CMBS

CMBS mainly include investment grade bonds originated by non-agencies. The fair values of these securities are determined using a pricing model which uses dealer quotes and other available trade information along with security level characteristics to determine deal specific spreads. As the significant inputs used to price these securities are observable market inputs, the fair values of CMBS are generally classified as Level 2. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, the fair values of these securities are classified as Level 3.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.    FAIR VALUE MEASUREMENTS (CONTINUED)
Non-agency RMBS

Non-agency RMBS mainly include investment grade bonds originated by non-agencies. The fair values of these securities are determined using an option adjusted spread model or other relevant models, which use inputs including available trade information or broker quotes, prepayment and default projections based on historical statistics of the underlying collateral and current market data. As the significant inputs used to price these securities are observable market inputs, the fair values of non-agency RMBS are generally classified as Level 2. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, the fair values of these securities are classified as Level 3.

ABS

ABS mainly include investment grade bonds backed by pools of loans with a variety of underlying collateral, including auto loans, student loans, credit card receivables and collateralized loan obligations ("CLOs"), originated by a variety of financial institutions. The fair values of these securities are determined using a model which uses prepayment speeds and spreads sourced primarily from the new issue market. As the significant inputs used to price these securities are observable market inputs, the fair values of ABS are generally classified as Level 2. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, the fair values of these securities are classified as Level 3.

Municipals

Municipals comprise revenue bonds and general obligation bonds issued by U.S. domiciled state and municipal entities. The fair values of these securities are determined using spreads obtained from the new issue market, trade prices and broker-dealers quotes. As the significant inputs used to price these securities are observable market inputs, the fair values of municipals are classified as Level 2.

Equity SecuritiesValuation Techniques


At September 30,2017, 31 securities (2016: 23) were in an unrealized loss position of $2 million (2016: $12 million).

At September 30,2017, 2 securities (2016: 3) was in a continuous unrealized loss position for 12 months or greater. Based on our impairment review processThe valuation techniques, including significant inputs and our ability and intentassumptions generally used to hold these securities for a reasonable period of time sufficient for a full recovery, we concluded thatdetermine the above equities in an unrealized loss position were temporarily impaired at September 30,2017.

b) Mortgage Loans

The following table provides a breakdown of our mortgage loans held-for-investment:
 
  
September 30, 2017 December 31, 2016 
 
  
Carrying Value % of Total Carrying Value % of Total 
          
 Mortgage Loans held-for-investment:        
 Commercial$360,381
 100% $349,969
 100% 
  360,381
 100% 349,969
 100% 
 Valuation allowances—
 —% —
 —% 
 Total Mortgage Loans held-for-investment$360,381
 100% $349,969
 100% 
          

For commercial mortgage loans, the primary credit quality indicator is the debt service coverage ratio (which compares a property’s net operating income to amounts needed to service the principal and interest due under the loan, generally, the lower the debt service coverage ratio, the higher the risk of experiencing a credit loss) and the loan-to-value ratio (loan-to-value ratios compare the unpaid principal balancefair values of the loan to the estimated fair value of the underlying collateral, generally, the higher the loan-to-value ratio, the higher the risk of experiencing a credit loss). The debt service coverage ratio and loan-to-value ratio,Company's financial instruments as well as the classification of the fair values utilizedof its financial instruments in calculatingthe fair value hierarchy are described in detail below.

Fixed Maturities

At each valuation date, the Company uses the market approach valuation technique to estimate the fair value of its fixed maturities portfolio, where possible. The market approach includes, but is not limited to, prices obtained from third-party pricing services for identical or comparable securities and the use of "pricing matrix models" using observable market inputs such as yield curves, credit risks and spreads, measures of volatility, and prepayment speeds. Pricing from third-party pricing services is sourced from multiple vendors, where available, and the Company maintains a vendor hierarchy by asset type based on historical pricing experience and vendor expertise. Where prices are unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers who are active in the corresponding markets. The valuation techniques including significant inputs and assumptions generally used to determine the fair values of the Company's fixed maturities by asset class as well as the classifications of the fair values of these ratios,securities in the fair value hierarchy are updated annually, on a rolling basis.

We have a high quality mortgage portfolio with weighted average debt service coverage ratiosdescribed in excess of 3.0x and weighted average loan-to-value ratios of less than 60%. There are no credit losses associated with the commercial mortgage loans that we hold at September 30, 2017.

There are no past due amounts at September 30, 2017.

detail below.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.INVESTMENTS (CONTINUED)


4.    FAIR VALUE MEASUREMENTS (CONTINUED)
c) Other InvestmentsU.S. Government and Agency


U.S. government and agency securities consist primarily of bonds issued by the U.S. Treasury and mortgage pass-through agencies such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. As the fair values of U.S. Treasury securities are based on unadjusted quoted market prices in active markets, the fair values of these securities are classified as Level 1. The following table providesfair values of U.S. government agency securities are determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads are observable market inputs, the fair values of U.S. government agency securities are classified as Level 2.

Non-U.S. Government

Non-U.S. government securities include bonds issued by non-U.S. governments and their agencies along with supranational organizations (collectively also known as sovereign debt securities). The fair values of these securities are based on prices obtained from international indices or valuation models that include inputs such as interest rate yield curves, cross-currency basis index spreads and country credit spreads for structures similar to the sovereign bond in terms of issuer, maturity and seniority. As the significant inputs used to price these securities are observable market inputs, the fair values of non-U.S. government securities are classified as Level 2.

Corporate Debt

Corporate debt securities consist primarily of investment grade debt of a breakdownwide variety of our investments in hedge funds, direct lending funds, private equity funds, real estate funds, CLO-Equitiescorporate issuers and industries. The fair values of these securities are generally determined using the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and broker-dealer quotes. As the yields for the risk-free yield curve and the spreads are observable market inputs, the fair values of corporate debt securities are generally classified as Level 2. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, the fair values of these securities are classified as Level 3.

Agency RMBS

Agency RMBS consist of bonds issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. The fair values of these securities are priced using a mortgage pool specific model which uses daily inputs from the active to be announced market and the spread associated with each mortgage pool based on vintage. As the significant inputs used to price these securities are observable market inputs, the fair values of Agency RMBS are classified as Level 2.

CMBS

CMBS mainly include investment grade bonds originated by non-agencies. The fair values of these securities are determined using a pricing model which uses dealer quotes and other privately held investments, togetheravailable trade information along with additional information relatingsecurity level characteristics to determine deal specific spreads. As the liquiditysignificant inputs used to price these securities are observable market inputs, the fair values of each category:CMBS are generally classified as Level 2. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, the fair values of these securities are classified as Level 3.



  Fair Value 
Redemption Frequency
(if currently eligible)
 
  Redemption  
  Notice Period  
 
          
 At September 30, 2017 
  
     
 Long/short equity funds$64,067
 8% Annually 60 days 
 Multi-strategy funds286,452
 35% Quarterly, Semi-annually 60-95 days 
 Event-driven funds48,578
 6% Annually 45 days 
 Direct lending funds232,389
 28% n/a n/a 
 Private equity funds71,896
 9% n/a n/a 
 Real estate funds46,691
 6% n/a n/a 
 CLO-Equities36,782
 3% n/a n/a 
 Other privately held investments43,398
 5% n/a n/a 
 Total other investments$830,253
 100%     
          
 At December 31, 2016 
  
     
 Long/short equity funds$118,619
 14% Semi-annually, Annually 45-60 days 
 Multi-strategy funds285,992
 34% Quarterly, Semi-annually 60-95 days 
 Event-driven funds93,539
 11% Annually 45 days 
 Direct lending funds134,650
 16% n/a n/a 
 Private equity funds81,223
 10% n/a n/a 
 Real estate funds13,354
 2% n/a n/a 
 CLO-Equities60,700
 8% n/a n/a 
 Other privately held investments42,142
 5% n/a n/a 
 Total other investments$830,219
 100%     
          
25
n/a -notapplicable

The investment strategies for the above funds are as follows:

Long/short equity funds: Seek to achieve attractive returns primarily by executing an equity trading strategy involving both long and short investments in publicly-traded equities.

Multi-strategy funds: Seek to achieve above-market returns by pursuing multiple investment strategies to diversify risks and reduce volatility. This category includes funds of hedge funds which invest in a large pool of hedge funds across a diversified range of hedge fund strategies.

Event-driven funds: Seek to achieve attractive returns by exploiting situations where announced or anticipated events create opportunities.

Direct lending funds: Seek to achieve attractive risk-adjusted returns, including current income generation, by investing in funds which provide financing directly to borrowers.

Private equity funds: Seek to achieve attractive risk-adjusted returns by investing in private transactions over the course of several years.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.INVESTMENTS (CONTINUED)


Real estate funds: Seek to achieve attractive risk-adjusted returns by making and managing investments in real estate and real estate securities and businesses.4.    FAIR VALUE MEASUREMENTS (CONTINUED)

Non-agency RMBS
Two common redemption restrictions which may impact our ability to redeem our hedge funds are gates and lockups. A gate is a suspension of redemptions which may be implemented
Non-agency RMBS mainly include investment grade bonds originated by the general partner or investment manager of the fund in order to defer, in whole or in part, the redemption request in the event the aggregate amount of redemption requests exceeds a predetermined percentage of the fund's net assets which may otherwise hinder the general partner or investment manager's ability to liquidate holdings in an orderly fashion in order to generate the cash necessary to fund extraordinarily large redemption payouts. A lockup period is the initial amount of time an investor is contractually required to hold the security before having the ability to redeem. During 2017 and 2016, neithernon-agencies. The fair values of these restrictions impacted our redemption requests. At September 30, 2017, $64 million (2016: $60 million), representing 16% (2016: 12%) of our total hedge funds, relate to holdings where wesecurities are still within the lockup period. The expiration of these lockup periods range from December 2017 to March 2019. 

At September 30,2017, we had $142 million (2016: $176 million) of unfunded commitments as a limited partner in direct lending funds. Once the full amount of committed capital has been called by the General Partner of each of these funds, the assets will not be fully returned until the completion of the fund's investment term. These funds have investment terms ranging from 5-10 yearsdetermined using an option adjusted spread model or other relevant models, which use inputs including available trade information or broker quotes, prepayment and the General Partners of certain funds have the option to extend the term by up to 3 years.
At September 30,2017, we had $16 million (2016: $12 million) of unfunded commitments as a limited partner in multi-strategy hedge funds. Once the full amount of committed capital has been called by the General Partner of each of these funds, the assets will not be fully returned until the completion of the funds' investment term. These funds have investment terms ranging from 2 years to the dissolutiondefault projections based on historical statistics of the underlying fund.collateral and current market data. As the significant inputs used to price these securities are observable market inputs, the fair values of non-agency RMBS are generally classified as Level 2. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, the fair values of these securities are classified as Level 3.
At September 30, 2017, we had $120 million (2016: $140 million)
ABS

ABS mainly include investment grade bonds backed by pools of unfunded commitments asloans with a limited partner in funds which invest in real estatevariety of underlying collateral, including auto loans, student loans, credit card receivables and real estate securities and businesses. These funds have investment terms ranging from 7 years to the dissolution of the underlying fund.
At September 30, 2017, we had $21 million (2016: $24 million) of unfunded commitments as a limited partner in a private equity fund. The life of the fund is subject to the dissolution of the underlying funds. We expect the overall holding period to be over 10 years.

During 2015, we made a $50 million commitment as a limited partner of a bank revolver opportunity fund. The fund is subject to an investment term of 7 years and the General Partners have the option to extend the term by up to 2 years. At September 30, 2017, this commitment remains unfunded. It is not anticipated that the full amount of this fund will be drawn.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.INVESTMENTS (CONTINUED)

d) Equity Method Investments

During 2016, we paid $108 million including direct transaction costs to acquire 19% of the common equity of Harrington Reinsurance Holdings Limitedcollateralized loan obligations ("Harrington"CLOs"), the parent companyoriginated by a variety of Harrington Re Ltd. ("Harrington Re"), an independent reinsurance company jointly sponsored by AXIS Capitalfinancial institutions. The fair values of these securities are determined using a model which uses prepayment speeds and The Blackstone Group L.P. ("Blackstone"). Through long-term service agreements, AXIS Capital will serve as Harrington Re's reinsurance underwriting manager and Blackstone will serve as exclusive investment management service provider. As an investor, we expect to benefit from underwriting profit generated by Harrington Re and the income and capital appreciation Blackstone seeks to deliver through its investment management services. In addition, we have entered into an arrangement with Blackstone under which underwriting and investment related fees will be shared equally. Harrington is not a variable interest entity. Given that we exercise significant influence over the operating and financial policies of this investee we account for our ownership in Harrington under the equity method of accounting. The Company's proportionate share of the underlying equity in net assets resulted in a basis difference of $5 million which represents initial transactions costs.

During the nine months ended September 30, 2017, we recorded an impairment charge of $9 million, related to a U.S. based insurance company, which reduced the carrying value of the investment to $nil. This charge is included in interest in income (loss) of equity method investments in the Consolidated Statement of Operations.

e) Net Investment Income

Net investment income was derivedspreads sourced primarily from the following sources:
 
  
Three months ended September 30, Nine months ended September 30, 
 
  
2017 2016 2017 2016 
          
 Fixed maturities$74,978
 $75,827
 $230,603
 $229,423
 
 Other investments17,373
 38,248
 59,973
 25,770
 
 Equity securities3,223
 4,633
 11,048
 12,843
 
 Mortgage loans2,895
 2,191
 7,970
 5,683
 
 Cash and cash equivalents3,111
 3,768
 9,640
 7,071
 
 Short-term investments698
 337
 1,797
 708
 
 Gross investment income102,278
 125,004
 321,031
 281,498
 
 Investment expenses(7,109) (8,081) (21,132) (23,680) 
 Net investment income$95,169
 $116,923
 $299,899
 $257,818
 
          




22
Tablenew issue market. As the significant inputs used to price these securities are observable market inputs, the fair values of Contents

AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.INVESTMENTS (CONTINUED)

f) Net Realized Investment Gains (Losses)

The following table provides an analysis of net realized investment gains (losses):
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Gross realized gains        
 Fixed maturities and short-term investments$19,297
 $26,211
 $57,524
 $67,833
 
 Equities17,980
 5,570
 33,794
 18,804
 
 Gross realized gains37,277
 31,781
 91,318
 86,637
 
 Gross realized losses        
 Fixed maturities and short-term investments(15,893) (21,908) (83,183) (90,702) 
 Equities(45) (576) (258) (15,923) 
 Gross realized losses(15,938) (22,484) (83,441) (106,625) 
 Net OTTI recognized in earnings(5,412) (4,247) (13,493) (20,346) 
 
Change in fair value of investment derivatives(1)
(1,295) 155
 (9,195) 39
 
 Net realized investment gains (losses)$14,632
 $5,205
 $(14,811) $(40,295) 
          
(1) Refer to Note 6 'Derivative Instruments'

The following table summarizes the OTTI recognized in earnings by asset class:
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Fixed maturities:        
 Non-U.S. government$3,905
 $2,456
 $8,187
 $2,953
 
 Corporate debt1,507
 1,791
 5,306
 14,833
 
  5,412
 4,247
 13,493
 17,786
 
 Equity Securities        
 Exchange-traded funds—
 —
 —
 2,560
 
  —
 —
 —
 2,560
 
 Total OTTI recognized in earnings$5,412
 $4,247
 $13,493
 $20,346
 
          



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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.INVESTMENTS (CONTINUED)

The following table provides a roll forward of the credit losses, before income taxes, for which a portion of the OTTI was recognized in AOCI:
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Balance at beginning of period$1,481
 $1,513
 $1,493
 $1,506
 
 Credit impairments recognized on securities not previously impaired—
 —
 —
 —
 
 Additional credit impairments recognized on securities previously impaired2
 —
 2
 7
 
 Change in timing of future cash flows on securities previously impaired—
 —
 —
 —
 
 Intent to sell of securities previously impaired—
 —
 —
 —
 
 Securities sold/redeemed/matured—
 (33) (12) (33) 
 Balance at end of period$1,483
 $1,480
 $1,483
 $1,480
 
          

g) Reverse Repurchase Agreements

At September 30, 2017, we held $34 million (December 31, 2016: $176 million) of reverse repurchase agreements. These loans are fully collateralized,ABS are generally outstanding forclassified as Level 2. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a short periodlow volume of timetrading activity and current transactions are presented on a gross basisnot orderly. In this event, the fair values of these securities are classified as partLevel 3.

Municipals

Municipals comprise revenue bonds and general obligation bonds issued by U.S. domiciled state and municipal entities. The fair values of cashthese securities are determined using spreads obtained from the new issue market, trade prices and cash equivalents inbroker-dealers quotes. As the Consolidated Balance Sheet. The required collateral for these loans is either cash or U.S. Treasuries at a minimum rate of 102% of the loan principal. Upon maturity, we receive principal and interest income. We monitor the estimated fair value of the securities loaned and borrowed on a daily basis with additional collateral obtained as necessary throughout the duration of the transaction.




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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

Fair value is defined as the price to sell an asset or transfer a liability (i.e. the “exit price”) in an orderly transaction between market participants. U.S. GAAP prescribes a fair value hierarchy that prioritizes thesignificant inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement. The hierarchy is broken down into three levels as follows:

Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access.

Level 2 - Valuations based on quoted prices in active markets for similar assets or liabilities, quoted prices for identical assets or liabilities in inactive markets, or for which significant inputsprice these securities are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.

Level 3 - Valuations based on inputs, that are unobservable and significant to the overall fair value measurement. The unobservable inputs reflect our own judgments about assumptions that market participants might use.

The availability of observable inputs can vary from financial instrument to financial instrument and is affected by a wide variety of factors including, for example, the type of financial instrument, whether the financial instrument is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment.

Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This may lead us to change the selection of our valuation technique (from market to cash flow approach) or may cause us to use multiple valuation techniques to estimate the fair valuevalues of a financial instrument. This circumstance could cause an instrument to be reclassified between levels within the fair value hierarchy.municipals are classified as Level 2.


Valuation Techniques


The valuation techniques, including significant inputs and assumptions generally used to determine the fair values of ourthe Company's financial instruments as well as the classification of the fair values of ourits financial instruments in the fair value hierarchy are described in detail below.


Fixed Maturities


At each valuation date, we usethe Company uses the market approach valuation technique to estimate the fair value of ourits fixed maturities portfolio, whenwhere possible. ThisThe market approach includes, but is not limited to, prices obtained from third partythird-party pricing services for identical or comparable securities and the use of “pricing"pricing matrix models”models" using observable market inputs such as yield curves, credit risks and spreads, measures of volatility, and prepayment speeds. Pricing from third partythird-party pricing services is sourced from multiple vendors, whenwhere available, and we maintainthe Company maintains a vendor hierarchy by asset type based on historical pricing experience and vendor expertise. WhenWhere prices are unavailable from pricing services, we obtainthe Company obtains non-binding quotes from broker-dealers who are active in the corresponding markets. The valuation techniques including significant inputs and assumptions generally used to determine the fair values of ourthe Company's fixed maturities by asset class as well as the classifications of the fair values of these securities in the fair value hierarchy are described in detail below.



24

25


AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE MEASUREMENTS (CONTINUED)


4.    FAIR VALUE MEASUREMENTS (CONTINUED)

U.S. governmentGovernment and agencyAgency


U.S. government and agency securities consist primarily of bonds issued by the U.S. Treasury and mortgage pass-through agencies such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. As the fair values of U.S. Treasury securities are based on unadjusted quoted market prices in active markets, the fair values of these securities are classified as Level 1. The fair values of U.S. government agency securities are determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads are observable market inputs, the fair values of U.S. government agency securities are classified as Level 2.


Non-U.S. governmentGovernment


Non-U.S. government securities include bonds issued by non-U.S. governments and their agencies along with supranational organizations (collectively also known as sovereign debt securities). The fair values of these securities are based on prices obtained from international indices or valuation models that include inputs such as interest rate yield curves, cross-currency basis index spreads and country credit spreads for structures similar to the sovereign bond in terms of issuer, maturity and seniority. As the significant inputs used to price these securities are observable market inputs, the fair values of non-U.S. government securities are classified as Level 2.


Corporate debtDebt


Corporate debt securities consist primarily of investment-gradeinvestment grade debt of a wide variety of corporate issuers and industries. The fair values of these securities are generally determined using the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and broker-dealer quotes. As the yields for the risk-free yield curve and the spreads are observable market inputs, the fair values of corporate debt securities are generally classified as Level 2. Where pricing is unavailable from pricing services, we obtainthe Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, the fair values of these securities are classified as Level 3.


Agency RMBS


Agency RMBS consist of bonds issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. The fair values of these securities are priced using a mortgage pool specific model which uses daily inputs from the active to be announced market and the spread associated with each mortgage pool based on vintage. As the significant inputs used to price these securities are observable market inputs, the fair values of Agency RMBS are classified as Level 2.


CMBS


CMBS mainly include mostly investment-gradeinvestment grade bonds originated by non-agencies. The fair values of these securities are determined using a pricing model which uses dealer quotes and other available trade information along with security level characteristics to determine deal specific spreads. As the significant inputs used to price these securities are observable market inputs, the fair values of CMBS securities are generally classified as Level 2. Where pricing is unavailable from pricing services, we obtainthe Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, the fair values of these securities are classified as Level 3.


Non-Agency

25

AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.    FAIR VALUE MEASUREMENTS (CONTINUED)
Non-agency RMBS


Non-AgencyNon-agency RMBS mainly include mostly investment-gradeinvestment grade bonds originated by non-agencies. The fair values of these securities are determined using an option adjusted spread model or other relevant models, which use inputs including available trade information or broker quotes, prepayment and default projections based on historical statistics of the underlying collateral and current market data. As the significant inputs used to price these securities are observable market inputs, the fair values of Non-Agencynon-agency RMBS are generally classified as Level 2. Where pricing is unavailable from pricing services, the Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, the fair values of these securities are classified as Level 2.3.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE MEASUREMENTS (CONTINUED)


ABS


ABS mainly include mostly investment-gradeinvestment grade bonds backed by pools of loans with a variety of underlying collateral, including automobile loan receivables,auto loans, student loans, credit card receivables and CLO debtcollateralized loan obligations ("CLOs"), originated by a variety of financial institutions. The fair values of these securities are determined using a model which uses prepayment speeds and spreads sourced primarily from the new issue market. As the significant inputs used to price these securities are observable market inputs, the fair values of ABS are generally classified as Level 2. Where pricing is unavailable from pricing services, we obtainthe Company obtains non-binding quotes from broker-dealers to estimate fair value. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. In this event, the fair values of these securities are classified as Level 3.


Municipals


Municipals comprise revenue bonds and general obligation bonds issued by U.S. domiciled state and municipal entities. The fair values of these securities are determined using spreads obtained from the new issue market, trade prices and broker-dealers quotes. As the significant inputs used to price these securities are observable market inputs, the fair values of municipals are classified as Level 2.


Equity Securities


Equity securities include common stocks, preferred stocks, exchange-traded funds and bond mutual funds. As the fair values of common stocks and exchange-traded funds are based on unadjusted quoted market prices in active markets, the fair values of these securities are classified as Level 1.
As the significant inputs used to price preferred stocks are observable market inputs, the fair value of these securities are classified as Level 2. As bond mutual funds have daily liquidity, with redemption based on the Net Asset Values per share ("NAV") of the funds, the fair values of these securities are classified as Level 2.


Other Investments


The fair value of an indirect investment in CLO-Equities is estimated using an income approach valuation technique, specifically an externally developed discounted cash flow model due to the lack of observable and relevant trades in secondary markets. As the significant inputs used to price this security are unobservable, the fair value of the indirect investment in CLO-Equities is classified as Level 3.

Other privately held securitiesinvestments include common shares, preferred shares, private company investment funds, investments in limited partnerships, convertible notes, convertible preferred shares, convertible notes and notes payable.a variable yield security. These securitiesinvestments are initially valued at cost, which approximates fair value. In subsequent measurement periods, the fair values of these securitiesinvestments are generally derived from one or a combination of valuation methodologies which consider factors including recent capital raises by the investee companies, comparable precedent transaction multiples, comparable publicly traded multiples, third-party valuations, discounted cash-flow models, and other techniques that consider the industry and development stage of each investee company. The fair value of the variable yield security is determined using an internallyexternally developed discounted cash flow model. In order to assess the reasonableness of the information received from investee companies, the Company maintains an understanding of current market conditions, historical results, and emerging trends that may impact the results of operations, financial condition or liquidity of these companies. In addition, the Company engages in regular communication with management at investee companies. As the significant inputs used to price these securitiesinvestments are unobservable, the fair valuevalues of these securitiesother privately held investments are classified as Level 3.

Indirect investments in CLO-Equities are classified as Level 3 as the The fair values of these securitiesprivate company investment funds are estimated using an income approach valuation technique (discounted cash flow model) due to the lackNAVs as advised by external fund managers or third-party administrators.

26


Short-TermAXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4.    FAIR VALUE MEASUREMENTS (CONTINUED)
Short-term Investments


Short-term investments primarily comprise highly liquid securities with maturities greater than three months but less than one year from the date of purchase. These securities are classified as Level 2 because these securities are typically not actively traded due to their approaching maturity, and, as such,therefore their amortized cost approximates fair value. The fair values of short-term investments are classified as Level 2.


Derivative Instruments


Derivative Instrumentsinstruments include foreign currencyexchange forward contracts, exchange traded interest rate swaps and commodity contracts that are customized to ourthe Company's economic hedging strategies and trade in the over-the-counter derivative market. The fair values of these derivatives are determined using thea market approach valuation technique based on significant observable market inputs from third partythird-party pricing vendors, non-binding broker-dealer quotes and/or recent trading activity. Accordingly,As the significant inputs used to price these derivatives are observable market inputs, the fair values of these derivatives are classified as Level 2.


Weather derivatives relate to non-exchange traded derivative-based risk management products addressing weather risks. The fair values of these derivatives are determined using observable market inputs and unobservable inputs in combination with industry or internally developed valuation and forecasting techniques. Accordingly, the fair values of these derivatives are classified as Level 3.





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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE MEASUREMENTS (CONTINUED)


4.    FAIR VALUE MEASUREMENTS (CONTINUED)
Other underwriting-related derivatives include insurance and reinsurance contracts that are required to be accounted for as derivatives. These derivative contracts are initially valued at cost which approximates fair value. In subsequent measurement periods, the fair values of these derivatives are determined using internally developed discounted cash flow models. As the significant inputs used to price these derivatives are unobservable, the fair value of these contracts are classified as Level 3.

Insurance-linked Securities

Insurance-linked securities comprise an investment in a catastrophe bond. As pricing is unavailable from pricing services, we obtain non-binding quotes from broker-dealers to estimate the fair values of these securities. Pricing is generally unavailable when there is a low volume of trading activity and current transactions are not orderly. Accordingly, the fair values of these securities are classified as Level 3.

Cash Settled Awards

Cash settled awards comprise restricted stock units that form part of our compensation program. Although the fair values of these awards are determined using observable quoted market prices in active markets, the restricted stock units are not actively traded. Accordingly, the fair values of these liabilities are classified as Level 2.




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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE MEASUREMENTS (CONTINUED)

The tables below present the financial instruments measured at fair value on a recurring basis for the periods indicated:
Quoted prices in active markets for identical assets (Level 1)Significant other observable inputs (Level 2)Significant unobservable inputs (Level 3)Fair value based on NAV practical expedientTotal fair value
At March 31, 2024
Assets
Fixed maturities, available for sale
U.S. government and agency$2,576,715 $17,002 $— $— $2,593,717 
Non-U.S. government— 738,198 — — 738,198 
Corporate debt— 4,789,463 126,475 — 4,915,938 
Agency RMBS— 1,585,620 — — 1,585,620 
CMBS— 820,393 — — 820,393 
Non-agency RMBS— 139,992 — — 139,992 
ABS— 1,317,905 — — 1,317,905 
Municipals— 157,547 — — 157,547 
 2,576,715 9,566,120 126,475 — 12,269,310 
Equity securities
Common stocks2,452 — — — 2,452 
Preferred stocks2 5,700 — — 5,702 
Exchange-traded funds287,166 — — — 287,166 
Bond mutual funds— 286,858 — — 286,858 
 289,620 292,558 — — 582,178 
Other investments
Multi-strategy funds— — — 24,950 24,950 
Direct lending funds— — — 168,987 168,987 
Private equity funds— — — 309,399 309,399 
Real estate funds— — — 309,545 309,545 
CLO-Equities— — 4,986 — 4,986 
Other privately held investments— — 96,255 20,602 116,857 
— — 101,241 833,483 934,724 
Short-term investments— 75,879 — — 75,879 
Other assets
Derivative instruments (refer to Note 5)— 1,232 — — 1,232 
Total Assets$2,866,335 $9,935,789 $227,716 $833,483 $13,863,323 
Liabilities
Derivative instruments (refer to Note 5)$— $2,282 $— $— $2,282 
 Total Liabilities$— $2,282 $— $— $2,282 




  Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair value based on NAV practical expedient Total Fair Value 
            
 At September 30, 2017          
 Assets          
 Fixed maturities          
 U.S. government and agency$1,495,423
 $51,895
 $—
 $—
 $1,547,318
 
 Non-U.S. government—
 573,640
 —
 —
 573,640
 
 Corporate debt—
 4,442,951
 61,016
 —
 4,503,967
 
 Agency RMBS—
 2,306,822
 —
 —
 2,306,822
 
 CMBS—
 669,736
 —
 —
 669,736
 
 Non-Agency RMBS—
 43,817
 —
 —
 43,817
 
 ABS—
 1,264,855
 24,015
 —
 1,288,870
 
 Municipals—
 152,216
 —
 —
 152,216
 
  1,495,423
 9,505,932
 85,031
 —
 11,086,386
 
 Equity securities          
 Common stocks14,826
 —
 —
 —
 14,826
 
 Exchange-traded funds454,194
 —
 —
 —
 454,194
 
 Bond mutual funds—
 190,731
 —
 —
 190,731
 
  469,020
 190,731
 —
 —
 659,751
 
 Other investments          
 Hedge funds—
 —
 —
 399,097
 399,097
 
 Direct lending funds—
 —
 —
 232,389
 232,389
 
 Private equity funds—
 —
 —
 71,896
 71,896
 
 Real estate funds—
 —
 —
 46,691
 46,691
 
 Other privately held investments—
 —
 43,398
 —
 43,398
 
 CLO-Equities—
 —
 36,782
 —
 36,782
 
  —
 —
 80,180
 750,073
 830,253
 
 Short-term investments—
 15,282
 —
 —
 15,282
 
 Other assets          
 Derivative instruments (see Note 6)—
 5,859
 —
 —
 5,859
 
 Insurance-linked securities—
 —
 24,976
 —
 24,976
 
 Total Assets$1,964,443
 $9,717,804
 $190,187
 $750,073
 $12,622,507
 
 Liabilities          
 Derivative instruments (see Note 6)$—
 $1,873
 $11,844
 $—
 $13,717
 
 Cash settled awards (see Note 9)—
 18,369
 —
 —
 18,369
 
  Total Liabilities$—
 $20,242
 $11,844
 $—
 $32,086
 
            
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE MEASUREMENTS (CONTINUED)


4.    FAIR VALUE MEASUREMENTS (CONTINUED)

Quoted prices in active markets for identical assets (Level 1)Significant other observable inputs (Level 2)Significant unobservable inputs (Level 3)Fair value based on NAV practical expedientTotal fair value
At December 31, 2023
Assets
Fixed maturities, available for sale
U.S. government and agency$2,989,612 $17,916 $— $— $3,007,528 
Non-U.S. government— 723,959 — — 723,959 
Corporate debt— 4,338,419 135,753 — 4,474,172 
Agency RMBS— 1,634,661 — — 1,634,661 
CMBS— 839,696 — — 839,696 
Non-agency RMBS— 153,396 — — 153,396 
ABS— 1,242,971 — — 1,242,971 
Municipals— 158,359 — — 158,359 
 2,989,612 9,109,377 135,753 — 12,234,742 
Equity securities
Common stocks2,546 — — — 2,546 
Preferred stocks1 5,600 — — 5,601 
Exchange-traded funds287,275 — — — 287,275 
Bond mutual funds— 293,089 — — 293,089 
 289,822 298,689 — — 588,511 
Other investments
Multi-strategy funds— — — 24,619 24,619 
Direct lending funds— — — 192,270 192,270 
Private equity funds— — — 301,712 301,712 
Real estate funds— — — 317,325 317,325 
CLO-Equities— — 5,300 — 5,300 
Other privately held investments— — 87,289 20,898 108,187 
— — 92,589 856,824 949,413 
Short-term investments— 17,216 — — 17,216 
Other assets
Derivative instruments (refer to Note 5)— 4,424 — — 4,424 
Total Assets$3,279,434 $9,429,706 $228,342 $856,824 $13,794,306 
Liabilities
Derivative instruments (refer to Note 5)$— $10,165 $— $— $10,165 
Total Liabilities$— $10,165 $— $— $10,165 



  Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair value based on NAV practical expedient Total Fair Value 
            
 At December 31, 2016          
 Assets          
 Fixed maturities          
 U.S. government and agency$1,583,106
 $72,963
 $—
 $—
 $1,656,069
 
 Non-U.S. government—
 565,834
 —
 —
 565,834
 
 Corporate debt—
 4,524,868
 75,875
 —
 4,600,743
 
 Agency RMBS—
 2,465,135
 —
 —
 2,465,135
 
 CMBS—
 663,176
 3,061
 —
 666,237
 
 Non-Agency RMBS—
 56,921
 —
 —
 56,921
 
 ABS—
 1,204,750
 17,464
 —
 1,222,214
 
 Municipals—
 163,961
 —
 —
 163,961
 
  1,583,106
 9,717,608
 96,400
 —
 11,397,114
 
 Equity securities          
 Common stocks78
 —
 —
 —
 78
 
 Exchange-traded funds514,707
 —
 —
 —
 514,707
 
 Bond mutual funds—
 123,959
 —
 —
 123,959
 
  514,785
 123,959
 —
 —
 638,744
 
 Other investments          
 Hedge funds—
 —
 —
 498,150
 498,150
 
 Direct lending funds—
 —
 —
 134,650
 134,650
 
 Private equity funds—
 —
 —
 81,223
 81,223
 
 Real estate funds—
 —
 —
 13,354
 13,354
 
 Other privately held investments—
 —
 42,142
 —
 42,142
 
 CLO-Equities—
 —
 60,700
 —
 60,700
 
  —
 —
 102,842
 727,377
 830,219
 
 Short-term investments—
 127,461
 —
 —
 127,461
 
 Other assets          
 Derivative instruments (see Note 6)—
 14,365
 2,532
 —
 16,897
 
 Insurance-linked securities—
 —
 25,023
 —
 25,023
 
 Total Assets$2,097,891
 $9,983,393
 $226,797
 $727,377
 $13,035,458
 
 Liabilities          
 Derivative instruments (see Note 6)$—
 $9,076
 $6,500
 $—
 $15,576
 
 Cash settled awards (see Note 9)—
 48,432
 —
 —
 48,432
 
 Total Liabilities$—
 $57,508
 $6,500
 $—
 $64,008
 
            
29

During 2017 and 2016, there were no transfers between Levels 1 and 2.










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5.FAIR VALUE MEASUREMENTS (CONTINUED)


4.    FAIR VALUE MEASUREMENTS (CONTINUED)
Except certain fixed maturities and insurance-linked securities priced using broker-dealer quotes (underlying inputs are not available), theThe following table quantifies the significant unobservable inputs used in estimating fair values at September 30,2017 forMarch 31, 2024 of investments classified as Level 3 in the fair value hierarchy.hierarchy:
Asset fair valueValuation techniqueUnobservable inputAmount / Range
Weighted
average
Other investments - CLO-Equities$4,986 Discounted cash flowDefault rate4.5%4.5%
  Loss severity rate50.0%50.0%
  Collateral spread3.0%3.0%
Estimated maturity date4 years4 years
Other investments - Other privately held investments$18,728 Discounted cash flowDiscount rate6.0%6.0%
Default rate0.5%0.5%
Loss absorption yield1.0%1.0%
Estimated maturity date0-2 years1 year
Note: Fixed maturities of $126 million that are classified as Level 3 are excluded from the above table as these securities are priced using broker-dealer quotes. In addition, other privately held investments of $78 million that are classified as Level 3 are excluded from the above table as these investments are priced using capital statements received from investee companies.
  Fair ValueValuation TechniqueUnobservable InputRange
Weighted
Average
 
        
 Other investments - CLO-Equities$32,141
Discounted cash flowDefault rates3.8%3.8% 
    Loss severity rate35.0%35.0% 
    Collateral spreads3.0%3.0% 
    Estimated maturity dates7 years7 years 
        
  4,641
Liquidation valueFair value of collateral100%100% 
    Discount margin0% - 17.8%2.7% 
        
 Other investments - Other privately held investments43,398
Discounted cash flowDiscount rate6.0% - 8.0%7.5% 
        
 Derivatives - Other underwriting-related derivatives$(11,844)Discounted cash flowDiscount rate2.3%2.3% 
        


Other Investments - CLO-Equities

The CLO-Equities market continues to be relatively inactive with only a small number of transactions being observed, particularly as it relatesrelated to transactions involving our CLO-Equities.CLO-Equities held by the Company. Accordingly, the fair valuesvalue of investmentsthe Company's indirect investment in CLO-Equities areis determined using models. Given that all of our direct investments in CLO-Equities are past their reinvestment period, there is uncertainty over the remaining time to maturity. As such our direct investments in CLO-Equities are estimated using a liquidation valuation. Indirect investments in CLO-Equities are valued using a discounted cash flow model prepared by an external investment manager.


The liquidation valuation is based on the fair values of the net underlying collateral which is determined by applying market discount margins by credit quality bucket. An increase (decrease) in the market discount margin would result in a decrease (increase) in value of our CLO-Equities.

Regarding the discounted cash flow model, the default and loss severity rates are the most judgmental unobservable market inputs to the discounted cash flow model to which the valuation of the Company's indirect investment in CLO-Equities is most sensitive. A significant increase (decrease) in either of these significant inputs in isolation would result in a lower (higher) fair value estimatesestimate for investmentsthe investment in CLO-Equities and, in general, a change in default rate assumptions willwould be accompanied by a directionally similar change in loss severity rate assumptions. Collateral spreads and estimated maturity dates are less judgmental inputs as they are based on the historical average of actual spreads and the weighted average life of the current underlying portfolios, respectively. A significant increase (decrease) in either of these significant inputs in isolation would result in a higher (lower) fair value estimatesestimate for investmentsthe investment in CLO-Equities. In general, these inputs have no significant interrelationship with each other or with default and loss severity rates.


On a quarterly basis, ourthe Company's valuation process for its indirect investment in CLO-Equities includes a review of the underlying collateral along with related discount margins by credit quality bucket used in the liquidation valuation and a review of the underlying cash flows and key assumptions used in the discounted cash flow model. The above significant unobservable inputs are reviewed and updated based on information obtained from secondary markets, including information received from the managers of ourthe Company's CLO-Equities portfolio.investment. In order to assess the reasonableness of the inputs we usethe Company uses in our models, we maintainthe discounted cash flow model, the Company maintains an understanding of current market conditions, historical results, as well asand emerging trends that may impact future cash flows. In addition,we update the assumptions we usethe Company uses in ourits models are updated through regular communication with industry participants and ongoingongoing monitoring of the deals in which we participate (e.g. default and loss severity rate trends).the Company participates.


Other Investments - Other Privately Held Securities

Other privately held securities are initially valued at cost which approximates fair value. In subsequent measurement periods, the fair valuesvalue of these securities arethe variable yield security was determined using internallyan externally developed discounted cash flow models. These models includemodel. This model includes inputs that are specific to eachthat investment. The inputs used in the fair value measurementsmeasurement include dividend or interest rates andan appropriate discount rates.rate, default rate, loss absorption rate and estimated maturity date. The selection of an appropriate discount rate is judgmental and is the most significant unobservable input used in the valuation



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE MEASUREMENTS (CONTINUED)

of these securities.this investment. A significant increase (decrease) in this input in isolation could result in a significantly lower (higher) fair value measurement for other privately held securities. Where relevant, we also consider the contractual agreements which stipulate methodologies for calculating the dividend rate to be paid upon liquidation, conversion or redemption.this investment. In order to assess the reasonableness of the inputs we usethe Company uses in the discounted cash flow models, we maintainmodel, the Company maintains an understanding of current market conditions, historical results, as well as investee specific information that may impact future cash flows.

Other underwriting-related derivatives are initially valued at cost which approximates fair value. In subsequent measurement periods, the fair values of these derivatives are determined using internally developed discounted cash flow models which uses appropriate discount rates. The selection of an appropriate discount rate is judgmental and is the most significant unobservable input used in the valuation of these derivatives. A significant increase (decrease) in this input in isolation could result in a significantly lower (higher) fair value measurement for the derivative contracts. In order to assess the reasonableness of the inputs we use in the discounted cash flow model, we maintain an understanding of current market conditions, historical results, as well as contract specific information that may impact future cash flows.






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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE MEASUREMENTS (CONTINUED)


4.    FAIR VALUE MEASUREMENTS (CONTINUED)
The following tables presenttable presents changes in Level 3 for financial instruments measured at fair value on a recurring basis forbasis:
Opening
balance
Transfers
into
Level 3
Transfers
out of
Level 3
Included 
in net income(1)
Included
in OCI (2)
PurchasesSales
Settlements/
distributions
Closing
balance
Change in
unrealized
gains/(losses) (3)
Three months ended March 31, 2024
Fixed maturities, available for sale         
Corporate debt$135,753 $— $— $(834)$(495)$4,231 $— $(12,180)$126,475 $— 
 135,753 — — (834)(495)4,231 — (12,180)126,475 — 
Other investments
CLO-Equities5,300 — — — — — — (314)4,986 — 
Other privately held investments87,289 — — 1,728 — 7,238 — — 96,255 1,728 
 92,589 — — 1,728 — 7,238 — (314)101,241 1,728 
Total assets$228,342 $— $— $894 $(495)$11,469 $— $(12,494)$227,716 $1,728 
Three months ended March 31, 2023
Fixed maturities, available for sale         
Corporate debt$119,104 $— $— $(7)$1,183 $18,910 $— $(8,763)$130,427 $— 
 119,104 — — (7)1,183 18,910 — (8,763)130,427 — 
Other investments
CLO-Equities5,016 — — 411 — — — (408)5,019 411 
Other privately held investments136,158 — — 336 — 4,459 — — 140,953 336 
 141,174 — — 747 — 4,459 — (408)145,972 747 
Total assets$260,278 $— $— $740 $1,183 $23,369 $— $(9,171)$276,399 $747 
(1) Realized gains (losses) on fixed maturities and realized and unrealized gains (losses) on other assets and other liabilities included in net income are included in net investment gains (losses). Realized and unrealized gains (losses) on other investments included in net income are included in net investment income.
(2) Unrealized gains (losses) on fixed maturities are included in other comprehensive income ("OCI").
(3) Change in unrealized gains (losses) relating to assets and liabilities held at the periods indicated:
reporting date.
  
Opening
Balance
 
Transfers
into
Level 3
 
Transfers
out of
Level 3
 
Included in
earnings (1)
 
Included
in OCI (2)
 Purchases Sales 
Settlements/
Distributions
 
Closing
Balance
 
Change in
unrealized
investment
gain/(loss) (3)
 
                      
 Three months ended September 30, 2017                 
 Fixed maturities                    
 Corporate debt$68,320
 $—
 $(1,208) $(835) $(9) $—
 $(2,274) $(2,978) $61,016
 $—
 
 CMBS—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
 ABS5,999
 —
 (6,001) —
 10
 24,007
 —
 —
 24,015
 —
 
  74,319
 —
 (7,209) (835) 1
 24,007
 (2,274) (2,978) 85,031
 —
 
 Other investments                   
 Other privately held investments42,938
 —
 —
 460
 —
 —
 —
 —
 43,398
 460
 
 CLO - Equities47,076
 —
 —
 1,402
 —
 —
 —
 (11,696) 36,782
 1,402
 
  90,014
 —
 —
 1,862
 —
 —
 —
 (11,696) 80,180
 1,862
 
 Other assets                   
 Derivative instruments—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
 Insurance-linked securities25,047
 —
 —
 (71) —
 —
 —
 —
 24,976
 (71) 
  25,047
 —
 —
 (71) —
 —
 —
 —
 24,976
 (71) 
 Total assets$189,380
 $—
 $(7,209) $956
 $1
 $24,007
 $(2,274) $(14,674) $190,187
 $1,791
 
                     
 
 Other liabilities                   
 Derivative instruments$12,209
 $—
 $—
 $(291) $—
 $—
 $—
 $(74) $11,844
 $(291) 
 Total liabilities$12,209
 $—
 $—
 $(291) $—
 $—
 $—
 $(74) $11,844
 $(291) 
                      
 Nine months ended September 30, 2017                 
 Fixed maturities 
  
  
  
  
  
  
  
  
  
 
 Corporate debt$75,875
 $1,536
 $(3,112) $(762) $(392) $19,181
 $(21,475) $(9,835) $61,016
 $—
 
 CMBS3,061
 —
 (9,418) —
 17
 9,400
 —
 (3,060) —
 —
 
 ABS17,464
 —
 (24,949) —
 1,493
 30,007
 —
 —
 24,015
 —
 
  96,400
 1,536
 (37,479) (762) 1,118
 58,588
 (21,475) (12,895) 85,031
 —
 
 Other investments                    
 Other privately held investments42,142
 —
 —
 1,256
 —
 —
 —
 —
 43,398
 1,256
 
 CLO - Equities60,700
 —
 —
 3,930
 —
 —
 —
 (27,848) 36,782
 3,930
 
  102,842
 —
 —
 5,186
 —
 —
 —
 (27,848) 80,180
 5,186
 
 Other assets                   
 Derivative instruments2,532
 —
 —
 653
 —
 —
 —
 (3,185) —
 —
 
 Insurance-linked securities25,023
 —
 —
 (47) —
 —
 —
 —
 24,976
 (47) 
  27,555
 —
 —
 606
 —
 —
 —
 (3,185) 24,976
 (47) 
 Total assets$226,797
 $1,536
 $(37,479) $5,030
 $1,118
 $58,588
 $(21,475) $(43,928) $190,187
 $5,139
 
                      
 Other liabilities                   
 Derivative instruments$6,500
 $—
 $—
 $9,991
 $—
 $12,135
 $—
 $(16,782) $11,844
 $(291) 
 Total liabilities$6,500
 $—
 $—
 $9,991
 $—
 $12,135
 $—
 $(16,782) $11,844
 $(291) 
                      



Transfers into Level 3 from Level 2

There were no transfers into Level 3 from Level 2 during the three months ended March 31, 2024 and 2023.

Transfers out of Level 3 into Level 2

There were no transfers out of Level 3 into Level 2 during the three months ended March 31, 2024 and 2023.





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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE MEASUREMENTS (CONTINUED)


4.    FAIR VALUE MEASUREMENTS (CONTINUED)
  
Opening
Balance
 
Transfers
into
Level 3
 
Transfers
out of
Level 3
 
Included in
earnings (1)
 
Included
in OCI (2)
 Purchases Sales 
Settlements/
Distributions
 
Closing
Balance
 
Change in
unrealized
investment
gain/(loss) (3)
 
                      
 Three months ended September 30, 2016                 
 Fixed maturities                    
 Corporate debt$62,022
 $—
 $—
 $(9) $100
 $7,563
 $—
 $(584) $69,092
 $—
 
 CMBS10,210
 —
 —
 —
 (48) —
 —
 (1,242) 8,920
 —
 
 ABS—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
  72,232
 —
 —
 (9) 52
 7,563
 —
 (1,826) 78,012
 —
 
 Other investments                    
 Other privately held investments41,755
 —
 —
 (355) —
 1,500
 —
 —
 42,900
 (355) 
 CLO - Equities65,883
 —
 —
 8,419
 —
 —
 —
 (10,519) 63,783
 8,419
 
  107,638
 —
 —
 8,064
 —
 1,500
 —
 (10,519) 106,683
 8,064
 
 Other assets                   
 Derivative instruments5
 —
 —
 665
 —
 1,818
 —
 —
 2,488
 665
 
 Insurance-linked securities25,025
 —
 —
 258
 —
 —
 —
 —
 25,283
 258
 
  25,030
 —
 —
 923
 —
 1,818
 —
 —
 27,771
 923
 
 Total assets$204,900
 $—
 $—
 $8,978
 $52
 $10,881
 $—
 $(12,345) $212,466
 $8,987
 
                      
 Other liabilities                   
 Derivative instruments$1,978
 $—
 $—
 $(169) $—
 $6,384
 $—
 $(9) $8,184
 $335
 
 Total liabilities$1,978
 $—
 $—
 $(169) $—
 $6,384
 $—
 $(9) $8,184
 $335
 
                      
 Nine months ended September 30, 2016                 
 Fixed maturities 
  
  
  
  
  
  
  
  
  
 
 Corporate debt$38,518
 $20,412
 $(1,955) $(988) $1,188
 $17,107
 $(4,015) $(1,175) $69,092
 $—
 
 CMBS10,922
 —
 —
 —
 (134) —
 —
 (1,868) 8,920
 —
 
 ABS—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
  49,440
 20,412
 (1,955) (988) 1,054
 17,107
 (4,015) (3,043) 78,012
 —
 
 Other investments                    
 Other privately held investments—
 —
 —
 (1,505) —
 44,405
 —
 —
 42,900
 (1,505) 
 CLO - Equities27,257
 36,378
 —
 17,431
 —
 —
 —
 (17,283) 63,783
 17,431
 
  27,257
 36,378
 —
 15,926
 —
 44,405
 —
 (17,283) 106,683
 15,926
 
 Other assets                   
 Derivative instruments4,395
 —
 —
 3,255
 —
 3,623
 —
 (8,785) 2,488
 669
 
 Insurance-linked securities24,925
 —
 —
 358
 —
 —
 —
 —
 25,283
 358
 
  29,320
 —
 —
 3,613
 —
 3,623
 —
 (8,785) 27,771
 1,027
 
 Total assets$106,017
 $56,790
 $(1,955) $18,551
 $1,054
 $65,135
 $(4,015) $(29,111) $212,466
 $16,953
 
                      
 Other liabilities                   
 Derivative instruments$10,937
 $—
 $—
 $2,445
 $—
 $7,189
 $—
 $(12,387) $8,184
 $457
 
 Total liabilities$10,937
 $—
 $—
 $2,445
 $—
 $7,189
 $—
 $(12,387) $8,184
 $457
 
                      
(1)Gains and losses included in earnings on fixed maturities are included in net realized investment gains (losses). Gains and (losses) included in earnings on other investments are included in net investment income. Gains (losses) on weather derivatives included in earnings are included in other insurance-related income.
(2)Gains and losses included in other comprehensive income (“OCI”) on fixed maturities are included in unrealized gains (losses) arising during the period.
(3)Change in unrealized investment gain (loss) relating to assets held at the reporting date.

The transfers into and out of fair value hierarchy levels reflect the fair value of the securities at the end of the reporting period.

Transfers into Level 3 from Level 2

There were no transfers to Level 3 from Level 2 made during the three months ended September 30, 2017. The transfers to Level 3 from Level 2 made during the nine months ended September 30, 2017 were primarily due to the lack of observable market inputs and multiple quotes from pricing vendors and broker-dealers for certain fixed maturities.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE MEASUREMENTS (CONTINUED)


There were no transfers to Level 3 from Level 2 made during the three months ended September 30, 2016. The transfers into Level 3 made during the nine months ended September 30, 2016 were primarily due to the lack of observable market inputs and multiple quotes from pricing vendors and broker-dealers for certain fixed maturities and as a result of a change in the valuation methodology used to fair value the CLO-equity fund. An income approach valuation technique (discounted cash flow model) was used to estimate the fair value of the CLO-equity fund at September 30, 2016. As the NAV practical expedient was not used to determine the fair value of the CLO-equity fund, the fair value of the fund was categorized within the fair value hierarchy.

Transfers out of Level 3 into Level 2

The transfers into Level 2 from Level 3 made during the three and nine months ended September 30, 2017 were primarily due to the availability of observable market inputs and quotes from pricing vendors on certain fixed maturities.

There were no transfers to Level 2 from Level 3 made during the three months ended September 30, 2016. The transfers to Level 2 from Level 3 made during the nine months ended September 30, 2016 were primarily due to the availability of observable market inputs and quotes from pricing vendors on certain fixed maturities.

Measuring the Fair Value of Other Investments Using Net Asset Valuations


The fair values of hedgemulti-strategy funds, direct lending funds, private equity funds, and real estate funds and private company investment funds are estimated using NAVsnet asset valuations ("NAVs") as advised by external fund managers or third partythird-party administrators. For these funds, NAVs are based on the manager's or administrator's valuation of the underlying holdings in accordance with the fund's governing documents and in accordance with U.S. GAAP.

If there is a reporting lag between the current period end and reporting date of the latest available fund valuation for any hedge fund, we estimate fair values by starting with the most recently available fund valuation and adjusting for return estimates as well as any subscriptions, redemptions and distributions that took place during the current period. Return estimates are obtained from the relevant fund managers. Accordingly, we do not typically have a reporting lag in fair value measurements of these funds. Historically, our valuation estimates incorporating these return estimates have not significantly diverged from the subsequently received NAVs.


For multi-strategy funds, direct lending funds, private equity funds, real estate funds and two of our hedgeprivate company investment funds, valuation statements are typically released on a three month reporting lag therefore we estimatelag. Therefore, the Company estimates the fair value of these funds by starting with the prior quarter-endmost recent fund valuations and adjusting for capital calls, redemptions, drawdowns and distributions. Return estimates are not available from the relevant fund managers for these funds. Accordingly, wefunds, therefore the Company typically havehas a reporting lag in ourits fair value measurements of these funds. In 2017,At March 31, 2024 and December 31, 2023 all funds measured at fair value using NAVs are reported generally on a lag represented 51% (2016: 35%) of our total other investments balance.one quarter lag.


WeThe Company often dodoes not have access to financial information relating to the underlying securities held within the funds, therefore, management is unable to corroborate the fair values placed on the securities underlying the asset valuations provided by fund managers or fund administrators. In order to assess the reasonableness of the NAVs, we performthe Company performs a number of monitoring procedures on a quarterly basis, to assess the quality of the information provided by fund managers and fundsfund administrators. These procedures include, but are not limited to, regular review and discussion of each fund's performance with its manager, regular evaluation of fund performance against applicable benchmarks and the backtesting of ourthe Company's fair value estimates against subsequently received NAVs. Backtesting involves comparing ourthe Company's previously reported fair values for each fund against NAVs per audited financial statements (for year-end values) and final NAVs from fund managers and fund administrators (for interim values).


The fair values of hedgemulti-strategy funds, direct lending funds, private equity funds, and real estate funds and private company investment funds, are measured using the NAV practical expedient, therefore the fair values of these funds have not been categorized within the fair value hierarchy.






32
35


AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.FAIR VALUE MEASUREMENTS (CONTINUED)


4.    FAIR VALUE MEASUREMENTS (CONTINUED)
Financial Instruments Disclosed, But Not Carried, at Fair Value


The fair value of financial instruments accounting guidance also applies to financial instruments disclosed, but not carried, at fair value, except for certain financial instruments, including insurance contracts.
TheAt March 31, 2024, the carrying values of cash and cash equivalents (includingincluding restricted amounts),amounts, accrued investment income, receivable for investments sold, certain other assets, payable for investments purchased and certain other liabilities approximated their fair values at September 30,2017, due to their respective short maturities. As these financial instruments are not actively traded, their fair values are classified as Level 2.


At March 31, 2024, the Company's fixed maturities, held to maturity, were recorded at amortized cost with a carrying value of $693 million (2023: $686 million) and a fair value of $684 million (2023: $676 million). The fair values of these securities are determined using a model which uses prepayment speeds and spreads sourced primarily from the new issue market. As the significant inputs used to price these securities are observable market inputs, their fair values are classified as Level 2.

At March 31, 2024, the carrying value of mortgage loans, held-for-investmentheld for investment, approximated their fair value at September 30,2017.value. The fair values of mortgage loans are primarily determined by estimating expected future cash flows and discounting them using current interest rates for similar mortgage loans with similar credit risk or are determined from pricing for similar loans. As mortgage loans are not actively traded, their fair values are classified as Level 3.


At September 30,2017, senior notes areMarch 31, 2024, the Company's debt was recorded at amortized cost with a carrying value of $994$1,314 million (2016: $993(2023: $1,314 million) and a fair value of $1.1 billion (2016: $1.0 billion)$1,204 million (2023: $1,198 million). The fair valuesvalue of these notes arethe Company's debt is based on prices obtained from a third partythird-party pricing service and areis determined using the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and broker-dealer quotes. As these spreads and the yields for the risk-free yield curve and the spreads are observable market inputs, the fair valuesvalue of senior notesthis debt is classified as Level 2.

At March 31, 2024, Federal Home Loan Bank advances were recorded at amortized cost with a carrying value of $86 million (2023: $86 million) and a fair value of $86 million (2023: $86 million). As these advances are not actively traded, their fair values are classified as Level 2.


6.DERIVATIVE INSTRUMENTS


The following table summarizes the balance sheet classification of derivatives recorded at fair value. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and is presented in the table to quantify the volume of our derivative activities. Notional amounts are not reflective of credit risk.


None of our derivative instruments are designated as hedges under current accounting guidance.






















33
   September 30, 2017 December 31, 2016 
   
Derivative
Notional
Amount
 
Derivative
Asset
Fair
Value(1)
 
Derivative
Liability
Fair
Value(1)
 
Derivative
Notional
Amount
 
Derivative
Asset
Fair
Value(1)
 
Derivative
Liability
Fair
Value(1)
 
              
 Relating to investment portfolio:            
 Foreign exchange forward contracts$147,015
 $—
 $439
 $195,979
 $12,331
 $87
 
 Interest rate swaps180,000
 393
 —
 —
 —
 —
 
 Relating to underwriting portfolio:            
 Foreign exchange forward contracts479,818
 5,466
 1,434
 492,899
 2,034
 8,989
 
 Weather-related contracts—
 —
 —
 67,957
 2,532
 6,500
 
 Commodity contracts—
 —
 —
 —
 —
 —
 
 Other underwriting-related contracts85,000
 —
 11,844
 —
 —
 —
 
 Total derivatives  $5,859
 $13,717
   $16,897
 $15,576
 
              
(1)Asset and liability derivatives are classified within other assets and other liabilities in the Consolidated Balance Sheets.




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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6.DERIVATIVE INSTRUMENTS (CONTINUED)


5.    DERIVATIVE INSTRUMENTS


The following table provides the balance sheet classifications of derivatives recorded at fair value:
  March 31, 2024December 31, 2023
  
Derivative
notional
amount
Derivative
asset
fair
value(1)
Derivative
liability
fair
value(1)
Derivative
notional
amount
Derivative
asset
fair
value(1)
Derivative
liability
fair
value(1)
Relating to investment portfolio:
Foreign exchange forward contracts$110,733 $204 $2 $49,307 $66 $274 
Relating to underwriting portfolio:
Foreign exchange forward contracts1,547,244 1,028 2,280 1,347,559 4,358 9,891 
Total derivatives$1,232 $2,282 $4,424 $10,165 
(1)Derivative assets and derivative liabilities are classified within other assets and other liabilities in the consolidated balance sheets.

The notional amounts of derivative contracts represent the basis on which amounts paid or received are calculated and are presented in the above table to quantify the volume of the Company's derivative activities. Notional amounts are not reflective of credit risk.

None of the Company's derivative instruments are designated as hedges.

Offsetting Assets and Liabilities


OurThe Company's derivative instruments are generally traded under International Swaps and Derivatives Association master netting agreements which establish terms that apply to all transactions. In the event of a bankruptcy or other stipulated event, master netting agreements provide that individual positions be replaced with a new amount, usually referred to as the termination amount, determined by taking into account market prices and converting into a single currency. Effectively, this contractual close-out netting reduces credit exposure from gross to net exposure.

The following table below presentsprovides a reconciliation of our gross derivative assets and liabilities to the net amounts presented in the Consolidated Balance Sheets,consolidated balance sheets, with the difference being attributable to the impact of master netting agreements.agreements:
March 31, 2024December 31, 2023
Gross amountsGross amounts offset
Net
amounts(1)
Gross amountsGross amounts offset
Net
amounts(1)
Derivative assets$4,516 $(3,284)$1,232 $8,708 $(4,284)$4,424 
Derivative liabilities$5,566 $(3,284)$2,282 $14,449 $(4,284)$10,165 
(1)Net asset and liability derivatives are classified within other assets and other liabilities in the consolidated balance sheets.
  September 30, 2017 December 31, 2016 
  Gross AmountsGross Amounts Offset
Net
Amounts(1)
 Gross AmountsGross Amounts Offset
Net
Amounts(1)
 
          
 Derivative assets$9,682
$(3,823)$5,859
 $22,270
$(5,373)$16,897
 
 Derivative liabilities$17,540
$(3,823)$13,717
 $20,949
$(5,373)$15,576
 
          
(1)Net asset and liability derivatives are classified within other assets and other liabilities in the Consolidated Balance Sheets.


Refer to Note 43 'Investments' for information on reverse repurchase agreements.


a) Relating to Investment Portfolio


Foreign Currency Risk


Within ourThe Company's investment portfolio we areis exposed to foreign currency risk. Accordingly,Therefore, the fair values of our investment portfolioits investments are partially influenced by the changechanges in foreign exchange rates. WeThe Company may enter into foreign currency exchange forward contracts to manage the effect of this foreign currency risk. These foreign currency hedging activities are not designated as specific hedges for financial reporting purposes.

Interest Rate Risk

Our investment portfolio contains a large percentage of fixed maturities which exposes us to significant interest rate risk. As part of our overall management of this risk, we may use interest rate swaps.

b) Relating to Underwriting Portfolio

Foreign Currency Risk

Our (re)insurance subsidiaries and branches operate in various foreign countries. Consequently, some of our business is written in currencies other than the U.S. dollar and, therefore, our underwriting portfolio is exposed to significant foreign currency risk. We manage foreign currency risk by seeking to match our foreign-denominated net liabilities under (re)insurance contracts with cash and investments that are denominated in such currencies. We may also use derivative instruments, specifically forward contracts and currency options, to economically hedge foreign currency exposures.






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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6.DERIVATIVE INSTRUMENTS (CONTINUED)


5.    DERIVATIVE INSTRUMENTS (CONTINUED)
Weatherb) Relating to Underwriting Portfolio

Foreign Currency Risk


We write derivative-based risk management products designed to address weather risks withThe Company's insurance and reinsurance subsidiaries and branches operate in various countries. Some of its business is written in currencies other than the objective of generating profits on aU.S. dollar, therefore the underwriting portfolio basis. The majority of this business consists of receiving a payment at contract inception in exchange for bearing the risk of variations in a quantifiable weather-related phenomenon, such as temperature. Where a client wishes to minimize the upfront payment, these transactions may be structured as swaps or collars. In general, our portfolio of such derivative contracts is of short duration, with contracts being predominantly seasonal in nature. In order to economically hedge a portion of this portfolio, we may also purchase weather derivatives.

Commodity Risk

Within our (re)insurance portfolio we are exposed to commodity pricesignificant foreign currency risk. We may hedge a portion of this priceThe Company manages foreign currency risk by entering into commodity derivative contracts.

Other Underwriting-related Risks

We enter intoseeking to match its foreign-denominated net liabilities under insurance and reinsurance contracts with cash and investments that are required to be accounted for as derivatives. These insurance or reinsurance contract provides indemnification to an insured or cedant as a result of a changedenominated in a variable as opposed to a change in an identifiable insured event. We consider thesethe same currencies. The Company uses derivative instruments, specifically, forward contracts to be part of our underwriting operations.economically hedge foreign currency exposures.


The following table provides the total unrealized and realized gains (losses) recognized in earningsnet income (loss) for derivatives not designated as hedges were as follows: hedges:
  Consolidated statement of operations line item that includes gain (loss) recognized in net income (loss)Three months ended March 31,
  20242023
Relating to investment portfolio:
Foreign exchange forward contractsNet investment gains (losses)$795 $(947)
Relating to underwriting portfolio:
Foreign exchange forward contractsForeign exchange (losses) gains(2,015)11,250 
Total$(1,220)$10,303 
























35
   Location of Gain (Loss) Recognized in Income on DerivativeThree months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
           
          
 Relating to investment portfolio:         
 Foreign exchange forward contractsNet realized investment gains (losses)$(1,815) $155
 $(6,534) $39
 
 Interest rate swapsNet realized investment gains (losses)520
 —
 (2,661) —
 
 Relating to underwriting portfolio:         
 Foreign exchange forward contractsForeign exchange losses (gains)(12,481) (182) (26,109) (2,958) 
 Weather-related contractsOther insurance related income (losses)—
 833
 (9,629) 809
 
 Commodity contractsOther insurance related income (losses)—
 1,799
 —
 1,499
 
 Other underwriting-related contractsOther insurance related income (losses)514
 —
 852
 —
 
 Total $(13,262) $2,605
 $(44,081) $(611) 
           



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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


7.6.    RESERVE FOR LOSSES AND LOSS EXPENSES

Reserve Roll-Forward


The following table presents a reconciliation of ourthe Company's beginning and ending gross reserve for losses and loss expenses and net reserve for unpaid losses and loss expensesexpenses:
Three months ended March 31,
20242023
Gross reserve for losses and loss expenses, beginning of period$16,434,018 $15,168,863 
Less reinsurance recoverable on unpaid losses and loss expenses, beginning of period(6,323,083)(5,831,172)
Net reserve for unpaid losses and loss expenses, beginning of period10,110,935 9,337,691 
Net incurred losses and loss expenses related to:
Current year728,671 724,680 
Prior years— (4,038)
 728,671 720,642 
Net paid losses and loss expenses related to:
Current year(50,724)(38,662)
Prior years(612,571)(574,538)
 (663,295)(613,200)
Foreign exchange and other(48,602)46,094 
Net reserve for unpaid losses and loss expenses, end of period10,127,709 9,491,227 
Reinsurance recoverable on unpaid losses and loss expenses, end of period6,503,188 5,823,417 
Gross reserve for losses and loss expenses, end of period$16,630,897 $15,314,644 

Estimates for the periods indicated:Significant Catastrophe Events

      
 Nine months ended September 30,2017 2016 
      
 Gross reserve for losses and loss expenses, beginning of period$9,697,827
 $9,646,285
 
 Less reinsurance recoverable on unpaid losses, beginning of period(2,276,109) (2,031,309) 
 Net reserve for unpaid losses and loss expenses, beginning of period7,421,718
 7,614,976
 
      
 Net incurred losses and loss expenses related to:    
 Current year2,591,135
 1,887,715
 
 Prior years(143,495) (224,131) 
  2,447,640
 1,663,584
 
 Net paid losses and loss expenses related to:    
 Current year(328,751) (233,124) 
 Prior years(1,384,510) (1,334,772) 
  (1,713,261) (1,567,896) 
      
 Foreign exchange and other333,456
 (112,649) 
      
 Net reserve for unpaid losses and loss expenses, end of period8,489,553
 7,598,015
 
 Reinsurance recoverable on unpaid losses, end of period2,298,022
 2,276,792
 
 Gross reserve for losses and loss expenses, end of period$10,787,575
 $9,874,807
 
      

We write business with loss experience generally characterized as low frequency and high severity in nature, which can result in volatility in our financial results. During the nine months ended September 30, 2017 and 2016, we recognized aggregate net losses and loss expenses, net of reinstatement premiums of $702 million and $145 million, respectively, in relation to catastrophe and weather related events.

The transfer of the insurance business of AXIS Specialty Australia to a reinsurer was approved by the Irish High Court on February 1, 2017 and the Federal Court of Australia on February 10, 2017. Consequently, the insurance policies, assets and liabilities of AXIS Specialty Australia were transferred to the reinsurer with effect from February 13, 2017. This resulted in the reduction of reserves for losses and loss expenses by $223 million and a reduction in reinsurance recoverables on unpaid and paid losses by $223 million.

On April 1, 2017, the Company acquired a 100% ownership interest in Aviabel. Foreign exchange and other includes reserves for losses and loss expenses of $79 million and reinsurance recoverables on unpaid and paid losses of $5 million related to this acquisition.







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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7.RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)

Prior Year Development

Prior year reserve development arises from changes to loss and loss expense estimates related to losses incurred in previous calendar years. Such development is summarized by segment in the following table:
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Insurance$2,603
 $20,688
 $30,740
 $43,181
 
 Reinsurance45,165
 55,331
 112,755
 180,950
 
 Total$47,768
 $76,019
 $143,495
 $224,131
 
          

Net favorable prior year reserve development for the three months ended September 30, 2017 included significant contributions from our medium and long tail reserve classes. Net favorable prior year reserve development for the nine months ended September 30, 2017 included significant contributions from short, medium, and long tail reserve classes. Net favorable prior year reserve development for the three and nine months ended September 30, 2016 included significant contributions from our short and long tail reserve classes.

Our short tail business includes the underlying exposures in our property and other, marine and aviation reserve classes within our insurance segment, and the property and other reserve class within our reinsurance segment. Development from these classes contributed $5 million and $41 million of net favorable prior year reserve development for the three and nine months ended September 30, 2017, respectively. These short-tail lines contributed $41 million and $116 million of net favorable prior year reserve development for the three and nine months ended September 30, 2016, respectively. The net favorable development for these classes primarily reflected the recognition of better than expected loss emergence.

Our medium-tail business consists primarily of professional insurance and reinsurance reserve classes, credit and political risk insurance reserve class, and credit and surety reinsurance reserve class. For the three months ended September 30, 2017, the professional reinsurance reserve class contributed net favorable prior year reserve development of $9 million. For the nine months ended September 30, 2017, the professional insurance and reinsurance reserve class contributed net favorable prior year reserve development of $54 million. For the three and nine months ended September 30, 2017, the credit and surety reinsurance reserve class recorded net favorable prior year development of $17 million and $18 million, respectively. This net favorable prior year reserve development reflected the recognition of generally better than expected loss emergence. For the three and nine months ended September 30, 2016, the professional reserve classes contributed net favorable prior year reserve development of $12 million and $28 million, respectively. The net favorable prior year reserve development on these reserve classes reflected generally favorable experience as we continued to transition to more experience based methods.

Our long-tail business consists primarily of liability and motor reserve classes. For the nine months ended September 30, 2017, the liability reinsurance reserve class contributed net favorable prior year reserve development of $40 million. For the three and nine months ended and September 30, 2016, the liability reinsurance reserve class contributed net favorable prior year development of $10 million and $32 million, respectively. The net favorable prior year reserve development for our liability reinsurance reserve class in both years primarily reflected the progressively increased weight given by management to experience based indications on older accident years, which has generally been favorable. For the nine months ended September 30, 2017, the liability insurance reserve class recorded net adverse prior year reserve development of $6 million, primarily attributable to reserve strengthening within our run-off Bermuda excess casualty book of business.

For the three and nine months ended September 30, 2017, the motor reinsurance reserve class recorded net favorable prior year development of $16 million and net adverse prior year reserve development of $4 million, respectively. For the three months ended September 30, 2017, the net favorable prior year reserve development related to favorable loss emergence trends on several classes of business spanning multiple accident years. For the nine months ended, the net adverse prior year development was driven by the U.K. Ministry of Justice’s recent announcement of a decrease in the discount rate used to calculate lump sum awards in U.K. bodily injury cases, known as the Ogden rate. EffectiveAt March 20, 2017, the Ogden rate changed from plus 2.5% to minus 0.75%. For the three and nine months ended September 30, 2016, the motor reinsurance reserve class contributed $7 million and $40 million, respectively, of net favorable prior year reserve development related to favorable loss emergence trends on several classes of business spanning multiple accident years.



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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

7.RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)


Our September 30, 201731, 2024, net reserves for losses and loss expenses includesincluded estimated amounts for numerous catastrophe events. We caution that theThe magnitude and/orand complexity of losses arising from certain of these events in particular Hurricanes Harvey, Irma and Maria and the two earthquakes in Mexico, as well as Hurricane Matthew, the Fort McMurray wildfires, Storm Sandy, the 2011 Japanese earthquake and tsunami, the 2010-11 New Zealand earthquakes and the Tianjin port explosion, inherently increasesincrease the level of uncertainty and, therefore, the level of management judgment involved in arriving at our estimated net reserves for losses and loss expenses. These events include Hurricane Ian, Winter Storm Elliot, June European Convective Storms, the Russia-Ukraine war and COVID-19 which occurred in 2022. As a result, our actual losses for these events may ultimately differ materially from our current estimates.

8.EARNINGS PER COMMON SHARE

The following table presents a comparison of basic and diluted earnings per common share:
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Basic earnings (loss) per common share        
 Net income (loss)$(457,084) $186,613
 $(341,541) $364,460
 
 Less: preferred share dividends10,656
 9,969
 36,154
 29,906
 
 Net income (loss) available to common shareholders(467,740) 176,644
 (377,695) 334,554
 
 
Weighted average common shares outstanding - basic (1)
83,305
 89,621
 84,479
 91,852
 
 Basic earnings (loss) per common share$(5.61) $1.97
 $(4.47) $3.64
 
          
 Diluted earnings (loss) per common share        
 Net income (loss) available to common shareholders$(467,740) $176,644
 $(377,695) $334,554
 
          
 
Weighted average common shares outstanding - basic (1)
83,305
 89,621
 84,479
 91,852
 
 
Share-based compensation plans (2)
—
 730
 —
 727
 
 
Weighted average common shares outstanding - diluted (1)
83,305
 90,351
 84,479
 92,579
 
          
 Diluted earnings (loss) per common share$(5.61) $1.96
 $(4.47) $3.61
 
          
 Anti-dilutive shares excluded from the dilutive computation425
 —
 712
 226
 
          
(1)
On August 17, 2015, the Company entered into an Accelerated Share Repurchase (“ASR”) agreement (see 'Note 10 - Shareholders' Equity' for additional detail). The weighted-average number of shares outstanding used in the computation of basic and diluted earnings per share reflects the Company’s receipt of 4,149,378 common shares delivered to the Company on August 20, 2015, and 1,358,380 common shares delivered to the company on January 15, 2016 under the Company's ASR agreement.
(2) Due to the net loss incurred in During the three and nine months ended September 30, 2017, allMarch 31, 2024, the share equivalents were anti-dilutive.


Company recognized catastrophe and weather-related losses, net of reinsurance, of $20 million (2023: $38 million).



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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

9.SHARE-BASED COMPENSATION


6.    RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
Prior Year Reserve Development

The Company's net prior year reserve development arises from changes to estimates of losses and loss expenses related to loss events that occurred in previous calendar years. The following table presents net prior year reserve development by segment:
  Three months ended March 31,
20242023
Favorable (Adverse)Favorable (Adverse)
Insurance$— $1,041 
Reinsurance— 2,997 
Total$— $4,038 

The following sections provide further details on net prior year reserve development by segment, line of business and accident year:

Insurance Segment:

Prior year reserve development by line of business was as follows:
Three months ended March 31,
20242023
Favorable (Adverse)Favorable (Adverse)
Property$8,011 $5,900 
Accident and health— (304)
Marine and aviation(8,011)13,221 
Cyber— 8,452 
Professional lines— (12,594)
Credit and political risk— 4,519 
Liability— (18,153)
Total$— $1,041 
2024
For the three months ended September 30, 2017,March 31, 2024, net prior year reserve development of $nil was recognized, the Company incurred share-based compensation costsprincipal components of $13which were: 
•$8 million (2016: $14 million)of net favorable prior year reserve development on property business primarily due to better than expected loss emergence mainly related to restricted stock awards, share-settled restricted stock units,the 2021 and cash-settled restricted stock units2022 accident years.
•$8 million of net adverse prior year reserve development on marine and recorded associated tax benefits of $3 million (2016: $3 million).aviation business primarily due to an increase in the loss estimate attributable to a specific large claim related to the 2019 accident year.

2023
For the ninethree months ended September 30, 2017,March 31, 2023, the Company incurred share-based compensation costsrecognized $1 million of $57net favorable prior year reserve development, the principal components of which were: 
•$13 million (2016: $50 million). In addition, the Company recorded associated tax benefits of $20 million (2016: $11 million), including $7 millionnet favorable prior year reserve development on marine and aviation business primarily due to better than expected loss emergence mainly related to excess tax benefits associated with the vesting of restricted stock units.

The fair value of share-settled restricted stock units2021 and cash-settled restricted stock units that vested during the nine months ended September 30, 2017 was $125 million (2016: $66 million), including $44 million attributable to a grant of 3 year cliff vesting service-based awards made in 2014. At September 30, 2017 there were $99 million of unrecognized compensation costs (2016 $104 million), which are expected to be recognized over the weighted average period of 2.52022 accident years.

Share-settled Awards

The following table provides a reconciliation of the beginning and ending balance of nonvested share-settled restricted stock units for the nine months endedSeptember 30,2017:

  Performance-based Stock Awards Service-based Stock Awards 
  
Number of
Restricted
Stock Units
 
Weighted 
Average
Grant Date
Fair Value(1)
 
Number of
Restricted
Stock Units
 
Weighted  Average
Grant Date
Fair Value(1)
 
          
 Nonvested restricted stock - beginning of period283
 $51.27
 1,593
 $48.88
 
      Granted87
 64.58
 525
 64.22
 
 
     Vested(2)
(119) 49.14
 (881) 47.37
 
      Forfeited—
 —
 (69) 54.66
 
 Nonvested restricted stock - end of period251
 $56.88
 1,168
 $57.08
 
          
37
(1) Fair value is based on the closing price of our common shares on the grant approval date.
(2) Share-settled restricted stock units vested during the nine months ended September 30, 2017 included 313,391 restricted stock units attributable to a grant of 3 year cliff vesting service-based awards made in 2014.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


9.    SHARE-BASED COMPENSATION6.    RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)

•$8 million of net favorable prior year reserve development on cyber business primarily due to better than expected loss emergence mainly related to 2019 and older accident years.
Cash-settled awards•$6 million of net favorable prior year reserve development on property business primarily due to better than expected loss emergence attributable to 2018 and older accident years, partially offset by reserve strengthening related to the 2021 accident year.

The following table provides•$5 million of net favorable prior year reserve development on credit and political risk business primarily due to a reconciliation ofdecrease in the beginning and ending balance of nonvested cash-settled restricted stock units for the nine months endedSeptember 30,2017:
  Performance-based Cash Settled Awards Service-based Cash Settled Awards 
  
Number of
Restricted
Stock Units
 
Number of
Restricted
Stock Units
 
      
 Nonvested restricted stock units - beginning of period68
 1,392
 
      Granted15
 427
 
 
     Vested(1)
(38) (755) 
      Forfeited—
 (60) 
 Nonvested restricted stock units - end of period45
 1,004
 
      
(1) Cash settled restricted stock units vested during the nine months ended September 30, 2017 included 307,556 restricted stock unitsloss estimate attributable to a grantspecific large claim related to the 2020 accident year and better than expected loss emergence attributable to the Lloyds book of 3 year cliff vesting service-based awards made in 2014.business related to several accident years.

At September 30, 2017, the liability for cash-settled restricted stock units, included in other liabilities in the Consolidated Balance Sheets, was •$18 million (2016: $34 million). of net adverse prior year reserve development on liability business primarily due to reserve strengthening within the U.S. primary casualty book of business mainly related to the 2015, 2018 and 2021 accident years.

•$13 million of net adverse prior year reserve development on professional lines business primarily due to reserve strengthening within the U.S. commercial management solutions book of business related to several accident years and U.S. financial institutions book of business mainly related to the 2018 accident year.

Reinsurance Segment:
Prior year reserve development by line of business was as follows:
  Three months ended March 31,
  20242023
Favorable
(Adverse)		Favorable
(Adverse)
Accident and health$— $6,988 
Agriculture— 11,891 
Marine and aviation— (250)
Professional lines— (3,225)
Credit and surety— (546)
Motor— (17,122)
Liability— (32,853)
Run-off lines
Catastrophe— 31,058 
Property— 6,883 
Engineering— 173 
Total run-off lines— 38,114 
Total$— $2,997 
2024
For the three months ended March 31, 2024, net prior year reserve development of $nil was recognized.
2023
For the three months ended March 31, 2023, the Company recognized $3 million of net favorable prior year reserve development, the principal components of which were:
•$12 million of net favorable development on agriculture business primarily due to better than expected loss emergence mainly related to the 2022 accident year.
•$7 million of net favorable development on accident and health business primarily due to better than expected loss emergence mainly related to the 2022 accident year.



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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


10.    SHAREHOLDERS' EQUITY6.    RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)

•$33 million of net adverse development on liability business primarily due to reserve strengthening to reflect increased estimates of future loss trend due to inflation, increases in loss estimates attributable to one large claim within the European book of business related to the 2021 accident year and reserve strengthening within the U.S. proportional book of business related to 2019 and older accident years.
The following table presents common shares issued and outstanding:•$17 million of net adverse development on motor business primarily due to reserve strengthening to reflect increased estimates of future loss trend due to inflation.
Run-off lines
•$31 million of net favorable development on catastrophe business primarily due to better than expected loss emergence mainly related to the 2022 accident year.
•$7 million of net favorable development on property business primarily due to better than expected loss emergence attributable to 2022 catastrophe events.

39
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Shares issued, balance at beginning of period176,580
 176,575
 176,580
 176,240
 
 Shares issued—
 —
 —
 335
 
 Total shares issued at end of period176,580
 176,575
 176,580
 176,575
 
          
 Treasury shares, balance at beginning of period(93,377) (85,921) (90,139) (80,174) 
 Shares repurchased(51) (2,252) (4,284) (8,499) 
 Shares reissued from treasury5
 37
 1,000
 537
 
 Total treasury shares at end of period(93,423) (88,136) (93,423) (88,136) 
          
 Total shares outstanding83,157
 88,439
 83,157
 88,439
 
          

Treasury Shares

The following table presents share repurchases:
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 In the open market:        
 
Total shares(1)
49
 2,232
 3,932
 8,236
 
 Total cost$3,237
 $124,948
 $261,180
 $434,948
 
 
Average price per share(2)
$65.80
 $56.00
 $66.43
 $52.81
 
          
 
From employees:(3)
        
 Total shares2
 20
 352
 263
 
 Total cost$110
 $1,088
 $24,479
 $14,137
 
 
Average price per share(2)
$64.04
 $54.13
 $69.53
 $53.68
 
          
 Total shares repurchased:        
 Total shares51
 2,252
 4,284
 8,499
 
 Total cost$3,347
 $126,036
 $285,659
 $449,085
 
 
Average price per share(2)
$65.74
 $55.98
 $66.68
 $52.84
 
          
(1)Total shares repurchased in the open market for the nine months ended September 30, 2016 includes 1,358,380 common shares acquired under the accelerated share repurchase program (see below for more detail).
(2)Calculated using whole numbers.
(3)To satisfy withholding tax liabilities upon the vesting of restricted stock and restricted stock units.











44


AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

10.SHAREHOLDERS' EQUITY (CONTINUED)


7.    EARNINGS PER COMMON SHARE
Accelerated Share Repurchase ProgramThe following table presents a comparison of earnings per common share and earnings per diluted common share:

Three months ended March 31,
  20242023
Earnings per common share
Net income$395,459 $180,097 
Less: Preferred share dividends7,563 7,563 
Net income available to common shareholders$387,896 $172,534 
Weighted average common shares outstanding84,879 84,864 
Earnings per common share$4.57 $2.03 
Earnings per diluted common share
Net income available to common shareholders$387,896 $172,534 
Weighted average common shares outstanding84,879 84,864 
    Share-based compensation plans814 989 
Weighted average diluted common shares outstanding85,693 85,853 
Earnings per diluted common share$4.53 $2.01 
Weighted average anti-dilutive shares excluded from the dilutive computation748 805 
On August 17, 2015, the Company entered into an Accelerated Share Repurchase agreement
8.    SHARE-BASED COMPENSATION

Performance Restricted Stock Units

Performance Restricted Stock Units granted in 2024 with Goldman, Sachs & Co. (“Goldman Sachs”) to repurchase an aggregate of $300 million ofa market condition

Certain share-settled performance restricted stock units granted in 2024 include a market condition which is the Company’s ordinary shares under an accelerated share repurchase program.

During August, 2015, undertotal shareholder return relative to its peer group ("Relative TSR") over the terms of this agreement, the Company paid $300 million to Goldman Sachs and initially repurchased 4,149,378 ordinary shares. The initial shares acquired represented 80% of the $300 million total paid to Goldman Sachs and wereperformance period. Relative TSR is calculated using the Company’s stock price at activation of the program. The ASR program is accounted for as an equity transaction. Accordingly, at December 31, 2015, $240 million of common shares repurchased were included as treasury shares in the Consolidated Balance Sheetaccordance with the remaining $60 million included as a reduction to additional paid-in capital.

On January 15, 2016, Goldman Sachs early terminated the ASR agreement and delivered 1,358,380 additional common shares to the Company, resulting in the reduction from additional paid-in capital of $60 million being reclassified to treasury shares. In total, the Company repurchased 5,507,758 common shares under the ASR agreement at an average price of $54.47.

Preferred Shares

On April 17, 2017, the Company redeemed the remaining 14,042,955 of its 6.875% Series C preferred shares, for an aggregate liquidation preference of $351 million.


11. DEBT AND FINANCING ARRANGEMENTS

On March 27, 2017, the $250 million credit facility entered into by AXIS Capital and certain of its subsidiaries and a syndication of lenders expired.

On March 27, 2017, certain of AXIS Capital’s operating subsidiaries (the "Participating Subsidiaries") amended their existing $500 million secured letter of credit facility (the “LOC Facility”) with Citibank Europe plc (“Citibank”) to include an additional
$250 million of secured letter of credit capacity (the “$250 Million Facility”) pursuant to a Committed Facility Letter and an amendment to the Master Reimbursement Agreement (the “LOC Facility Documents”). Under the terms of the $250 Million Facility, lettersapplicable award agreement. If performance goals are achieved, these awards will cliff vest at the end of credita three-year performance period within a range of 0% to 200% of target.

Performance Restricted Stock Units granted in 2024 with a maximum aggregate amount of $250 million are available for issuance on behalfperformance condition

Certain share-settled performance restricted stock units granted in 2024 include a performance condition which is the Company’s average annual growth in book value per diluted common share, plus accumulated dividends over the performance period, adjusted to exclude unrealized investment gains (losses) recognized in accumulated other comprehensive income, and share repurchases during the performance period ("Adjusted DBVPS"). Adjusted DBVPS is calculated in accordance with the terms of the Participating Subsidiaries. These lettersapplicable award agreement. If performance goals are achieved, these awards will cliff vest at the end of credit will principally be useda three-year performance period within a range of 0% to support the reinsurance obligations200% of the Participating Subsidiaries. The $250 Million Facility is subject to certain covenants, including the requirement to maintain sufficient collateral, as defined in the LOC Facility Documents, to cover all of the obligations under the LOC Facility.target.

Such obligations include contingent reimbursement obligations for outstanding letters of credit and fees payable to Citibank. In the event of default, Citibank may exercise certain remedies, including the exercise of control over pledged collateral and the termination of the availability of the LOC Facility to any or all of the Participating Subsidiaries. The $250 million Facility expires March 31, 2018. The terms and conditions of the $500 million Facility remain unchanged. 






40
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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


8.    SHARE-BASED COMPENSATION (CONTINUED)

12.COMMITMENTS AND CONTINGENCIES

Valuation assumptions
Reinsurance Agreements

Performance Restricted Stock Units granted in 2024 and 2023 with a market condition
We purchase reinsurance
The fair value of these performance restricted stock units was measured on the grant date using a Monte Carlo simulation model.

The following table provides details of the significant inputs used in the Monte Carlo simulation model:
Three months ended March 31,2024
2023 (1)
2023 (2)
Expected volatility26.00%36.24%29.30%
Expected term (in years)3.03.01.0
Expected dividend yieldn/an/an/a
Risk-free interest rate4.06%3.79%4.61%
n/a - not applicable
(1) Performance restricted stock units granted in the ordinary course of business
(2) Performance restricted stock units granted in the three months endedMarch 31, 2023 in relation to senior leadership transition

Beginning share price, Ending share price and retrocessional protectionExpected term

Performance restricted stock units granted in 2024
The beginning share price for our insuranceawards was based on the average closing share price over the 30 trading days preceding and reinsurance linesincluding the start of business.the performance period. The minimum reinsurance premiumsending share price was based on the average projected closing share price over the 30 trading days preceding and including the end of the performance period. Performance for these awards is measured from January 1, 2024 to December 31, 2026.

Performance restricted stock units granted in 2023 and performance restricted stock units granted in the three months ended March 31, 2023 in relation to senior leadership transition
The beginning share price for awards was based on the average closing share price over the 10 trading days preceding and including the start of the performance period. The ending share price was based on the projected average closing share price over the 10 trading days preceding and including the end of the performance period. Performance for awards granted in 2023 is generally measured from January 1, 2023 to December 31, 2025, with performance for awards granted to one senior leader being measured from January 1, 2023 to December 31, 2023.

Expected volatility
The expected volatility is estimated based on the Company's historical share price volatility.

Expected dividend yield
The expected dividend yield is not applicable to the performance restricted stock units as dividends are contractually due in advancepaid at the end of the vesting period and do not affect the value of the performance restricted stock units.

Risk-free interest rate
The risk-free rate is estimated based on the yield on a quarterly basis. At September 30,2017, we have unrecorded outstanding reinsurance purchase commitmentsU.S. treasury zero-coupon bond issued with a remaining term equal to the vesting period of $97 million, of which $15 millionthe performance restricted stock units.

Compensation expense associated with performance restricted stock units granted in 2024 and 2023 is due in 2017 and the remaining $82 million is due in 2018 and later years. Actual payments under the reinsurance contracts will dependdetermined on the underlying subject premiumgrant date based on the fair value calculated by the Monte Carlo simulation model, and may exceedis recognized on a straight-line basis over the minimum premium.requisite service period. During the three months ended March 31, 2023, the transition in our senior leadership resulted in a modification of the previously existing vesting terms of the outstanding restricted stock units and performance restricted stock units granted in 2022 and earlier of one senior leader, and a modification of the performance period of that leader's performance restricted stock units granted in 2022. The modifications did not result in incremental compensation expense.


Investments

Refer to Note 4 - 'Investments' for information on commitments related to our other investments.

13.OTHER COMPREHENSIVE INCOME

The tax effects allocated to each component of other comprehensive income were as follows:
  2017 2016 
  Before Tax Amount Tax (Expense) Benefit Net of Tax Amount Before Tax Amount Tax (Expense) Benefit Net of Tax Amount 
              
 Three months ended September 30,            
 Available for sale investments:            
 Unrealized investment gains arising during the period$64,431
 $(1,926) $62,505
 $40,125
 $(3,789) $36,336
 
 Adjustment for reclassification of net realized investment gains and OTTI losses recognized in net income(15,925) 2,639
 (13,286) (5,050) 2,408
 (2,642) 
 Unrealized investment gains arising during the period, net of reclassification adjustment48,506
 713
 49,219
 35,075
 (1,381) 33,694
 
 Non-credit portion of OTTI losses—
 —
 —
 —
 —
 —
 
 Foreign currency translation adjustment8,088
 —
 8,088
 1,722
 —
 1,722
 
 Total other comprehensive income, net of tax$56,594
 $713
 $57,307
 $36,797
 $(1,381) $35,416
 
              
 Nine months ended September 30,            
 Available for sale investments:            
 Unrealized investment gains arising during the period$215,360
 $(8,899) $206,461
 $263,235
 $(24,579) $238,656
 
 Adjustment for reclassification of net realized investment losses and OTTI losses recognized in net income8,269
 1,900
 10,169
 40,338
 2,282
 42,620
 
 Unrealized investment gains arising during the period, net of reclassification adjustment223,629
 (6,999) 216,630
 303,573
 (22,297) 281,276
 
 Non-credit portion of OTTI losses—
 —
 —
 —
 —
 —
 
 Foreign currency translation adjustment46,824
 —
 46,824
 5,694
 —
 5,694
 
 Total other comprehensive income, net of tax$270,453
 $(6,999) $263,454
 $309,267
 $(22,297) $286,970
 
              





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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

13.OTHER COMPREHENSIVE INCOME (CONTINUED)


8.    SHARE-BASED COMPENSATION (CONTINUED)
Reclassifications outPerformance Restricted Stock Units granted in 2024 with a performance condition

The fair value of AOCI into net income (loss) availablethese performance restricted stock units was determined based on the closing price of the Company's common shares on the grant date, and compensation expense is recognized on a straight-line basis over the requisite service period, and is subject to periodic adjustment based on the achievement of established performance criteria during the performance period.

The following table provides an activity summary of the Company's share-settled restricted stock units for the three months ended March 31, 2024:
Share-Settled Performance
Restricted Stock Units		Share-Settled Service
Restricted Stock Units
Number of
restricted
stock units
Weighted 
average
grant date
fair value
Number of
restricted
stock units
Weighted  average
grant date
fair value
Non-vested restricted stock units - beginning of period144 $65.69 1,855 $55.21 
     Granted104 65.77 696 59.34 
     Vested— — (682)54.67 
     Forfeited— — (78)55.29 
Non-vested restricted stock units - end of period248 $65.73 1,791 $57.02 


The following table provides additional information related to share-based compensation:
Three months ended March 31,20242023
Share-based compensation expense$13,671 $12,526 
Tax benefits associated with share-based compensation expense$2,763 $2,647 
Fair value of restricted stock units vested(1)
$41,156 $50,714 
Unrecognized share-based compensation expense$92,556 $108,882 
Expected weighted average period associated with the recognition of unrecognized share-based compensation expense2.9 years2.8 years
(1) Fair value is based on the closing price of the Company's common shareholders were as follows:shares on the vest date.

42

AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

9.    SHAREHOLDERS' EQUITY
The following table presents changes in common shares issued and outstanding:
  Three months ended March 31,
  20242023
Shares issued, balance at beginning of period176,580 176,580 
Shares issued— — 
Total shares issued at end of period176,580 176,580 
Treasury shares, balance at beginning of period(91,294)(91,912)
Shares repurchased(1,281)(262)
Shares reissued682 777 
Total treasury shares at end of period(91,893)(91,397)
Total shares outstanding84,687 85,183 
Treasury Shares
The following table presents common shares repurchased from shares held in Treasury:
  Three months ended March 31,
  20242023
In the open market:(1)
Total shares1,048 — 
Total cost$61,607 $— 
Average price per share(2)
$58.79 $— 
From employees:(3)
Total shares233 262 
Total cost$14,121 $15,945 
Average price per share(2)
$60.70 $60.82 
Total shares repurchased:
Total shares1,281 262 
Total cost$75,728 $15,945 
Average price per share(2)
$59.13 $60.82 
(1) Shares are repurchased pursuant to the Company's Board-authorized share repurchase program announced in December 2023, effective January 1, 2024 through
to December 31, 2024.
(2) Calculated using whole numbers.
(3)  Shares are repurchased from employees to satisfy personal withholding tax liabilities that arise on the vesting of share-settled restricted stock units.

Dividends
The following table presents dividends declared and paid related to the Company's common and preferred shares:
Per share data
Dividends declaredDividends paid in period of declarationDividends paid in period following declaration
Three months ended March 31, 2024
   Common shares$0.44 $— $0.44 
   Series E preferred shares$34.38 $— $34.38 
Three months ended March 31, 2023
   Common shares$0.44 $— $0.44 
   Series E preferred shares$34.38 $— $34.38 

43

AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

   
Amount Reclassified from AOCI(1)
 
 Details About AOCI ComponentsConsolidated Statement of Operations Line Item That Includes ReclassificationThree months ended September 30, Nine months ended September 30, 
 2017 2016 2017 2016 
           
 Unrealized investment gains (losses) on available for sale investments         
  Other realized investment gains(losses)$21,337
 $9,297
 $5,224
 $(19,992) 
  OTTI losses(5,412) (4,247) (13,493) (20,346) 
  Total before tax15,925
 5,050
 (8,269) (40,338) 
  Income tax expense(2,639) (2,408) (1,900) (2,282) 
  Net of tax$13,286
 $2,642
 $(10,169) $(42,620) 
           
 Foreign currency translation adjustment         
  Foreign exchange loss$—
 $—
 $(24,149) $—
 
  Income tax expense—
 —
 —
 —
 
  Net of tax$—
 $—
 $(24,149) $—
 
           
10.    DEBT AND FINANCING ARRANGEMENTS
(1)Amounts in parentheses are debits to net income (loss) available to common shareholders.

Loan Advances made to a Third Party Reinsurer

At March 31, 2024, loan advances of $25 million (2023: $82 million) were repaid and were treated as a non-cash activity in the consolidated statement of cash flows. The loan balance receivable at March 31, 2024, of $55 million (2023: $80 million) is included in loan advances made in the consolidated balance sheets. At December 31, 2023, the Company had committed to advance a further $26 million to the third party reinsurer.During 2024, the third party reinsurer advised the Company that this advance was no longer required.
Letter of Credit Facility

On March 27, 2017, as part26, 2024, the $500 million Facility was amended to reduce the committed utilization capacity available under the Facility to $300 million, enter into an uncommitted secured letter of credit facility with Citibank Europe plc, extend the tenors of issuable letters of credit to March 31, 2026 and make certain updates to the facility's collateral and fee arrangements.

11.     FEDERAL HOME LOAN BANK ADVANCES

The Company's subsidiaries, AXIS Insurance Company and AXIS Surplus Insurance Company, are members of the wind downFederal Home Loan Bank of our Australia operation,Chicago ("FHLB").

At March 31, 2024, the Australia Prudential Regulation Authority revokedcompanies had admitted assets of approximately $3 billion (2023: $3 billion) which provides borrowing capacity of up to approximately $759 million (2023: $759 million).

At March 31, 2024, the authorizationCompany had $86 million(2023: $86 million) of AXIS Specialty Australiaborrowings under the FHLB program, with maturities in 2024 and 2025 and interest payable at interest rates between 5.6% and 5.7% (2023: 5.6% and 5.9%). The Company incurred interest expense of $1 million for the three months ended March 31, 2024 and 2023. The borrowings under the FHLB program are secured by investments with a fair value of $90 million (2023: $95 million).

12.    COMMITMENT AND CONTINGENCIES

Legal Proceedings

From time to carry on insurance business in Australia. As this resultedtime, the Company is subject to routine legal proceedings, including arbitrations, arising in the substantial liquidationordinary course of AXIS Specialty Australia, we have releasedbusiness. These legal proceedings generally relate to claims asserted by or against the cumulative translation adjustmentCompany in the ordinary course of its insurance or reinsurance operations. Estimated amounts payable related to these proceedings are included in the reserve for losses and loss expenses in the Company's consolidated balance sheets.

The Company is not party to any material legal proceedings arising outside the ordinary course of business.

Investments

Refer to Note 3 - 'Investments' for information on the Company's unfunded investment commitments related to the Company's other investment portfolio.





44

AXIS Specialty AustraliaCAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
13.    OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the tax effects allocated to each component of $24 millionother comprehensive income (loss):
20242023
Before tax amountIncome tax (expense) benefitNet of tax amountBefore tax amountIncome tax (expense) benefitNet of tax amount
Three months ended March 31,
Available for sale investments:
Unrealized gains (losses) arising during the period for which an allowance for expected credit losses has not been recognized$(76,408)$16,349 $(60,059)$153,851 $(19,284)$134,567 
Unrealized gains (losses) arising during the period for which an allowance for expected credit losses has been recognized(434)16 (418)14,950 (1,328)13,622 
Adjustment for reclassification of net realized (gains) losses and impairment losses recognized in net income (loss)24,879 (1,464)23,415 44,121 (3,371)40,750 
Unrealized gains (losses) arising during the period, net of reclassification adjustment(51,963)14,901 (37,062)212,922 (23,983)188,939 
Foreign currency translation adjustment(8,951)— (8,951)(535)— (535)
Total other comprehensive income (loss), net of tax$(60,914)$14,901 $(46,013)$212,387 $(23,983)$188,404 

The following table presents details of amounts reclassified from accumulated other comprehensive income (loss) ("AOCI") to net income (loss):
Amount reclassified from AOCI(1)
AOCI ComponentsConsolidated statement of operations line item that includes reclassification adjustmentThree months ended March 31,
20242023
Unrealized gains (losses) on available for sale investments
Other realized gains (losses)$(24,871)$(44,121)
Impairment losses(8)— 
Total before tax(24,879)(44,121)
Income tax (expense) benefit1,464 3,371 
Net of tax$(23,415)$(40,750)
(1)     Amounts in the Consolidated Balance Sheetparentheses are charges to foreign exchange losses in the Consolidated Statementnet income (loss).


















45


AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


14.    SUBSEQUENT EVENTSRELATED PARTY TRANSACTIONS


Acquisition of Novae Group plcDuring 2018, the Company entered into a quota share retrocessional agreement with Harrington Re which was deemed to have met the established criteria for retroactive reinsurance accounting. During 2024, the Company entered into a reinsurer novation and replacement agreement with Harrington Re and a third party reinsurer with respect to this quota share retrocession contract.


15.    REORGANIZATION EXPENSES

For the three months ended March 31, 2024, reorganization expenses were $12 million (2023: $nil) primarily related to severance costs mainly attributable to the Company's "How We Work" program which is focused on simplifying the Company’s operating structure.

16.    INCOME TAXES
On July 5, 2017,December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (the "Act") which will apply a corporate income tax of 15% for fiscal years beginning on or after January 1, 2025. The Act includes a provision referred to as the economic transition adjustment, which is intended to provide a fair and equitable transition into the tax regime. Pursuant to the Act and subsequently issued guidance, the Company and the boardrecorded a net deferred tax asset of directors of Novae Group plc (“Novae”), a public limited company incorporated in England and Wales, announced that it had agreed on the terms of a recommended cash offer of 700 pence per share to be made by AXIS Capital to acquire the entire issued and to be issued share capital of Novae.

On August 24, 2017, the Company and the board of directors of Novae announced that it had agreed on the terms of an increased recommended cash offer of 715 pence per share (the "Offer") to be made by AXIS Capital for the acquisition of the entire issued and to be issued share capital of Novae.

The acquisition was effected by way of a Scheme of Arrangement (the “Scheme”) under the laws of the United Kingdom (“U.K.”) which requires the approval of a U.K. court and approval of a majority of Novae’s shareholders, representing at least 75% of the votes cast. The Scheme is also subject to receipt of certain regulatory approvals and other customary conditions. On August 29, 2017, Novae shareholders approved the Scheme.

On October 2, 2017, AXIS Capital acquired the shares of Novae for £462.9 million (approximately $615.6 million). The results of Novae will be included in the results of the Company's insurance and reinsurance segments from this date (the "Closing date").

On October 6, 2017, AXIS Capital received clearance from all applicable regulators, including the European Commission, and commenced management control and integration of the combined businesses from this date.




47





14.    SUBSEQUENT EVENTS (CONTINUED)

Novae is a diversified property and casualty (re)insurance business operating through Syndicate 2007 at Lloyd’s of London. The acquisition of Novae is expected to accelerate the growth strategy of the Company's international insurance business, and significantly scale up its capabilities to enable the Company to even better serve its clients and brokers.

The Company incurred transaction related expenses including due diligence, legal, accounting, and investment banking fees and expenses, as well as integration expenses of $6$163 million in the three months ended September 30, 2017 relatedMarch 31, 2024 which it expects to the acquisition of Novae. In addition, the Company was contractually obligated to pay investment banking fees on the Closing date of the transaction.utilize mainly over a 10-year period. The Company expects substantially all of the integration costs related to the acquisition to be incurredincur increased taxes in 2018. In addition, the Company expects to begin realizing cost savingsBermuda beginning in 2018.2025.


The Company is currently in the processfollowing table provides an analysis of determining the fair values of the underlying assets and liabilities at the acquisition date. Given the timing of the acquisition, a preliminary allocation of purchase price is not yet complete. The Company will include amounts recognized for net assets and liabilities acquired, together with goodwill, as of the acquisition date in the Company's Annual Report on Form 10-K.income tax expense (benefit):

Three months ended March 31,20242023
Current income tax expense (benefit)
U.S.$21,498 $10,905 
Europe5,528 3,174 
Bermuda— 199 
Deferred income tax expense (benefit)
U.S.2,745 70 
Europe8,280 1,548 
Bermuda(162,705)— 
Total income tax expense (benefit)$(124,654)$15,896 
California Wildfires

In October 2017, Northern California was impacted by a series of devastating wildfires ("California Wildfires") which caused widespread residential and commercial property damage. Current estimated industry insured losses for this event range between $4 billion and $8 billion.

Our preliminary pre-tax net loss estimate for this event is in the range of $35 million to $45 million. The Company's loss estimate is primarily based on a ground-up assessment of losses from individual contracts and treaties exposed to the affected regions, including preliminary information from clients, brokers and loss adjusters. Industry insured loss estimates, market share analyses and catastrophe modeling analyses were also taken into account where appropriate.
Due to the preliminary nature of the information available to prepare these estimates, the actual net ultimate amount of losses for this event may be materially different from the current estimate.






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AXIS CAPITAL HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
16.    INCOME TAXES (CONTINUED)

The following table presents the distribution of income before income taxes between domestic and foreign jurisdictions and a reconciliation of the actual income tax rate to the amount computed by applying the effective tax rate of 0% under Bermuda law to income before income taxes:
Three months ended March 31,20242023
Income before income taxes
Bermuda (domestic)$83,231$106,604
Foreign187,57489,388
 Total income before income taxes$270,805$195,992
Reconciliation of effective tax rate (% of income before income taxes)
Expected tax rate— %— %
Foreign taxes at local expected rates:
U.S.9.2 %5.4 %
Europe5.0 %3.2 %
Valuation allowance(0.7 %)(1.8 %)
Bermuda Economic Transition Adjustment(60.1 %)— %
Other0.6 %1.3 %
Actual tax rate(46.0 %)8.1 %

47

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of our results of operations for the three months ended March 31, 2024 and 2023 and our financial condition at March 31, 2024 and results of operations.December 31, 2023. This should be read in conjunction with the consolidated financial statements and related notes included in Item 1 Consolidated Financial Statements of this report and also our Management’s Discussion and Analysis of Financial Condition and Results of Operations containedincluded in our Annual Report on Form 10-K for the year ended December 31,2016. Tabular 2023. Unless otherwise noted, tabular dollars are in thousands, except per share amounts. Amounts in tables may not reconcile due to rounding differences.
Page  
Page  
ThirdFirst Quarter 20172024 Financial Highlights
5049
Executive SummaryOverview
5150
UnderwritingConsolidated Results – Groupof Operations
6152
Results by Segment: For the three and nine months ended September 30, 2017 and 2016
i) Insurance Segment
7054
i) Insuranceii) Reinsurance Segment
7058
ii) Reinsurance Segment
74
Other Expenses (Revenues), Net
78
Net Investment Income and Net Realized Investment Gains (Losses)
8062
Other Expenses (Revenues), Net
65
Financial Measures
67
Non-GAAP Financial Measures Reconciliation
69
Cash and Investments
8273
Liquidity and Capital Resources
8576
Critical Accounting Estimates
8777
Recent Accounting Pronouncements
8778
Off-Balance Sheet and Special Purpose Entity Arrangements
87






48
49


THIRDFIRST QUARTER 20172024 FINANCIAL HIGHLIGHTS
Third
First Quarter 20172024 Consolidated Results of Operations
 
•Net loss attributableincome available to common shareholders of $468$388 million,, or $(5.61)$4.57 per common share, and $4.53 per diluted common share
•Operating income(1) of $220 million, or $2.57 per diluted common share(1)
•
Non-GAAP operating loss(1) of $446 million, or $(5.35) per diluted common share(1)
•Gross premiums written of $1.2$2.7 billion
•Net premiums written of $833 million
$1.7 billion
•Net premiums earned of $1$1.3 billion
Net favorable prior year reserve development of $48 million
Estimated•Pre-tax catastrophe and weather-related pre-tax net losses, net of reinstatement premiums,reinsurance, of $617$20 million ($17 million, after-tax), (Insurance: $19 million; Reinsurance: $1 million), or 61.41.5 points on current accident year lossattributable to weather-related events.
•Underwriting income(2) of $146 million and combined ratio compared to $22 million, or 2.3 points for the third quarter of 2016:91.1%
◦Third quarter estimated catastrophe pre-tax losses, net of reinstatement premiums, of $617 million (Insurance: $315 million and Reinsurance: $302 million) included Hurricanes Harvey, Irma and Maria and the two earthquakes in Mexico;
◦Third quarter estimated weather-related pre-tax net losses of $6 million (Insurance: $4 million and Reinsurance: $2 million);
◦Favorable development on prior quarters' estimated catastrophe and weather related pre-tax net losses of $6 million (Insurance: $2 million and Reinsurance: $4 million) largely related to U.S. weather-related events
•
Underwriting loss(2) of $513 million and combined ratio of 152.9%
•Net investment income of $95$167 million and net realized
•Net investment losses of $9 million
•Foreign exchange gains of $15$24 million
Foreign exchange losses•Reorganization expenses of $33$12 million

•Income tax benefit of $125 million, inclusive of a net deferred tax benefit of $163 million attributable to Bermuda's Corporate Income Tax Act 2023. Refer to 'Management's Discussion and Analysis of Financial Condition and Results of Operations – Overview – Recent Developments – Bermuda Corporate Income Tax Act 2023 for further details.
ThirdFirst Quarter 20172024 Consolidated Financial Condition
•Total cash and investments of $14.7$16.8 billion; fixed maturities, short-term investments, and cash and short-term securitiescash equivalents comprise 87%89% of total cash and investments and have an average credit rating of AA-
•Total assets of $21.8$31.8 billion
•Reserve for losses and loss expenses of $10.8$16.6 billion and reinsurance recoverable on unpaid and paid losses and loss expenses of $2.4$7.0 billion
Total debt•Debt of $1.0$1.3 billion and the debt to total capital ratio(3) of 15.4%
19.3%
•Total common shares repurchased were 1.3 million shares for a total of $76 million, including $62 million repurchased for $3 million.
At November 8, 2017 the remaining authorization under thepursuant to our Board-authorized share repurchase program approved by our Boardand $14 million from employees to satisfy personal withholding tax liabilities that arise on the vesting of Directors was $739 million. Following the offer to acquire Novae Group plc ("Novae") on July 5, 2017, the Company suspended its open mark share repurchase program.share-settled restricted stock units
•Common shareholders’ equity of $4.7 billion and diluted $5.0 billion; book value per diluted common share of $57.13
(1)Operating income (loss) and operating income (loss) per diluted common share are non-GAAP financial measures as defined in Item 10(e) of $55.33SEC Regulation S-K. The reconciliations to the most comparable GAAP financial measures, net income (loss) available (attributable) to common shareholders and earnings (loss) per diluted common share, respectively, and a discussion of the rationale for the presentation of these items are provided in 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures Reconciliation'.
(2)Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to the most comparable GAAP financial measure, net income (loss), is presented in 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Consolidated Results of Operations', and a discussion of the rationale for its presentation is provided in 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures Reconciliation'.    
(1)
Non-GAAP operating income (loss) and non-GAAP operating income (loss) per diluted common share are non-GAAP financial measures as defined in SEC Regulation G. The reconciliations of non-GAAP measures to the most comparable GAAP financial measures (net income (loss) available to common shareholders and diluted earnings per common share, respectively) are provided in the 'Results of Operations', which is included in the 'Executive Summary' section of this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A").
(2)
Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to net income (loss) before income taxes and interest in income (loss) of equity method investments, the most comparable GAAP measure, is presented in the 'Results of Operations', which is included in the 'Executive Summary' section of this MD&A.

(3)The debt to total capital ratio is calculated by dividing debt by total capital. Total capital represents the sum of total shareholders’ equity and debt.



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EXECUTIVE SUMMARYOVERVIEW


Business Overview

We areAXIS Capital, through its operating subsidiaries, is a Bermuda-based global specialty underwriter and provider of specialty lines insurance and treaty reinsurance productssolutions with operations in Bermuda, the United States ("U.S."), Europe, Singapore Canada, Latin America and the Middle East.Canada. Our underwriting operations are organized around our two global underwriting platforms, AXIS Insurance and AXIS Re.

Our mission is toWe provide our clients and distribution partners with a broad range of risk transfer products and services, and meaningfulstrong capacity, backed by significantexcellent financial strength. We manage our portfolio holistically, aiming to construct the optimum consolidated portfolio of funded and unfunded risks, consistent with our risk appetite and the development of our franchise. We nurture an ethical, entrepreneurial, disciplined and disciplineddiverse culture that promotes outstanding client service, intelligent risk taking, operating efficiency, corporate citizenship and the achievement of superior risk-adjusted returns for our shareholders. We believe that the achievement of our objectives will position us as a global leader in specialty risks. OurThe execution on thisof our business strategy for the first ninethree months of 2017 included: 2024 included the following:

•growing in a number of attractive specialty insurance and reinsurance markets including U.S. excess and surplus lines and Lloyd's specialty insurance business;
continued growth of our accident and health lines, which is focused on specialty accident and health products;

growth of our syndicate at Lloyd's which provides us with access to Lloyd's worldwide licenses and an extensive distribution network. During the first quarter of 2016 we commenced writing business through our underwriting division at Lloyd's in China. On July 14, 2017, we announced that we had received final authorization from Lloyd’s, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) for our own Lloyd’s managing agent, AXIS Managing Agency Limited (“AXIS Managing Agency”). Effective August 4, 2017, AXIS Managing Agency assumed management of AXIS Syndicate 1686 at Lloyd’s, replacing the Company’s third-party managing agency agreement with Asta Managing Agency Limited, which had been in place since 2014;

continued implementation of a more focused distribution strategy and increased our scale and relevance in key markets;

continued rebalancing of•re-balancing our portfolio towards less volatile lines of business, that carry attractive rates;returns while deploying capital within risk limit tolerance, diversification criteria and risk management strategy;


continued improvement•investing in attractive growth markets and advancing capabilities to address more transactional specialist business targeting the lower middle market with our key distribution partners;

•leveraging our global platform to introduce our products and services to new regions including the expansion of our London specialty lines to North America markets;

•continuing the implementation of a more focused distribution strategy while building mutually beneficial relationships with clients and partners;

•improving the effectiveness and efficiency of our operating platforms and processes;processes through our "How We Work" program;


increased investment•investing in data and analytics;technology capabilities, and tools to empower our underwriters and enhance the service that we provide to our customers;


broadened risk-funding sources•utilizing reinsurance markets and developed vehicles that utilize third-party capital including:relationships;


Our investment in Harrington Reinsurance Holdings Limited ("Harrington"), the parent company of Harrington Re Ltd. ("Harrington Re"), an independent reinsurance company jointly sponsored by AXIS Capital•fostering a positive workplace environment that enables us to attract, retain and The Blackstone Group L.P. ("Blackstone"). Harrington Re’s strategy isdevelop top talent; and

•growing our corporate citizenship program to combinegive back to our communities and help contribute to a multi-line reinsurance portfolio with a diversified allocation to alternative investment strategies to earn attractive risk-adjusted returns. Harrington has developed a portfolio that optimizes the risk-reward characteristics of both assets and liabilities, leveraging the respective strengths of AXIS Capital and Blackstone while deploying a disciplined and fully integrated approach to both underwriting and investing; andmore sustainable future.

AXIS Ventures Reinsurance Limited, which manages capital for investors interested in deploying funds directly into the property-catastrophe and other short-tail business.

On April 1, 2017, the Company acquired general aviation insurer and reinsurer Aviabel, increasing the Company's scale and relevance in the global aviation market. The Company will continue to maintain Aviabel's physical presence in Brussels and Amsterdam.

On April 17, 2017, the Company redeemed the remaining $351 million of its 6.875% Series C preferred shares. The execution of this transaction reduced the weighted average annual dividend rate on our preferred equity capital base by 88 basis points to 5.50%.






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Effective July 1, 2017, our reinsurance segment no longer writes derivative-based risk management products which address weather risks.

On July 5, 2017 the Company announced that it had agreed on the terms of a recommended offer to acquire Novae Group plc (“Novae”), a diversified specialty (re)insurer that operates through Lloyd’s of London. On October 2, 2017, the Company acquired the shares of Novae. The results of Novae will be included in the results of the Company's insurance and reinsurance segments from this date (the "Closing date"). On October 6, 2017, AXIS Capital received clearance from all applicable regulators, including the European Commission, and commenced management control and integration of the combined businesses from this date.

On July 6, 2017, S&P Global Ratings affirmed its 'A-' long-term counterparty credit and senior debt ratings of AXIS Capital, and its 'A+' long-term counterparty credit and financial strength ratings of the Company's core operating subsidiaries. At the same time, S&P Global Ratings revised its outlook on AXIS Capital to negative from stable based on the planned acquisition of Novae.

Outlook


We are committed to being a leaderleadership in specialty risk, an area in which we already have depth of talent and experience, and have earned an outstanding reputation. Committed to its hybrid strategy, AXIS Capital has developed substantial platforms in both insurance and reinsurance, providing itreinsurance. We believe our market positioning, specialty underwriting acumen, global platform, claims management capabilities and deep relationships with balance and diversification. Management believes its positioning, franchise, expert underwriters and strong relationships withour distributors and clients, supported by a conservative and well performing investment portfolio, will provide opportunities in 2018, with variances amongst our lines driven by our tactical response to market conditions. Atfor increased profitability.

Across the same time, we are broadening our risk-funding sources and developing vehicles that utilize the industry’s abundant third party capital. Therefore, we expect that our net premiums written will not grow as much as our gross premiums written, as we intend to share moremajority of our risk with strategic capital partners.
Competitive conditionsbusiness lines, we view pricing to be attractive and we anticipate rate movement to remain slightly positive and above loss cost trends. Pricing momentum is expected to slow across many lines but the ability to access well-priced new business should remain. We expect dislocations in the admitted market to continue to impact worldwide insurance markets with greatest pressures impacting catastrophe exposed property and certain global specialty lines ofdrive additional risk types into the U.S. Wholesale channel.

Pricing momentum in non-proportional reinsurance continues to be strong while our proportional reinsurance business is benefiting from rate increases in the underlying business. We have observed greater competitiveness for large accounts comparedexpect these market conditions to smaller risks. These competitive pressures have led to price reductions across most lines of business, with decreases in international markets generally more severe than those observedpersist in the U.S. Duringnear term. We continue to focus on underwriting discipline to drive targeted profitable growth among the month of September, our industry experienced substantial natural catastrophe loss activity, comparable to full year levels incurred in 2005specialty and 2011, which werecasualty reinsurance lines that we offer.

Across the highest catastrophe loss years on record. We believe markets conditions will remain uncertain through the end of the year and possibly beyond as carriers assess pricing, portfolio construction and account preferences. In this challenging market environment, we are focusing on lines and markets that remain adequately priced andbusiness, we will continue to assess pricing adequacy as market conditionspursue targeted growth opportunities by employing a disciplined underwriting strategy and trends evolve.appetite. Where necessary we alsoprices continue to shiftdeliver adequate profitability, we will look to grow within our risk and volatility guidelines. With a strengthened book of business, mix toward smaller, less volatile risk accounts whichand a growing footprint in the specialty markets that are seeing the most favorable conditions, we believe AXIS is well positioned to drive profitable growth within the current environment.

Recent Developments

How We Work Program

Reorganization expenses of $12 million primarily relate to severance costs mainly attributable to our "How We Work" program which is focused on simplifying the operating structure.
Bermuda Corporate Income Tax Act 2023

On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (the "Act") which will enable usapply a corporate income tax of 15% for fiscal years beginning on or after January 1, 2025. The Act includes a provision referred to achieve better, more stable attritional loss experience. In addition, our recent acquisitionas the economic transition adjustment, which is intended to provide a fair and equitable transition into the tax regime. Pursuant to the Act and subsequently issued guidance, we recorded a net deferred tax asset of Novae increases our scale and relevance$163 million in the London marketplace, andfirst quarter of 2024 which we expect to be well-positionedutilize mainly over a 10-year period. We expect to capitalize on new opportunities andincur increased taxes in Bermuda beginning in 2025. The Bermuda net deferred tax benefit is excluded from improved market conditions emerging through the international specialty insurance market, including Lloyd’s of London.operating income (loss).

The reinsurance markets' trading environment remains challenging in the many of lines of business and geographical regions. The market continues to be influenced by excess capacity, strong balance sheets of established market participants and a consolidation of reinsurance purchasing. As noted above, our industry experienced substantial natural catastrophe loss activity during the month of September, which we believe will favorably impact pricing in our upcoming renewal cycle. The improvements will differ between lines of business and by geographical regions. These factors, combined with AXIS' customer-centric approach and opportunities in specific lines of business and geographies allow us to execute on our targeted growth strategy. We will continue to protect the quality and profitability of our existing book, targeting larger shares of the more attractive treaties, managing the overall volatility of our reinsurance book, and expanding our already strong group of strategic capital partners with whom to share our risks.







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CONSOLIDATED RESULTS OF OPERATIONS

  Three months ended March 31,
  2024% Change2023
Underwriting revenues:
Gross premiums written$2,654,427 11%$2,381,976 
Net premiums written1,722,073 7%1,608,356 
Net premiums earned1,258,041 2%1,230,199 
Other insurance related income8,340 nm577 
Underwriting expenses:
Net losses and loss expenses(728,671)1%(720,642)
Acquisition costs(254,254)10%(230,373)
Underwriting-related general and administrative expenses(1)
(137,793)(2%)(140,395)
Underwriting income (2)
145,663 139,366 
Net investment income167,383 25%133,771 
Net investment gains (losses)(9,207)(54%)(20,190)
Corporate expenses(1)
(25,580)(3%)(26,416)
Foreign exchange (losses) gains23,552 nm(8,710)
Interest expense and financing costs(17,147)1%(16,894)
Reorganization expenses(12,299)nm— 
Amortization of intangible assets(2,729)—%(2,729)
Income before income taxes and interest in income (loss) of equity method investments269,636 198,198 
Income tax (expense) benefit124,654 nm(15,896)
Interest in income (loss) of equity method investments1,169 nm(2,205)
Net income395,459 180,097 
Preferred share dividends(7,563)—%(7,563)
Net income available to common shareholders$387,896 $172,534 
nm – not meaningful is defined as a variance greater than +/-100%
(1)Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $26 million for the three months ended March 31, 2024 and 2023, respectively. Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Expenses (Revenues), Net' for further details on corporate expenses. Refer also to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial MeasureMeasures Reconciliation' for further details.

We present our results(2)Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in Item 10(e) of operationsSEC Regulation S-K. The reconciliation to net income (loss), the most comparable GAAP financial measure, is presented in the way we believe will be most meaningfultable above. Refer also to 'Management’s Discussion and usefulAnalysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures Reconciliation' for further details.





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Underwriting Revenues

Underwriting revenues by segment were as follows:
  Three months ended March 31,
  2024% Change2023
Gross premiums written:
Insurance$1,574,50511%$1,415,612
Reinsurance1,079,92212%966,364
Total gross premiums written$2,654,42711%$2,381,976
Percent of gross premiums written ceded
Insurance35 %(3 pts)38 %
Reinsurance35 %10 pts25 %
Total percent of gross premiums written ceded35 %2 pts33 %
Net premiums written:
Insurance$1,022,35416%$882,576
Reinsurance699,719(4%)725,780
Total net premiums written$1,722,0737%$1,608,356
Net premiums earned:
Insurance$917,94612%$816,456
Reinsurance340,095(18%)413,743
Total net premiums earned$1,258,0412%$1,230,199

Refer to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements we use are "non-GAAP financial measures" under Securities and Exchange Commission rules and regulations. In this 'Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), we present underwriting-related– Results by Segment' for further details on underwriting revenues.

Combined Ratio

The components of the combined ratio were as follows:
  Three months ended March 31,
  2024
% Point
Change
2023
Current accident year loss ratio, excluding catastrophe and weather-related losses56.4 %0.655.8 %
Catastrophe and weather-related losses ratio1.5 %(1.6)3.1 %
Current accident year loss ratio57.9 %(1.0)58.9 %
Prior year reserve development ratio— %0.3(0.3 %)
Net losses and loss expenses ratio57.9 %(0.7)58.6 %
Acquisition cost ratio20.2 %1.518.7 %
General and administrative expense ratio(1)
13.0 %(0.6)13.6 %
Combined ratio91.1 %0.290.9 %
(1) The general and administrative expense ratio included corporate expenses consolidatednot allocated to underwriting income, non-GAAP operating income (in totalsegments of 2.0% and 2.1% for the three months ended March 31, 2024 and 2023, respectively. Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Expenses (Revenues), Net' for further details.

Refer to 'Management's Discussion and Analysis of Financial Condition and Results of Operations – Results by Segment' for further details on underwriting expenses.

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RESULTS BY SEGMENT

Insurance Segment

Results for the insurance segment were as follows:
  Three months ended March 31,
  2024% Change2023
Revenues:
Gross premiums written$1,574,50511%$1,415,612
Net premiums written1,022,35416%882,576
Net premiums earned917,94612%816,456
Other insurance related income21(61%)54
Expenses:
Current accident year net losses and loss expenses(496,864)(450,508)
Prior year reserve development—1,041
Acquisition costs(176,029)(147,058)
Underwriting-related general and administrative expenses(122,087)(116,630)
Underwriting income$122,987$103,355
Ratios:
% Point
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses52.0 %(0.2)52.2 %
Catastrophe and weather-related losses ratio2.1 %(0.9)3.0 %
Current accident year loss ratio54.1 %(1.1)55.2 %
Prior year reserve development ratio— %0.1(0.1 %)
Net losses and loss expenses ratio54.1 %(1.0)55.1 %
Acquisition cost ratio19.2 %1.218.0 %
Underwriting-related general and administrative expense ratio13.3 %(0.9)14.2 %
Combined ratio86.6 %(0.7)87.3 %

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Gross Premiums Written

Gross premiums written by line of business were as follows:
  Three months ended March 31,
  20242023% Change
Professional lines$236,665 15 %$221,615 16 %7%
Property478,835 30 %381,339 27 %26%
Liability287,705 18 %284,026 20 %1%
Cyber132,936 8 %152,788 11 %(13%)
Marine and aviation262,010 17 %233,424 16 %12%
Accident and health104,606 7 %79,384 6 %32%
Credit and political risk71,748 5 %63,036 4 %14%
Total$1,574,505 100 %$1,415,612 100 %11%

Gross premiums written for the three months ended March 31, 2024 increased by $159 million, or 11%, compared to the three months ended March 31, 2023. The increase was primarily attributable to property, marine and aviation, accident and health, professional lines, and credit and political risk lines, partially offset by a decrease in cyber lines.

The increases in property, and marine and aviation lines were due to new business and favorable rate changes. The increases in accident and health, professional lines, and credit and political risk lines were mainly driven by new business.

The decrease in cyber lines was attributable to premium adjustments in the three months ended March 31, 2024, related to business written on a perline slip basis, and a decrease in premiums associated with two significant programs, partially offset by new business.

Ceded Premiums Written

Ceded premiums written for the three months ended March 31, 2024 was $552 million, or 35%, of gross premiums written, compared to $533 million, or 38%, of gross premiums written for the three months ended March 31, 2023. The increase in ceded premiums written of $19 million, or 4%, was primarily driven by increases in property, and marine and aviation lines, partially offset by decreases in cyber, and professional lines.

The increase in property lines reflected the increase in gross premiums written for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase in marine and aviation lines was attributable to reinstatement premiums associated with losses and loss expenses for the three months ended March 31, 2024. The decreases in cyber, and professional lines were due to the restructuring of significant existing quota share basis)treaties.

The decrease in cyber lines also reflected the decrease in gross premiums written for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.












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Net Premiums Earned

Net premiums earned by line of business were as follows:
  Three months ended March 31,
  20242023
%
Change
Professional lines$196,581 21 %$188,953 23 %4%
Property253,593 28 %197,268 25 %29%
Liability124,639 14 %124,854 15 %—%
Cyber82,858 9 %81,820 10 %1%
Marine and aviation139,290 15 %125,330 15 %11%
Accident and health84,257 9 %64,543 8 %31%
Credit and political risk36,728 4 %33,688 4 %9%
Total$917,946 100 %$816,456 100 %12%

Net premiums earned for the three months ended March 31, 2024 increased by $101 million, or 12% ($103 million, or 13%, on a constant currency basis(1)), compared to the three months ended March 31, 2023.

The increase was primarily driven by increases in gross premiums earned in property, marine and aviation, and accident and health lines, together with a decrease in ceded premiums earned in professional lines. These amounts were partially offset by increases in ceded premiums earned in property, and marine and aviation lines, together with a decrease in gross premiums earned in professional lines.

Loss Ratio

The components of the loss ratio were as follows:
  Three months ended March 31,
2024% Point
Change		2023
Current accident year loss ratio54.1 %(1.1)55.2 %
Prior year reserve development ratio— %0.1(0.1 %)
Loss ratio54.1 %(1.0)55.1 %

Current Accident Year Loss Ratio

The current accident year loss ratio decreased to 54.1% for the three months ended March 31, 2024, from 55.2% for the three months ended March 31, 2023.

The decrease in the current accident year loss ratio for the three months ended March 31, 2024, compared to the same period in 2023, was impacted by a lower level of catastrophe and weather-related losses. During the three months ended March 31, 2024, catastrophe and weather-related losses, were $19 million, or 2.1 points, attributable to weather-related events. Comparatively, during the three months ended March 31, 2023, catastrophe and weather-related losses, were $24 million, or 3.0 points, primarily attributable to New Zealand floods, Cyclone Gabrielle, and other weather-related events.

Adjusting for the impact of the catastrophe and weather-related losses, the current accident year loss ratio decreased to 52.0% for the three months ended March 31, 2024, from 52.2% for the three months ended March 31, 2023. The decrease was principally due to changes in business mix associated with the increase in property lines and the decrease in liability lines business written in recent periods.


(1) Amounts presented on a constant currency basis and pre-tax total return on cash and investments excluding foreign exchange movements, which are “non-GAAPnon-GAAP financial measures”measures as defined in Item 10 (e) of SEC Regulation G. We believe that these non-GAAP measures, which may be defined and calculated differently by other companies, better explain and enhance the understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP.

Underwriting-Related General and Administrative Expenses

Underwriting-related general and administrative expenses include those general and administrative expenses that are incremental and/or directly attributable to our individual underwriting operations. While this measure is presented in Item 1, Note 3 to the Consolidated Financial Statements 'Segment Information', it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.

Corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company. As these costs are not incremental and/or directly attributable to our individual underwriting operations, we exclude them from underwriting-related general and administrative expenses and, therefore, consolidated underwriting income. Our total general and administrative expenses, the most comparable GAAP financial measure to underwriting-related general and administrative expenses, includes corporate expenses.

S-K. The reconciliation of underwriting-related general and administrative expenses to general and administrative expenses, the most comparable GAAP measure is presented in the 'Results of Operations'.

Consolidated Underwriting Income

Consolidated underwriting income is a pre-tax measure of underwriting profitability that takes into account net premiums earned and other insurance related income (losses) as revenues and net losses and loss expenses, acquisition costs and underwriting-related general and administrative costs as expenses. While this measure is presented in Item 1, Note 3 to the Consolidated Financial Statements 'Segment Information', it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.

We evaluate our underwriting results separately from the performance of our investment portfolio. As such, we believe it appropriate to exclude net investment income and net realized investment gains (losses) from our underwriting profitability measure. Interest expense and financing costs primarily relate to interest payable on our senior notes and are excluded from consolidated underwriting income for the same reason.

Foreign exchange losses (gains) in our Consolidated Statements of Operations primarily relate to our net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio. As a result, we believe that foreign exchange losses (gains) are not a meaningful contributor to our underwriting performance and, therefore, exclude them from consolidated underwriting income.

Bargain purchase gain reflects the excess of the fair value of the net identifiable assets acquired over the fair value of consideration transferred. The bargain purchase gain is unrelated to underwriting operations and for this reason it is excluded from consolidated underwriting income.

Transaction related expenses are driven by business decisions, the nature and timing of which are unrelated to the underwriting process and for this reason they are excluded from consolidated underwriting income.

We believe that presentation of underwriting-related general and administrative expenses and consolidated underwriting income provides investors with an enhanced understanding of our results of operations, by highlighting the underlying pre-tax profitability of



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our underwriting activities. The reconciliation of consolidated underwriting income to income before income taxes and interest in income (loss) of equity method investments, the most comparable GAAP measure is presented in the 'Results of Operations'.

Non-GAAP Operating Income

Non-GAAP operating income represents after-tax operational results without consideration of after-tax net realized investment gains (losses), foreign exchange losses (gains), bargain purchase gain, and transaction related expenses.

Although the investment of premiums to generate income and realized investment gains (losses) is an integral part of our operations, the determination to realize investment gains (losses) is independent of the underwriting process and is heavily influenced by the availability of market opportunities. Furthermore, many users believe that the timing of the realization of investment gains (losses) is somewhat opportunistic for many companies.

Foreign exchange losses (gains) in our Consolidated Statements of Operations are primarily driven by the impact of foreign exchange rate movements on net insurance related-liabilities. However, this movement is only one element of the overall impact of foreign exchange rate fluctuations on our financial position. In addition, we recognize unrealized foreign exchange losses (gains) on our available-for-sale investments in other comprehensive income and foreign exchange losses (gains) realized upon the sale of these investments in net realized investments gains (losses). These unrealized and realized foreign exchange losses (gains) generally offset a large portion of the foreign exchange losses (gains) reported separately in net income (loss), thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As such, the Statement of Operations foreign exchange losses (gains) in isolation is not a fair representation of the performance of our business.

Bargain purchase gain reflects the excess of the fair value of the net identifiable assets acquired over the fair value of consideration transferred and is not indicative of future revenues of the company.

Transaction related expenses are primarily driven by business decisions, the nature and timing of which are unrelated to the underwriting process and which are not representative of underlying business performance.

Certain users of our financial statements evaluate earnings excluding after-tax net realized investment gains (losses), foreign exchange losses (gains), bargain purchase gain, and transaction related expenses to understand the profitability of recurring sources of income.

We believe that showing net income available to common shareholders exclusive of net realized gains (losses), foreign exchange losses (gains), bargain purchase gain, and transaction related expenses reflects the underlying fundamentals of our business. In addition, we believe that this presentation enables investors and other users of our financial information to analyze performance in a manner similar to how our management analyzes the underlying business performance. We also believe this measure follows industry practice and, therefore, facilitates comparison of our performance with our peer group. We believe that equity analysts and certain rating agencies that follow us, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons. The reconciliation of non-GAAP operating income to net income available to common shareholders, the most comparable GAAP measure is presented in the 'Results of Operations'.

Constant Currency Basis

We present gross premiums written, net premiums written and net premiums earned on a constant currency basis in this MD&A. The amounts presented on a constant currency basis areis calculated by applying the average foreign exchange rate from the current year to the prior year amounts. We believe this presentation enables investorsbalance.

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Prior Year Reserve Development

Refer to Item 1, Note 6 to the Consolidated Financial Statements 'Reserve for losses and other usersloss expenses' for details on the lines of our financial informationbusiness and prior year reserve development.

Acquisition Cost Ratio

The acquisition cost ratio increased to analyze performance19.2% for the three months ended March 31, 2024, from 18.0% for the three months ended March 31, 2023, primarily related to changes in business mix driven by an increase in property, and accident and health lines of business written in recent periods, together with a manner similardecrease in ceding commission mainly in professional lines and cyber lines.

Underwriting-Related General and Administrative Expense Ratio

The underwriting-related general and administrative expense ratio decreased to how our management analyzes13.3% for the underlying business performance. The reconciliation to gross premiums written, net premiums written andthree months ended March 31, 2024, from 14.2% for the three months ended March 31, 2023, mainly driven by an increase in net premiums earned, on a GAAP basis is presentedpartially offset by increases in the 'Group Underwriting Results' section of this MD&A.performance-related compensation costs and personnel costs.


Pre-Tax Total Return on Cash and Investments excluding Foreign Exchange Movement

Pre-tax total return on cash and investments excluding foreign exchange movements measures net investment income (loss), net realized investments gains (losses), interest in income (loss) of equity method investments, and pre-tax change in unrealized gains (losses) generated by our average cash and investment balances. The reconciliation to pre-tax total return on cash and investments, the most comparable GAAP financial measure is presented in the 'Net Investment Income and Net Realized Investment Gains (Losses)'





57
54




Reinsurance Segment
section of this release. We believe this presentation enables investors and other users of our financial information to analyze the performance of our investments.


Results of Operationsfrom the reinsurance segment were as follows:
   Three months ended September 30, Nine months ended September 30, 
   2017 % Change 2016 2017 % Change 2016 
              
 Underwriting revenues:            
 Net premiums earned$1,017,131
 9% $934,415
 $2,937,265
 6% $2,783,746
 
 Other insurance related income (losses)(3,197) nm 5,944
 (4,420) nm 4,850
 
 Underwriting expenses:            
 Net losses and loss expenses(1,235,367) 132% (532,328) (2,447,640) 47% (1,663,584) 
 Acquisition costs(194,724) 3% (189,810) (588,879) 5% (559,570) 
 
Underwriting general and administrative expenses(1)
(96,696) (15%) (114,223) (335,782) (5%) (352,632) 
 Underwriting Income (Loss)$(512,853)   $103,998
 $(439,456)   $212,810
 
              
 
Corporate expenses(1)
(27,933) (3%) (28,683) (97,922) 13% (86,922) 
 Net investment income95,169
 (19%) 116,923
 299,899
 16% 257,818
 
 Net realized investment gains (losses)14,632
 nm 5,205
 (14,811) (63%) (40,295) 
 Other (expenses) revenues, net(45,345) nm 956
 (128,470) nm 31,195
 
 Bargain purchase gain—
 nm —
 15,044
 nm —
 
 Transaction related expenses(5,970) nm —
 (5,970) nm —
 
 Income (loss) before income taxes and interest in income (loss) of equity method investments(482,300)   198,399
 (371,686)   374,606
 
 Income tax (expense) benefit25,877
   (9,352) 38,547
   (7,712) 
 Interest in loss of equity method investments(661) nm (2,434) (8,402) nm (2,434) 
 Net income (loss)$(457,084)   $186,613
 $(341,541)   $364,460
 
 Preferred share dividends(10,656) 7% (9,969) (36,154) 21% (29,906) 
 Net income (loss) available to common shareholders$(467,740) nm $176,644
 $(377,695) nm $334,554
 
              
 
Net realized investment gains (losses), net of tax(2)
$(11,975)   $(2,726) $16,703
   $42,667
 
 
Foreign exchange gains (losses), net of tax(3)
28,071
   (13,229) 85,851
   (67,771) 
 
Bargain purchase gain(4)
—
   —
 (15,044)   —
 
 Transaction related expenses, net of tax5,749
   —
 5,749
   —
 
 Non-GAAP operating income (loss)$(445,895) nm $160,689
 $(284,436) nm $309,450
 
              
  Three months ended March 31,
  2024% Change2023
Revenues:
Gross premiums written$1,079,92212%$966,364
Net premiums written699,719(4%)725,780
Net premiums earned340,095(18%)413,743
Other insurance related income8,319nm523
Expenses:
Current accident year net losses and loss expenses(231,807)(274,172)
Prior year reserve development—2,997
Acquisition costs(78,225)(83,315)
Underwriting-related general and administrative expenses(15,706)(23,765)
Underwriting income$22,676$36,011
Ratios:
% Point
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses68.0 %5.063.0 %
Catastrophe and weather-related losses ratio0.2 %(3.1)3.3 %
Current accident year loss ratio68.2 %1.966.3 %
Prior year reserve development ratio— %0.8(0.8 %)
Net losses and loss expenses ratio68.2 %2.765.5 %
Acquisition cost ratio23.0 %2.920.1 %
Underwriting-related general and administrative expense ratio4.6 %(1.2)5.8 %
Combined ratio95.8 %4.491.4 %
nm – not meaningful
(1)
Underwriting-related general and administrative expenses is a non-GAAP measure as defined in SEC Regulation G. The reconciliation to total general and administrative expenses, the most comparable GAAP measure, also included corporate expenses of ($27,933) and ($28,683) for the three months ended September 30, 2017 and 2016, respectively, and ($97,922) and ($86,922) for the nine months ended September 30, 2017 and 2016, respectively. Refer to 'Other (expenses) revenues, net' for additional information related to the corporate expenses. Also, refer to 'Non-GAAP Financial Measures' for additional information.
(2)Tax cost (benefit) of $2,657 and $2,479 for the three months ended September 30, 2017 and 2016, respectively, and $1,892 and $2,372 for the nine months ended September 30, 2017 and 2016, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the ability to utilize capital losses.
(3)
Tax cost (benefit) of ($4,439) and $566 for the three months ended September 30, 2017 and 2016, respectively, and $(4,242) and $2,010 for the nine months ended September 30, 2017 and 2016, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the tax status of specific foreign exchange transactions.
(4)Tax impact is nil.



58







55




Gross Premiums Written
Non-GAAP Financial Measures

We also present non-GAAP operating income per diluted common share and annualized non-GAAP operating return on average common equity (“annualized non-GAAP operating ROACE”), which are derived from the non-GAAP operating income measure and can be reconciled to the most comparable GAAP financial measuresGross premiums written by line of business were as follows:

   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Net income (loss) available to common shareholders$(467,740) $176,644
 $(377,695) $334,554
 
 Non-GAAP operating income (loss)(445,895) 160,689
 (284,436) 309,450
 
 
Weighted average common shares and common share equivalents - diluted(1)
83,305
 90,351
 84,479
 92,579
 
          
 Earnings (loss) per common share - diluted$(5.61) $1.96
 $(4.47) $3.61
 
 Non-GAAP operating income (loss) per common share - diluted$(5.35) $1.78
 $(3.37) $3.34
 
          
 Average common shareholders’ equity$4,898,698
 $5,369,921
 $4,912,998
 $5,319,849
 
          
 
Annualized return on average common equity(2)
nm
 13.2% (10.3%) 8.4% 
 
Annualized Non-GAAP operating return on average common equity(3)
nm
 12.0% (7.7%) 7.8% 
          
  Three months ended March 31,
  20242023
% 
Change
Liability$218,175 20 %$198,861 21 %10%
Accident and health310,792 29 %295,985 31 %5%
Professional lines146,832 14 %136,201 14 %8%
Credit and surety164,043 15 %115,237 12 %42%
Motor152,145 14 %140,115 14 %9%
Agriculture39,501 4 %22,399 2 %76%
Marine and aviation46,134 4 %30,531 3 %51%
Run-off lines
Catastrophe1,423 — %16,301 2 %(91%)
Property(156)— %9,605 1 %nm
Engineering1,033 — %1,129 — %(9%)
Total run-off lines2,300 — %27,035 3 %(91%)
Total$1,079,922 100 %$966,364 100 %12%
nm – not meaningful
(1)
Refer to Item 1, Note 8 to our Consolidated Financial Statements 'Earnings per Common Share' for further details on the dilution calculation.
(2)Return on average common equity ("ROACE") is calculated by dividing annualized net income available to common shareholders for the period by the average shareholders' equity determined by using the common shareholders' equity balances at the beginning and end of the period.
(3)Non-GAAP operating ROACE, a non-GAAP financial measure as defined in SEC Regulation G, is calculated by dividing annualized operating income for the period by the average common shareholders' equity.











56

Underwriting Results

Total underwriting lossGross premiums written for the three months ended September 30, 2017 was $513March 31, 2024, increased by $114 million, or 12% ($102 million, or 11%, on a decrease of $617 millionconstant currency basis), compared to the underwritingthree months ended March 31, 2023. The increase was primarily attributable to credit and surety, liability, agriculture, marine and aviation, accident and health, motor, and professional lines, partially offset by decreases in catastrophe and property lines.

The increase in credit and surety lines was driven by new business, increased line sizes on surety contracts, the timing of renewals of several credit and surety contracts and positive premium adjustments in the three months ended March 31, 2024, compared to negative premium adjustments in the three months ended March 31, 2023.

The increase in liability lines was related to new business, an increased line size on a significant contract and the timing of renewals of significant contracts, partially offset by non-renewals and decreased line sizes on several contracts, and a lower level of premium adjustments in the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

The increase in agriculture lines was due to new business and the timing of the renewal of a significant contract, partially offset by negative premium adjustments.

The increase in marine and aviation lines was driven by new marine business.

The increase in accident and health lines was related to positive premium adjustments in the three months ended March 31, 2024, compared to the negative premium adjustments in the three months ended March 31, 2023, and new business, partially offset by decreased line sizes on several contracts.

The increase in motor lines was due to the timing of the renewal of a significant contract and new business, partially offset by non-renewals and decreased line sizes on several contracts associated with repositioning the portfolio.

The increase in professional lines was attributable to new business and an increased line size on a significant contract, partially offset by negative premium adjustments associated with unfavorable market conditions in the three months ended March 31, 2024, compared to positive premium adjustments related to favorable market conditions in three months ended March 31, 2023, and the timing of the renewal of a significant contract.

The decreases in catastrophe and property lines were associated with the exit from these lines of business in June 2022.

59

Ceded Premiums Written

Ceded premiums written for the three months ended March 31, 2024, was $380 million, or 35%, of gross premiums written, compared to $241 million, or 25%, of gross premiums written for the three months ended March 31, 2023.The increase in ceded premiums written of $140 million, or 58%, was primarily driven by increases in credit and surety, liability, accident and health, professional lines, motor, and marine and aviation lines, partially offset by a decrease in catastrophe lines.

The increases in credit and surety, liability, accident and health, professional lines and motor lines were primarily attributable to premiums ceded to a quota share retrocession agreement entered into with Monarch Point Re (ISA 2024) Ltd. on January 1, 2024 compared to premiums ceded to a quota share retrocession agreement entered into with Monarch Point Re (ISA 2023) Ltd. on September 22, 2023 with an effective date of January 1, 2023.

The increase in credit and surety lines was also due to an increase in gross premiums written in the three months ended March 31, 2024, compared to the three months ended March 31, 2023, and the restructuring of a significant quota share retrocession treaty with a strategic capital partner, partially offset by the non-renewal of a significant quota share retrocession treaty.

The increases in liability lines and professional lines were also due to the restructuring of a significant quota share retrocession treaty with a strategic capital partner, partially offset by the restructuring of another significant quota share retrocession treaty with a strategic capital partner.

The increase in motor lines was partially offset by the restructuring of a significant quota share retrocession treaty with a strategic capital partner.

The increase in marine and aviation lines was attributable to an increase in gross premiums written in the three months ended March 31, 2024, compared to the three months ended March 31, 2023, and the restructuring of a significant quota share retrocessional treaty with a strategic capital partner.

The decrease in catastrophe lines was due to the decrease in gross premiums written in the three months ended March 31, 2024, compared to the three months ended March 31, 2023 following the exit from this line of business in June 2022.

Net Premium Earned

Net premiums earned by line of business were as follows:
  Three months ended March 31,
  2024  2023  % Change
Liability$84,419 25 %$102,441 25 %(18%)
Accident and health81,014 24 %83,184 20 %(3%)
Professional lines36,895 11 %57,011 14 %(35%)
Credit and surety55,797 16 %54,013 13 %3%
Motor31,824 9 %38,835 9 %(18%)
Agriculture23,485 7 %25,632 6 %(8%)
Marine and aviation18,900 6 %16,273 4 %16%
Run-off lines
Catastrophe3,484 1 %13,361 4 %(74%)
Property3,116 1 %18,609 4 %(83%)
Engineering1,161 — %4,384 1 %(74%)
Total run-off lines7,761 2 %36,354 9 %(79%)
Total$340,095 100 %$413,743 100 %(18%)

Net premiums earned for the three months ended March 31, 2024, decreased by $74 million, or 18% ($70 million, or 17%, on a constant currency basis), compared to the three months ended March 31, 2023.



60

The decrease was primarily driven by decreases in gross premiums earned in catastrophe, property and professional lines, together with increases in ceded premiums earned in liability, professional lines, and motor lines. These amounts were partially offset by an increase in gross premiums earned in liability lines, together with a decrease in ceded premiums earned in catastrophe lines.

Other Insurance Related Income (Loss)

Other insurance related income of $104$8 million for the three months ended September 30, 2016. The decrease in underwritingMarch 31, 2024, compared to other insurance related income of $1 million for the three months ended March 31, 2023, was primarily driven byassociated with an increase in fees related to arrangements with strategic capital partners.

Loss Ratio

The components of the loss ratio were as follows:
  Three months ended March 31,
  2024% Point
Change		2023
Current accident year loss ratio68.2 %1.966.3 %
Prior year reserve development ratio— %0.8(0.8 %)
Loss ratio68.2 %2.765.5 %

Current Accident Year Loss Ratio

The current accident year loss ratio increased to 68.2% for the three months ended March 31, 2024, from 66.3% for the three months ended March 31, 2023.

The current accident year loss ratio for three months ended March 31, 2024, compared to the same period in 2023, was impacted by a lower level of catastrophe and weather-related losses. During the three months ended March 31, 2024, catastrophe and weather-related losses, a decrease in net favorable prior year reserve development, an increase inwere $1 million, or 0.2 point, attributable to weather-related events. Comparatively, during the three months ended March 31, 2023, catastrophe and weather-related losses,were $13 million, or 3.3 points, primarily attributable to New Zealand floods, and other weather-related events.

Adjusting for the impact of the catastrophe and weather-related losses, the current accident year loss ratio excludingincreased to 68.0% for the three months ended March 31, 2024, from 63.0% for the three months ended March 31, 2023. The increase was principally due to elevated loss experience in marine and aviation lines and changes in business mix associated with the exit from catastrophe and weather-relatedproperty lines of business.

Prior Year Reserve Development

Refer to Item 1, Note 6 to the Consolidated Financial Statements 'Reserve for losses and loss expenses' for details on the lines of business and prior year reserve development.

Acquisition Cost Ratio

The acquisition cost ratio increased to 23.0% for the three months ended March 31, 2024, from 20.1% for the three months ended March 31, 2023, primarily related to adjustments attributable to loss-sensitive features driven by improved loss performance mainly in liability, credit and surety, and accident and health lines, and higher costs associated with changes in business mix driven by increases in credit and surety, accident and health, and liability lines of business written in recent periods, together with decreases in catastrophe and property lines of business written in recent periods, partially offset by the impact of retrocessional contracts on credit and surety, accident and health, and liability lines

Underwriting-Related General and Administrative Expense Ratio

The underwriting-related general and administrative expense decreased to 4.6% for the three months ended March 31, 2024, from 5.8% for the three months ended March 31, 2023, mainly driven by an increase in fees related to arrangements with strategic capital partners and a decrease in personnel costs, partially offset by a decrease in general and administrative expenses.net premiums earned.


The reinsurance segment underwriting loss increased by $310 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016. The decrease in underwriting income was primarily driven by an increase in catastrophe and weather-related losses, an increase in the current accident year loss ratio excluding catastrophe and weather-related losses and a decrease in net favorable prior year reserve development, partially offset by a decrease acquisition costs.61

The insurance segment underwriting loss increased by $307 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016. The decrease in underwriting income was primarily driven by an increase in catastrophe and weather-related losses, and a decrease in net favorable prior year reserve development.

Total underwriting loss in the nine months ended September 30, 2017 was $439 million, a decrease to underwriting income of $652 million compared to $213 million in the nine months ended September 30, 2016. The decrease in underwriting income was primarily driven by an increase in catastrophe and weather-related losses, an increase in the current accident year loss ratio excluding catastrophe and weather-related losses, decrease in net favorable prior year reserve development, partially offset by a decrease in general and administrative expenses.
The reinsurance segment underwriting income decreased by $352 million in the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. The decrease in underwriting income was primarily driven by an increase in catastrophe and weather-related losses, decrease in net favorable prior year reserve development, an increase in the current accident year loss ratio excluding catastrophe and weather-related losses, partially offset by a decrease in general and administrative expenses.NET INVESTMENT INCOME AND NET INVESTMENT GAINS (LOSSES)
The insurance segment underwriting loss increased by $300 million in the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. The increase in underwriting income was primarily driven by an increase in catastrophe and weather-related losses, and an increase in acquisition costs.

Net Investment IncomeRESULTS BY SEGMENT

Net investment income
Insurance Segment

Results for the three and nine months ended September 30, 2017 was $95 million and $300 million, respectively, a decreaseinsurance segment were as follows:
  Three months ended March 31,
  2024% Change2023
Revenues:
Gross premiums written$1,574,50511%$1,415,612
Net premiums written1,022,35416%882,576
Net premiums earned917,94612%816,456
Other insurance related income21(61%)54
Expenses:
Current accident year net losses and loss expenses(496,864)(450,508)
Prior year reserve development—1,041
Acquisition costs(176,029)(147,058)
Underwriting-related general and administrative expenses(122,087)(116,630)
Underwriting income$122,987$103,355
Ratios:
% Point
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses52.0 %(0.2)52.2 %
Catastrophe and weather-related losses ratio2.1 %(0.9)3.0 %
Current accident year loss ratio54.1 %(1.1)55.2 %
Prior year reserve development ratio— %0.1(0.1 %)
Net losses and loss expenses ratio54.1 %(1.0)55.1 %
Acquisition cost ratio19.2 %1.218.0 %
Underwriting-related general and administrative expense ratio13.3 %(0.9)14.2 %
Combined ratio86.6 %(0.7)87.3 %

54

Gross Premiums Written

Gross premiums written by line of $42 million, respectively, compared to the three and nine months ended September 30, 2016 primarily attributable to our alternative investments portfolio.business were as follows:
  Three months ended March 31,
  20242023% Change
Professional lines$236,665 15 %$221,615 16 %7%
Property478,835 30 %381,339 27 %26%
Liability287,705 18 %284,026 20 %1%
Cyber132,936 8 %152,788 11 %(13%)
Marine and aviation262,010 17 %233,424 16 %12%
Accident and health104,606 7 %79,384 6 %32%
Credit and political risk71,748 5 %63,036 4 %14%
Total$1,574,505 100 %$1,415,612 100 %11%


Net Realized Investment Gains (Losses)

Net realized investment gains were $15 millionGross premiums written for the three months ended September 30, 2017March 31, 2024 increased by $159 million, or 11%, compared to net realized investment gains of $5 million for for the same period of 2016. The net realized investment gains for the three months ended September 30, 2017 were mainly attributable to gains on sales of ETFs, partially offset by an other than temporary impairment ("OTTI") charge of $5 million. The net realized investment gains for the three months ended September 30, 2016 were attributable to sales of fixed income and equities which benefited from improved pricing in 2016.

Net realized investment losses were $15 million in the nine months ended September 30, 2017, compared to net realized investment losses of $40 million for the same period of 2016. The net realized investment losses for the nine months ended September 30, 2017 and 2016 were primarily attributable to foreign currency losses (net of forward contracts) on the sale of non-U.S. government and corporate debt securities as a result of the strengthening of the U.S. dollar and OTTI.

Corporate Expenses

Corporate expenses were $28 million for the three months ended September 30, 2017, compared to $29 million for the three months ended September 30, 2016. The decrease was primarily attributable to a decrease in performance related compensation costs and an



57

increase in the allocation of corporate costs to the insurance and reinsurance segments, largely offset by an increase in personnel expenses.

Corporate expenses were $98 million for the nine months ended September 30, 2017 compared to $87 million in the same period in 2016. March 31, 2023. The increase was primarily attributable to an increaseproperty, marine and aviation, accident and health, professional lines, and credit and political risk lines, partially offset by a decrease in personnel expenses.cyber lines.

Other Expenses (Revenues), Net


The foreign exchange losses of $33 millionincreases in property, and $90 million for the threemarine and nine months ended September 30, 2017, respectively,aviation lines were primarilydue to new business and favorable rate changes. The increases in accident and health, professional lines, and credit and political risk lines were mainly driven by new business.

The decrease in cyber lines was attributable to the impact of the weakening of the U.S. dollar on the remeasurement of net insurance-related liabilities mainly denominated in pound sterling and euro. For the nine months ended September 30, 2017 compared to the same period in 2016, foreign exchange losses also included the reclass of the cumulative translation adjustment of $24 million related to the wind-down of AXIS Specialty Australia from accumulated other comprehensive income to foreign exchange losses.

The foreign exchange gains of $14 million and $70 million for the three and nine months ended September 30, 2016, respectively, were primarily driven by the impact of the strengthening of the U.S. dollar on the remeasurement of net insurance-related liabilities mainly denominated against the pound sterling.

The financial results for the three and nine months ended September 30, 2017 resulted in a tax benefit of $26 million and $39 million, respectively. The tax benefit of $26 million recognizedpremium adjustments in the three months ended September 30, 2017 was primarily driven by an underwriting loss recognized in our U.S. operations. The tax benefit of $39 million recognized in the nine months ended September 30, 2017 was primarily driven by an underwriting loss recognized in our U.S. operations, share based compensation excess tax benefits which were recognized in the income statement,March 31, 2024, related to business written on a line slip basis, and a tax adjustment related to the bargain purchase gain recognizeddecrease in connectionpremiums associated with the acquisition of Aviabel.

The financial results for the three and nine months ended and 2016 resulted in a tax expense of $9 million and $8 million, respectively, was primarily driven by the generation of consolidated pre-tax net income in our European operations.

Bargain Purchase Gain

On April 1, 2017, the Company acquired general aviation insurer and reinsurer, Aviabel. The purchase price was allocated to the acquired assets and liabilities of Aviabel based on estimated fair values on the closing date and a bargain purchase gain of $15 million was recognized in the nine months ended September 30, 2017.

Transaction Related Expenses

The Company incurred transaction related expenses including due diligence, legal, accounting, and investment banking fees and expenses, as well as integration expenses of $6 million in the three months ended September 30, 2017 related to the acquisition of Novae. In addition, the Company was contractually obligated to pay investment banking fees on the closing date of the transaction. The Company expects substantially all of the integration costs related to the acquisition to be incurred in 2018. In addition, the Company expects to begin realizing cost savings in 2018.

Interest in Loss of Equity Method Investments

Interest in loss of equity method investments was $1 million and $8 million for the three and nine months ended September 30, 2017, respectively. The nine months ended September 30, 2017 included impairment losses of $9 million related to an investment in a U.S. based insurance company,two significant programs, partially offset by income of $1 million related to the Company’s aggregate share of profits in a company in which it has significant influence over the operating and financial policies.new business.



Ceded Premiums Written




58

Financial Measures

We believe the following financial indicators are important in evaluating our performance and measuring the overall growth in value generated for our common shareholders:
   Three months ended and at September 30, Nine months ended and at September 30, 
   2017 2016 2017 2016 
          
 
ROACE (annualized)(1)
nm
 13.2% (10.3%) 8.4% 
 
Non-GAAP operating ROACE (annualized)(2)
nm
 12.0% (7.7%) 7.8% 
 
Diluted book value per common share(3)
$55.33
 $59.77
 $55.33
 $59.77
 
 Cash dividends declared per common share0.38
 0.35
 1.14
 1.05
 
 Increase (decrease) in diluted book value per common share adjusted for dividends$(4.74) $2.50
 $(1.80) $6.74
 
          
nm – not meaningful
(1) Return on average common equity (“ROACE”) is calculated by dividing annualized net income available to common shareholders for the period by the average shareholders’ equity determined by using the common shareholders’ equity balances at the beginning and end of the period.
(2) Non-GAAP operating ROACE is calculated by dividing annualized operating income for the period by the average common shareholders’ equity determined by using the common shareholders’ equity balances at the beginning and end of the period. Annualized non-GAAP operating ROACE is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to ROACE, the most comparable GAAP measure, is presented in the 'Results of Operations'.
(3) Diluted book value per common share represents total common shareholders’ equity divided by the number of common shares and diluted common share equivalents outstanding, determined using the treasury stock method. Cash settled awards are excluded from the denominator.
Return on Equity
ROACE reflects the impact of net income attributable to common shareholders including net realized investment gains (losses), foreign exchange losses (gains), a bargain purchase gain related to the acquisition of Aviabel, and transaction related expenses associated with the acquisition of Novae.
The decrease in ROACECeded premiums written for the three months ended September 30, 2017, compared to the three months ended September 30, 2016,March 31, 2024 was primarily driven by a decrease in underwriting income and net investment income together with foreign exchange losses, partially offset by a tax benefit compared to a tax expense in 2016 and an increase in net realized investment gains .
The decrease in ROACE in the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, was primarily driven by a decrease in underwriting income and foreign exchange losses, partially offset by a tax benefit compared to a tax expense in 2016, an increase in net investment income, a decrease in net realized investment losses, and the bargain purchase gain.
Non-GAAP operating ROACE excludes the impact of net realized investment gains (losses), foreign exchange losses (gains), the bargain purchase gain and transaction related expenses.
The decrease in non-GAAP operating ROACE for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, was primarily driven by a decrease in underwriting income and net investment income partially offset by a tax benefit compared to a tax expense in 2016.
The decrease in non-GAAP operating ROACE in the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, was primarily driven by a decrease in underwriting income, partially offset by a tax benefit compared to a tax expense in 2016 and an increase in net investment income.

Diluted Book Value per Common Share
Diluted book value per common share decreased by 7% to $55.33 at September 30, 2017, from $59.77 at September 30, 2016, which primarily reflected net losses attributable to common shareholders generated over the past twelve months of $247 million and common share dividends declared.




59

Cash Dividends Declared per Common Share
We believe in returning excess capital to our shareholders by way of dividends (as well as share repurchases) accordingly, our dividend policy is an integral part of the value we create for our shareholders. Our cumulatively strong earnings have permitted our Board of Directors to approve thirteen successive increases in quarterly common share dividends.
Diluted Book Value per Common Share Adjusted for Dividends
Diluted book value per common share adjusted for dividends decreased by $4.74 or 8% per common share for the three months ended September 30, 2017, by $1.80 or 3% per common share for the nine months ended September 30, 2017, and $2.92, or 5%, per common share over the past twelve months.
Taken together, we believe that growth in diluted book value per common share and common share dividends declared represent the total value created for our common shareholders. As companies in the insurance industry have differing dividend payout policies, we believe investors use the diluted book value per common share adjusted for dividends metric to measure comparable performance across the industry.

During the three and nine months ended September 30, 2017, respectively, the decrease in diluted book value per common share adjusted for dividends was primarily attributable to net loss generated in both periods and common share dividends declared, partially offset by an increase in unrealized gains on investments reported in accumulated other comprehensive income.

During the three and nine months ended September 30, 2016, respectively, total value created consisted primarily of net income and an increase in unrealized gains on investments reported in accumulated other comprehensive income, partially offset by common share dividends declared.




60

UNDERWRITING RESULTS – GROUP

The following table provides our group underwriting results for the periods indicated. Underwriting income is a pre-tax measure of underwriting profitability that takes into account net premiums earned and other insurance related income as revenues and net losses and loss expenses, acquisition costs and underwriting-related general and administrative costs as expenses.
   Three months ended September 30, Nine months ended September 30, 
   2017 % Change 2016 2017 % Change 2016 
              
 Revenues:            
 Gross premiums written$1,185,574
 24% $959,962
 $4,459,772
 5% $4,239,558
 
 Net premiums written832,743
 40% 595,431
 3,297,718
 —% 3,288,587
 
 Net premiums earned1,017,131
 9% 934,415
 2,937,265
 6% 2,783,746
 
 Other insurance related income (losses)(3,197) nm 5,944
 (4,420) nm 4,850
 
              
 Expenses:            
 Current year net losses and loss expenses(1,283,135) 
 (608,347) (2,591,135) 
 (1,887,715) 
 Prior year reserve development47,768
 
 76,019
 143,495
 
 224,131
 
 Acquisition costs(194,724) 
 (189,810) (588,879) 
 (559,570) 
 Underwriting-related general and administrative            
 
expenses(1)
(96,696) 
 (114,223) (335,782) 
 (352,632) 
              
 
Underwriting income (loss)(2)
$(512,853) nm $103,998
 $(439,456) nm $212,810
 
              
              
 
General and administrative expenses(1)
$124,629
 
 $142,906
 $433,704
 
 $439,554
 
 
Income (loss) before income taxes and interest in income (loss) of equity method investments(2)
$(482,300) 
 $198,399
 $(371,686) 
 $374,606
 
              
nm – not meaningful
(1)
Underwriting-related general and administrative expenses is a non-GAAP measure as defined in SEC Regulation G. The reconciliation to general and administrative expenses, the most comparable GAAP measure, is presented in the 'Results of Operations', which is included in the 'Executive Summary' section of this MD&A.
(2)
Group (or consolidated) underwriting income (loss) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to net income (loss before tax and interest in income (loss) of equity investments), the most comparable GAAP measure, is presented in the "Results of Operations', which is included in the 'Executive Summary' section of this MD&A.




61

UNDERWRITING REVENUES

Gross and net premiums written, by segment, were as follows:
   Gross Premiums Written 
   Three months ended September 30, Nine months ended September 30, 
   2017 % Change 2016 2017 % Change 2016 
              
 Insurance$744,366
 10% $675,430
 $2,234,395
 6% $2,112,796
 
 Reinsurance441,208
 55% 284,532
 2,225,377
 5% 2,126,762
 
 Total$1,185,574
 24% $959,962
 $4,459,772
 5% $4,239,558
 
              
 
Constant currency(3)
$1,188,100
 24% $959,962
 $4,522,500
 7% $4,239,558
 
              
 % ceded            
 Insurance33% (3) pts 36% 31% (1) pts 32% 
 Reinsurance25% (18) pts 43% 21% 8 pts 13% 
 Total30% (8) pts 38% 26% 4 pts 22% 
              
  Net Premiums Written 
   Three months ended September 30, Nine months ended September 30, 
   2017 % Change 2016 2017 % Change 2016 
              
 Insurance$500,022
 15% $433,131
 $1,533,029
 7% $1,433,058
 
 Reinsurance332,721
 105% 162,300
 1,764,689
 (5%) 1,855,529
 
 Total$832,743
 40% $595,431
 $3,297,718
 —% $3,288,587
 
              
 
Constant currency(3)
$835,600
 40% $595,431
 $3,360,300
 2% $3,288,587
 
              
(3)Amounts presented on a constant currency basis are non-GAAP financial measures as defined in SEC Regulation G. The constant currency basis is calculated by applying the average foreign exchange rate from the current year to the prior year balance.

Gross Premiums Written:

Gross premiums written for the three and nine months ended September 30, 2017 increased by $226$552 million, or 24% ($228 million or 24% on a constant currency basis) and $220 million or 5% ($283 million or 7% on a constant currency basis)35%, respectively, compared to the three and nine months ended September 30, 2016, respectively. The increase for the three and nine months ended September 30, 2017 compared to the same periods in 2016, was due to an increase in both the insurance and reinsurance segments.

The reinsurance segment'sof gross premiums written, increased by $157compared to $533 million, or 55% ($160 million or 56% on a constant currency basis) and $99 million or 5% ($150 million or 7% on a constant currency basis) for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016.

The increase in the reinsurance segment38%, of gross premiums written for the three months ended September 30, 2017 compared to the same periodMarch 31, 2023. The increase in ceded premiums written of 2016,$19 million, or 4%, was primarily driven by our liability, catastrophe,increases in property, and motor lines. The increase in our liability lines was due to timing differences. The increase in our catastrophe lines was largely due to reinstatement premiums associated with the third quarter catastrophe losses. The increase in our propertymarine and motor lines was primarily driven by new business. Timing differences also contributed to the increase in premiums written in our motor lines.

The increase for the nine months ended September 30, 2017 compared to the same period in 2016, was primarily driven by our catastrophe, agriculture, property and motoraviation lines, partially offset by a decreasedecreases in our creditcyber, and suretyprofessional lines. The increase in our catastrophe and property lines was driven by new business. Favorable premium adjustments and reinstatement premiums contributed to the increase in premiums written in our catastrophe and agriculture lines. The increase in our motor lines was driven by new business and favorable premium adjustments, partially offset by a lower level of premiums written on a multi-year basis during 2017



62

compared to 2016, together with the impact of foreign exchange movements. The decrease in our credit and surety lines was primarily due to a lower level of premiums written on a multi-year basis.

The insurance segment's gross premiums written increased by $69 million or 10% and $122 million or 6% ($133 million on a constant currency basis) for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016.


The increase in property lines reflected the insurance segmentincrease in gross premiums written for the three months ended September 30, 2017March 31, 2024, compared to the three months ended March 31, 2023. The increase in marine and aviation lines was attributable to our liability lines, and our credit and political risk lines driven by new business opportunities, together with an increase in our aviation linesreinstatement premiums associated with our recent acquisition of Aviabel. These increases were partially offset by a reduction in premiums written in our property lines following our exit from some U.S. retail insurance operations last year.

The increase in the nine months ended September 30, 2017 was attributable to our liability, accidentlosses and health lines and our professional lines, primarily driven by new business opportunities, together with an increase in our aviation lines associated with our recent acquisition of Aviabel. These increases were partially offset by a decrease in premiums written in our property lines following our exit from some U.S. retail insurance operations last year.
Ceded Premiums Written:

Ceded premiums writtenloss expenses for the three and nine months ended September 30, 2017March 31, 2024. The decreases in cyber, and professional lines were $353 million or 30% and $1.2 billion or 26%due to the restructuring of gross premiums written, respectively, compared to $365 million or 38% and $951 million or 22% of gross premiums written for the three and nine months ended September 30, 2016, respectively. significant existing quota share treaties.

The decrease in cyber lines also reflected the ratio of ceded premiums written todecrease in gross premiums written for the three months ended September 30, 2017 and increaseMarch 31, 2024, compared to the three months ended March 31, 2023.












55

Net Premiums Earned

Net premiums earned by line of business were as follows:
  Three months ended March 31,
  20242023
%
Change
Professional lines$196,581 21 %$188,953 23 %4%
Property253,593 28 %197,268 25 %29%
Liability124,639 14 %124,854 15 %—%
Cyber82,858 9 %81,820 10 %1%
Marine and aviation139,290 15 %125,330 15 %11%
Accident and health84,257 9 %64,543 8 %31%
Credit and political risk36,728 4 %33,688 4 %9%
Total$917,946 100 %$816,456 100 %12%

Net premiums earned for the ninethree months ended September 30, 2017,March 31, 2024 increased by $101 million, or 12% ($103 million, or 13%, on a constant currency basis(1)), compared to the three months ended March 31, 2023.

The increase was primarily driven by increases in gross premiums earned in property, marine and aviation, and accident and health lines, together with a decrease in ceded premiums earned in professional lines. These amounts were partially offset by increases in ceded premiums earned in property, and marine and aviation lines, together with a decrease in gross premiums earned in professional lines.

Loss Ratio

The components of the loss ratio were as follows:
  Three months ended March 31,
2024% Point
Change		2023
Current accident year loss ratio54.1 %(1.1)55.2 %
Prior year reserve development ratio— %0.1(0.1 %)
Loss ratio54.1 %(1.0)55.1 %

Current Accident Year Loss Ratio

The current accident year loss ratio decreased to 54.1% for the three months ended March 31, 2024, from 55.2% for the three months ended March 31, 2023.

The decrease in the current accident year loss ratio for the three months ended March 31, 2024, compared to the same period in 2016,2023, was impacted by a lower level of catastrophe and weather-related losses. During the three months ended March 31, 2024, catastrophe and weather-related losses, were $19 million, or 2.1 points, attributable to weather-related events. Comparatively, during the three months ended March 31, 2023, catastrophe and weather-related losses, were $24 million, or 3.0 points, primarily attributable to New Zealand floods, Cyclone Gabrielle, and other weather-related events.

Adjusting for the impact of the catastrophe and weather-related losses, the current accident year loss ratio decreased to 52.0% for the three months ended March 31, 2024, from 52.2% for the three months ended March 31, 2023. The decrease was principally due to changes in business mix associated with the increase in property lines and the decrease in liability lines business written in recent periods.


(1) Amounts presented on a constant currency basis are non-GAAP financial measures as defined in Item 10 (e) of SEC Regulation S-K. The constant currency basis is calculated by applying the average foreign exchange rate from the current year to the prior year balance.

56

Prior Year Reserve Development

Refer to Item 1, Note 6 to the Consolidated Financial Statements 'Reserve for losses and loss expenses' for details on the lines of business and prior year reserve development.

Acquisition Cost Ratio

The acquisition cost ratio increased to 19.2% for the three months ended March 31, 2024, from 18.0% for the three months ended March 31, 2023, primarily related to changes in business mix driven by an increase in property, and accident and health lines of business written in recent periods, together with a decrease in ceding commission mainly in professional lines and cyber lines.

Underwriting-Related General and Administrative Expense Ratio

The underwriting-related general and administrative expense ratio decreased to 13.3% for the three months ended March 31, 2024, from 14.2% for the three months ended March 31, 2023, mainly driven by an increase in net premiums earned, partially offset by increases in performance-related compensation costs and personnel costs.



57

Reinsurance Segment

Results from the reinsurance segment were as follows:
  Three months ended March 31,
  2024% Change2023
Revenues:
Gross premiums written$1,079,92212%$966,364
Net premiums written699,719(4%)725,780
Net premiums earned340,095(18%)413,743
Other insurance related income8,319nm523
Expenses:
Current accident year net losses and loss expenses(231,807)(274,172)
Prior year reserve development—2,997
Acquisition costs(78,225)(83,315)
Underwriting-related general and administrative expenses(15,706)(23,765)
Underwriting income$22,676$36,011
Ratios:
% Point
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses68.0 %5.063.0 %
Catastrophe and weather-related losses ratio0.2 %(3.1)3.3 %
Current accident year loss ratio68.2 %1.966.3 %
Prior year reserve development ratio— %0.8(0.8 %)
Net losses and loss expenses ratio68.2 %2.765.5 %
Acquisition cost ratio23.0 %2.920.1 %
Underwriting-related general and administrative expense ratio4.6 %(1.2)5.8 %
Combined ratio95.8 %4.491.4 %
nm – not meaningful

58

Gross Premiums Written

Gross premiums written by line of business were as follows:
  Three months ended March 31,
  20242023
% 
Change
Liability$218,175 20 %$198,861 21 %10%
Accident and health310,792 29 %295,985 31 %5%
Professional lines146,832 14 %136,201 14 %8%
Credit and surety164,043 15 %115,237 12 %42%
Motor152,145 14 %140,115 14 %9%
Agriculture39,501 4 %22,399 2 %76%
Marine and aviation46,134 4 %30,531 3 %51%
Run-off lines
Catastrophe1,423 — %16,301 2 %(91%)
Property(156)— %9,605 1 %nm
Engineering1,033 — %1,129 — %(9%)
Total run-off lines2,300 — %27,035 3 %(91%)
Total$1,079,922 100 %$966,364 100 %12%
nm – not meaningful

Gross premiums written for the three months ended March 31, 2024, increased by $114 million, or 12% ($102 million, or 11%, on a constant currency basis), compared to the three months ended March 31, 2023. The increase was primarily attributable to the reinsurance segment.credit and surety, liability, agriculture, marine and aviation, accident and health, motor, and professional lines, partially offset by decreases in catastrophe and property lines.


The decreaseincrease in credit and surety lines was driven by new business, increased line sizes on surety contracts, the timing of renewals of several credit and surety contracts and positive premium adjustments in the reinsurance segment ratiothree months ended March 31, 2024, compared to negative premium adjustments in the three months ended March 31, 2023.

The increase in liability lines was related to new business, an increased line size on a significant contract and the timing of cededrenewals of significant contracts, partially offset by non-renewals and decreased line sizes on several contracts, and a lower level of premium adjustments in the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

The increase in agriculture lines was due to new business and the timing of the renewal of a significant contract, partially offset by negative premium adjustments.

The increase in marine and aviation lines was driven by new marine business.

The increase in accident and health lines was related to positive premium adjustments in the three months ended March 31, 2024, compared to the negative premium adjustments in the three months ended March 31, 2023, and new business, partially offset by decreased line sizes on several contracts.

The increase in motor lines was due to the timing of the renewal of a significant contract and new business, partially offset by non-renewals and decreased line sizes on several contracts associated with repositioning the portfolio.

The increase in professional lines was attributable to new business and an increased line size on a significant contract, partially offset by negative premium adjustments associated with unfavorable market conditions in the three months ended March 31, 2024, compared to positive premium adjustments related to favorable market conditions in three months ended March 31, 2023, and the timing of the renewal of a significant contract.

The decreases in catastrophe and property lines were associated with the exit from these lines of business in June 2022.

59

Ceded Premiums Written

Ceded premiums written for the three months ended March 31, 2024, was $380 million, or 35%, of gross premiums written, compared to $241 million, or 25%, of gross premiums written for the three months ended September 30, 2017March 31, 2023.The increase in ceded premiums written of $140 million, or 58%, was primarily driven by increases in credit and surety, liability, accident and health, professional lines, motor, and marine and aviation lines, partially offset by a decrease in catastrophe lines.

The increases in credit and surety, liability, accident and health, professional lines and motor lines were primarily attributable to premiums ceded to a quota share retrocession agreement entered into with Monarch Point Re (ISA 2024) Ltd. on January 1, 2024 compared to the same periodpremiums ceded to a quota share retrocession agreement entered into with Monarch Point Re (ISA 2023) Ltd. on September 22, 2023 with an effective date of January 1, 2023.

The increase in 2016,credit and surety lines was primarilyalso due to an increase in gross premiums written in the quarter togetherthree months ended March 31, 2024, compared to the three months ended March 31, 2023, and the restructuring of a significant quota share retrocession treaty with a decrease in premiums ceded to our strategic capital partners. The decrease in premiums ceded was attributable to our professional and liability lines,partner, partially offset by an increasethe non-renewal of a significant quota share retrocession treaty.

The increases in premiums ceded in our catastrophe lines.liability lines and professional lines were also due to the restructuring of a significant quota share retrocession treaty with a strategic capital partner, partially offset by the restructuring of another significant quota share retrocession treaty with a strategic capital partner.


The increase in motor lines was partially offset by the reinsurance segment ratiorestructuring of ceded premiums written to gross premiums written for the nine months ended September 30, 2017 compared to the same perioda significant quota share retrocession treaty with a strategic capital partner.

The increase in 2016, primarily duemarine and aviation lines was attributable to an increase in gross premiums written in the three months ended March 31, 2024, compared to the three months ended March 31, 2023, and the restructuring of a significant quota share retrocessional treaty with a strategic capital partner.

The decrease in catastrophe lines was due to the decrease in gross premiums written in the three months ended March 31, 2024, compared to the three months ended March 31, 2023 following the exit from this line of business in June 2022.

Net Premium Earned

Net premiums earned by line of business were as follows:
  Three months ended March 31,
  2024  2023  % Change
Liability$84,419 25 %$102,441 25 %(18%)
Accident and health81,014 24 %83,184 20 %(3%)
Professional lines36,895 11 %57,011 14 %(35%)
Credit and surety55,797 16 %54,013 13 %3%
Motor31,824 9 %38,835 9 %(18%)
Agriculture23,485 7 %25,632 6 %(8%)
Marine and aviation18,900 6 %16,273 4 %16%
Run-off lines
Catastrophe3,484 1 %13,361 4 %(74%)
Property3,116 1 %18,609 4 %(83%)
Engineering1,161 — %4,384 1 %(74%)
Total run-off lines7,761 2 %36,354 9 %(79%)
Total$340,095 100 %$413,743 100 %(18%)

Net premiums earned for the three months ended March 31, 2024, decreased by $74 million, or 18% ($70 million, or 17%, on a constant currency basis), compared to the three months ended March 31, 2023.



60

The decrease was primarily driven by decreases in gross premiums earned in catastrophe, property and professional lines, together with increases in ceded premiums earned in our catastrophe, agriculture, creditliability, professional lines, and surety lines as well as our liability lines,motor lines. These amounts were partially offset by an increase in gross premiums written.

In June 2017, the Company obtained catastrophe protection for its insurance and reinsurance segments through a reinsurance agreement with Northshore Re II Limited ("Northshore"). In connection with the reinsurance agreement, Northshore issued notes to unrelated investors in an amount equal to the full $350 million of coverage provided under the reinsurance agreement covering a three year period. At the time of the agreement, the Company performed an evaluation of Northshore to determine if it meets the definition of a variable interest entity ("VIE"). The Company concluded that Northshore is a VIE but that the Company does not have a variable interest in the entity, as the variability in results is expected to be absorbed entirely by the investors in Northshore. Accordingly, Northshore is not consolidated in the Company's consolidated financial statements. The premium ceded to Northshore during the nine months ended September 30, 2017 was $27 million.



63


Net Premiums Earned:

Net premiums earned by segment were as follows:
   Three months ended September 30,   Nine months ended September 30,   
   2017   2016   
%
Change
 2017   2016   
%
Change
 
                      
 Insurance$496,004
 49% $444,691
 48% 12% $1,448,270
 49% $1,322,649
 48% 9% 
 Reinsurance521,127
 51% 489,724
 52% 6% 1,488,995
 51% 1,461,097
 52% 2% 
 Total$1,017,131
 100% $934,415
 100% 9% $2,937,265
 100% $2,783,746
 100% 6% 
                      
 
Constant currency(3)
$1,027,050
   $934,415
 

 10% $2,999,050
   $2,783,746
   8% 
                      
(3)Amounts presented on a constant currency basis are non-GAAP financial measures as defined in SEC Regulation G. The constant currency basis is calculated by applying the average foreign exchange rate from the current year to the prior year balance.

Changes in net premiums earned reflect period to period changes in net premiums written and business mix, together with normal variability in premium earning patterns.

Net premiums earned for the three and nine months ended September 30, 2017 increased by $83 million or 9% ($93 million or 10% on a constant currency basis) and $154 million or 6% ($215 million or 8% on a constant currency basis), respectively, compared to the three and nine months ended September 30, 2016, respectively. The increases for both periods compared to the same periods in 2016, were driven by increases in both the insurance and reinsurance segments.

The increase in net premiums earned in the insurance segment for the three and nine months ended September 30, 2017 compared to the same periods in 2016, were driven by strong premium growth in our accident and healthliability lines, as well as our aviation lines in recent periods, together with a decrease in ceded premiums earned in our property lines. Net premiums earned for the nine months ended September 30, 2017 was also impacted by strong premium growth in our property lines in recent periods.

The increase in net premiums earned in the reinsurance segment for the three months ended September 30, 2017 compared to the same periods in 2016, was primarily driven by strong premium growth in our motor lines, as well as favorable reinstatement premiums impacting our catastrophe lines, and favorable premium estimate adjustments impacting our agriculture lines, partially offset by an increase in ceded premiums earned in our catastrophe, agriculture and professional lines, as well as a decrease in gross premium earned in our professional lines.

The increase in net premiums earned in the reinsurance segment for the nine months ended September 30, 2017, compared to the same periods in 2016, driven by an increase in gross premium earned in our motor and agriculture lines, partially offset by an increase in ceded premiums earned in our agriculture and professional lines, together with a decrease in gross premiums earned in our professional lines.


Other Insurance Related Income (Losses):(Loss)


Other insurance related losses was $3income of $8 million for the three months ended September 30, 2017,March 31, 2024, compared to other insurance related income of $6$1 million for the same periodthree months ended March 31, 2023, was primarily associated with an increase in 2016. The decrease in other insurancefees related income of $9 million was driven by the reinsurance segment and reflected a decrease in profit commissions associated withretrocessional agreementsto arrangements with strategic capital partner related to the third quarter catastrophe losses.partners.


Other insurance related losses for the nine months ended September 30, 2017 was $4 million, compared to other insurance related income of $5 million for the same period in 2016. The decrease in other insurance related income of $9 million was driven by the reinsurance segment and reflected net realized losses on our weather and commodities derivative portfolio partially offset by fees from our strategic capital partners.Loss Ratio






64

UNDERWRITING EXPENSES


The following table provides a breakdowncomponents of our combined ratio:the loss ratio were as follows:
  Three months ended March 31,
  2024% Point
Change		2023
Current accident year loss ratio68.2 %1.966.3 %
Prior year reserve development ratio— %0.8(0.8 %)
Loss ratio68.2 %2.765.5 %
   Three months ended September 30, Nine months ended September 30, 
   2017 
% Point
Change
 2016 2017 
% Point
Change
 2016 
              
 Current accident year loss ratio126.2% 61.1 65.1% 88.2% 20.4 67.8% 
 Prior year reserve development(4.7%) 3.4 (8.1%) (4.9%) 3.1 (8.0%) 
 Acquisition cost ratio19.1% (1.2) 20.3% 20.0% (0.1) 20.1% 
 
General and administrative expense ratio(1)
12.3% (3.0) 15.3% 14.8% (1.0) 15.8% 
 Combined ratio152.9% 60.3 92.6% 118.1% 22.4 95.7% 
              
(1)
The general and administrative expense ratio includes corporate expenses not allocated to reportable segments of 2.7% and 3.1% for the three months ended September 30, 2017 and 2016, respectively, and 3.3% and 3.1% for the six months ended September 30, 2017 and 2016, respectively. These costs are further discussed in the ‘Other Expenses (Revenues), Net’ section.


Current Accident Year Loss Ratio:Ratio


The current accident year loss ratio increased to 68.2% for the three months ended March 31, 2024, from 66.3% for the three months ended March 31, 2023.

The current accident year loss ratio increased to 126.2% and 88.2% for the three and nine months ended September 30, 2017, respectively, from 65.1% and 67.8% for the three and nine months ended September 30, 2016, respectively.

The increase in the current accident year loss ratio for the three and nine months ended September 30, 2017March 31, 2024, compared to the same period in 2016,2023, was impacted by a higherlower level of catastrophe and weather-related losses. During the three and nine months ended September 30, 2017 we incurred pre-taxMarch 31, 2024, catastrophe and weather-related losses, net of reinstatement premiums, of $617were $1 million, or 61.4 points and $702 million or 24.1 points, respectively, primarily0.2 point, attributable to Hurricanes Harvey, Irma and Maria, the two earthquakes in Mexico and U.S. weather-related events. Comparatively, during the three and nine months ended September 30, 2016 we incurred pre-taxMarch 31, 2023, catastrophe and weather-related losses, net of reinstatement premiums of $22were $13 million, or 2.33.3 points, primarily attributable to New Zealand floods, and $145 million, or 5.3 points, respectively.other weather-related events.


After adjustingAdjusting for the impact of the catastrophe and weather-related losses, our current accident year loss ratio for the three and nine months ended September 30, 2017 was 64.8% and 64.1%, respectively, compared to 62.8% and 62.5% in the three and nine months ended September 30, 2016, respectively.

The increase in the current accident year loss ratio after adjusting for the impact of the catastrophe and weather-related lossesincreased to 68.0% for the three months ended September 30, 2017 compared toMarch 31, 2024, from 63.0% for the same period in 2016,three months ended March 31, 2023. The increase was mainlyprincipally due to higher attritional losses in our insurance property lines, higher mid-sizeelevated loss experience in our reinsurance creditmarine and suretyaviation lines the ongoing impact of the Ogden rate change on our reinsurance motor lines togetherand changes in business mix associated with the adverse impact on rate and trend.

The increase in the current accident year loss ratio after adjusting for the impact of theexit from catastrophe and weather-related losses for the nine months ended September 30, 2017 comparedproperty lines of business.

Prior Year Reserve Development

Refer to Item 1, Note 6 to the same period in 2016, was mainly due to higher loss experience in our insurance and reinsurance property lines, the adverse impact on rate and trend and the ongoing impact of the Ogden rate change on our reinsurance motor lines.

For further discussion on current accident year loss ratios, refer to the insurance and reinsurance segment discussions below.

Estimates of Significant Catastrophe Events

Our September 30, 2017 net reservesConsolidated Financial Statements 'Reserve for losses and loss expenses includes estimated amountsexpenses' for numerous catastrophe events. We caution thatdetails on the magnitude and/or complexitylines of losses arising from certain of these events, in particular Hurricanes Harvey, Irmabusiness and Maria and the two earthquakes in Mexico as well as Hurricane Matthew, the Fort McMurray wildfires, Storm Sandy, the 2011 Japanese earthquake and tsunami, the 2010-11 New Zealand earthquakes and the Tianjin port explosion, inherently increases the level of uncertainty and, therefore, the level of management judgment involved in arriving at our estimated net reserves for losses and loss expenses. As a result, our actual losses for these events may ultimately differ materially from our current estimates.



65

Our estimated net losses in relation to the catastrophe events described above were derived from ground-up assessments of our in-force contracts and treaties providing coverage in the affected regions. These assessments take into account the latest information available from clients, brokers and loss adjusters. In addition, we consider industry insured loss estimates, market share analyses and catastrophe modeling analyses, when appropriate. Our estimates remain subject to change, as additional loss data becomes available.

We continue to monitor paid and incurred loss development for catastrophe events of prior years and update our estimates of ultimate losses accordingly.

Prior Year Reserve Development:

Our favorable prior year reserve development was the net result of several underlying reserve developments on prior accident years, identified during our quarterly reserve review process. The following table provides a breakdown of prior year reserve development by segment:development.


   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Insurance$2,603
 $20,688
 $30,740
 $43,181
 
 Reinsurance45,165
 55,331
 112,755
 180,950
 
 Total$47,768
 $76,019
 $143,495
 $224,131
 
          

Overview

Our short tail business includes the underlying exposures in our property and other, marine and aviation reserve classes within our insurance segment, and the property and other reserve class within our reinsurance segment. Development from these classes contributed $5 million and $41 million of net favorable prior year reserve development for the three and nine months ended September 30, 2017, respectively. These short-tail lines contributed $41 million and $116 million of net favorable prior year reserve development for the three and nine months ended September 30, 2016, respectively. The net favorable development for these classes primarily reflected the recognition of better than expected loss emergence.

Our medium-tail business consists primarily of professional insurance and reinsurance reserve classes, credit and political risk insurance reserve class, and credit and surety reinsurance reserve class. For the three months ended September 30, 2017, the professional reinsurance reserve class contributed net favorable prior year reserve development of $9 million. For the nine months ended September 30, 2017, the professional insurance and reinsurance reserve classes contributed net favorable prior year reserve development of $54 million. For the three and nine months ended September 30, 2017 the credit and surety reinsurance reserve class recorded net favorable prior year reserve development of $17 million and $18 million, respectively. This net favorable prior year reserve development reflected the recognition of generally better than expected loss emergence.

For the three and nine months ended September 30, 2016, the professional reserve classes contributed net favorable prior year reserve development of $12 million and $28 million, respectively. The net favorable prior year reserve development on these reserve classes reflected the generally favorable experience as we continued to transition to more experience based methods.

Our long-tail business consists primarily of liability and motor reserve classes. For the nine months ended September 30, 2017, the liability reinsurance reserve class contributed net favorable prior year reserve development of $40 million. For the three and nine months ended and September 30, 2016, the liability reinsurance reserve class contributed net favorable prior year development of $10 million and $32 million, respectively. The net favorable prior year reserve development for our liability reinsurance reserve class in both years primarily reflected the progressively increased weight given by management to experience based indications on older accident years, which has generally been favorable. For the nine months ended September 30, 2017, the liability insurance reserve class recorded net adverse prior year reserve development of $6 million, primarily attributable to reserve strengthening within our run-off Bermuda excess casualty book of business.

For the three and nine months ended September 30, 2017, the motor reinsurance reserve class recorded net favorable prior year reserve development of $16 million and net adverse prior year reserve development of $4 million, respectively. For the three months ended September 30, 2017, the net favorable prior year reserve development related to favorable loss emergence trends on several classes of



66

business spanning multiple accident years. For the nine months ended, the net adverse prior year development was driven by the U.K. Ministry of Justice’s recent announcement of a decrease in the discount rate used to calculate lump sum awards in U.K. bodily injury cases, known as the Ogden rate. Effective March 20, 2017, the Ogden rate changed from plus 2.5% to minus 0.75%. For the three and nine months ended September 30, 2016, the motor reinsurance reserve class contributed $7 million and $40 million, respectively, of net favorable prior year reserve development related to favorable loss emergence trends on several classes of business spanning multiple accident years.

We caution that conditions and trends that impacted the development of our liabilities in the past may not necessarily occur in the future.

The following sections provide further details on prior year reserve development by segment, reserving class and accident year.

Insurance Segment:
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Property and other$432
 $10,061
 $4,434
 $24,048
 
 Marine2,461
 4,682
 17,957
 8,382
 
 Aviation(831) 517
 (4,344) 437
 
 Credit and political risk(18) (25) (53) (232) 
 Professional lines(261) 3,378
 18,489
 8,956
 
 Liability820
 2,075
 (5,743) 1,590
 
 Total$2,603
 $20,688
 $30,740
 $43,181
 
          

For the three months endedSeptember 30, 2017 we recognized $3 million of net favorable prior year reserve development, the principal component of which was: 

$2 million of net favorable prior year reserve development on marine business, primarily related to accident year 2015 and primarily driven by better than expected development.

For the three months ended September 30, 2016 we recognized $21 million of net favorable prior year reserve development, the principal components of which were: 

$10 million of net favorable prior year reserve development on property and other business, driven by better than expected loss emergence, primarily driven by reductions in mid-size loss estimates impacting accident year 2015 and favorable loss experience in our accident and health lines impacting accident year 2014.

$5 million of net favorable prior year reserve development on marine business, driven by better than expected loss emergence, primarily driven by reductions in mid-size loss estimates impacting accident year 2015.

For the nine months ended September 30, 2017 we recognized $31 million of net favorable prior year reserve development, the principal components of which were: 

$18 million of net favorable prior year reserve development on professional lines business, primarily related to accident years 2013 and 2014 due to the recognition of better than expected development.

$18 million of net favorable prior year reserve development on marine business, primarily related to accident years 2013, 2015 and 2016 driven by better than expected loss emergence.

$6 million of net adverse prior year development on liability lines, primarily attributable to reserve strengthening on two large claims within our run-off Bermuda excess casualty book of business impacting 2014 and prior accident years.




67

For the nine months ended September 30, 2016 we recognized $43 million of net favorable prior year reserve development, the principal components of which were: 

$24 million of net favorable prior year reserve development on property and other business, driven by better than expected loss emergence primarily related to accident year 2014.

$9 million of net favorable prior year reserve development on professional lines business, driven by better than expected
development related to various accident years, partially offset by reserve strengthening relating to updated information on one specific claim impacting accident year 2010.

$8 million of net favorable prior year reserve development on marine business, driven by better than expected loss emergence, primarily driven by reductions in mid-size loss estimates impacting accident year 2015.

Reinsurance Segment:
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Property and other$3,041
 $25,831
 $22,482
 $83,522
 
 Credit and surety16,838
 3,900
 18,361
 6,761
 
 Professional lines8,918
 8,761
 35,764
 18,918
 
 Motor15,653
 6,653
 (3,963) 39,794
 
 Liability715
 10,186
 40,111
 31,955
 
 Total$45,165
 $55,331
 $112,755
 $180,950
 
          

For the three months endedSeptember 30, 2017 we recognized $45 million of net favorable prior year reserve development, the principal components of which were:

$17 million of net favorable prior year reserve development on credit and surety, primarily related to accident years 2012 through 2015 driven by better than expected loss emergence.

$16 million of net favorable prior year reserve development on motor business, due to better than expected loss emergence emanating from all accident years, partially offset by the adverse impact of the recent change in Ogden rate.

$9 million of net favorable prior year reserve development on professional lines business, primarily related to earlier accident year 2009 for reasons discussed in the overview.

For the three months ended September 30, 2016 we recognized $55 million of net favorable prior year reserve development, the principal components of which were:

$26 million of net favorable prior year reserve development on property and other business, related to 2011 through 2015 accident years driven by better than expected loss emergence including a reserve reduction of $7 million related to Storm Sandy.

$10 million of net favorable prior year reserve development on liability business, primarily related to the 2007 through 2010 accident years, for reasons discussed in the overview.

$9 million of net favorable prior year reserve development on professional lines business, primarily related to the 2005 through 2010 accident years, for reasons discussed in the overview.

$7 million of net favorable prior year reserve development on motor business, related to non-proportional business spanning multiple accident years, driven by better than expected loss emergence.




68

For the nine months ended September 30, 2017 we recognized $113 million of net favorable prior year reserve development, the principal components of which were:

$40 million of net favorable prior year reserve development on liability business, primarily related to accident years 2008 through 2010, for reasons discussed in the overview.

$36 million of net favorable prior year reserve development on professional lines business, primarily related to accident years 2008 through 2012, for reasons discussed in the overview.

$22 million of net favorable prior year reserve development on property and other business, primarily related to 2013, 2014 and 2016 accident years driven by overall better than expected loss emergence.

$18 million of net favorable prior year reserve development on credit and surety business, primarily related to accident year 2012 driven by better than expected loss emergence.

$4 million of net adverse prior year reserve development on motor business related to the impact of the recent change in Ogden rate, largely offset by continued better than expected loss emergence spanning multiple accident years.

For the nine months ended September 30, 2016 we recognized $181 million of net favorable prior year reserve development, the principal components of which were:

$84 million of net favorable prior year reserve development on property and other business, primarily related to the 2010 through 2015 accident years driven by better than expected loss emergence.

$40 million of net favorable prior year reserve development on motor business, primarily related to non-proportional business spanning multiple accident years, driven by better than expected loss emergence.

$32 million of net favorable prior year reserve development on liability business, primarily related to the 2006 through 2011 accident years, for reasons discussed in the overview.

$19 million of net favorable prior year reserve development on professional lines business, primarily related to the 2005 through 2010 accident years, for reasons discussed in the overview.

Acquisition Cost Ratio:Ratio


The acquisition cost ratio decreasedincreased to 19.1% and 20.0%23.0% for the three and nine months ended September 30, 2017, respectively,March 31, 2024, from 20.3% and 20.1% infor the three and nine months ended September 30, 2016, respectively,March 31, 2023, primarily related to adjustments attributable to loss-sensitive features driven by our reinsurance segmentimproved loss performance mainly in liability, credit and primarily attributable tosurety, and accident and health lines, and higher costs associated with changes in business mix.mix driven by increases in credit and surety, accident and health, and liability lines of business written in recent periods, together with decreases in catastrophe and property lines of business written in recent periods, partially offset by the impact of retrocessional contracts on credit and surety, accident and health, and liability lines


Underwriting-Related General and Administrative Expense Ratio:Ratio


The underwriting-related general and administrative expense ratio decreased to 12.3% and 14.8%4.6% for the three and nine months ended September 30, 2017,March 31, 2024, from 15.3% and 15.8% in5.8% for the three and nine months ended September 30, 2016 respectively, primarily reflecting a decrease in performance related compensation costs andMarch 31, 2023, mainly driven by an increase in fees fromrelated to arrangements with strategic capital partners.




partners and a decrease in personnel costs, partially offset by a decrease in net premiums earned.



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69


NET INVESTMENT INCOME AND NET INVESTMENT GAINS (LOSSES)

RESULTS BY SEGMENT


INSURANCE SEGMENTInsurance Segment


Results from ourfor the insurance segment were as follows:
  Three months ended March 31,
  2024% Change2023
Revenues:
Gross premiums written$1,574,50511%$1,415,612
Net premiums written1,022,35416%882,576
Net premiums earned917,94612%816,456
Other insurance related income21(61%)54
Expenses:
Current accident year net losses and loss expenses(496,864)(450,508)
Prior year reserve development—1,041
Acquisition costs(176,029)(147,058)
Underwriting-related general and administrative expenses(122,087)(116,630)
Underwriting income$122,987$103,355
Ratios:
% Point
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses52.0 %(0.2)52.2 %
Catastrophe and weather-related losses ratio2.1 %(0.9)3.0 %
Current accident year loss ratio54.1 %(1.1)55.2 %
Prior year reserve development ratio— %0.1(0.1 %)
Net losses and loss expenses ratio54.1 %(1.0)55.1 %
Acquisition cost ratio19.2 %1.218.0 %
Underwriting-related general and administrative expense ratio13.3 %(0.9)14.2 %
Combined ratio86.6 %(0.7)87.3 %

   Three months ended September 30, Nine months ended September 30, 
   2017 % Change 2016 2017 % Change 2016 
              
 Revenues:            
 Gross premiums written$744,366
 10% $675,430
 $2,234,395
 6% $2,112,796
 
 Net premiums written500,022
 15% 433,131
 1,533,029
 7% 1,433,058
 
 Net premiums earned496,004
 12% 444,691
 1,448,270
 9% 1,322,649
 
 Other insurance related income (losses)526
 nm 39
 1,077
 nm (57) 
              
 Expenses:            
 Current year net losses and loss expenses(631,468)   (293,914) (1,272,235)   (896,952) 
 Prior year reserve development2,603
   20,688
 30,740
   43,181
 
 Acquisition costs(74,231)   (61,755) (223,665)   (184,982) 
 General and administrative expenses(75,038)   (84,588) (253,308)   (252,652) 
              
 Underwriting income (loss)$(281,604) nm $25,161
 $(269,121) nm $31,187
 
              
 Ratios:  
% Point
Change
     
% Point
Change
   
 Current accident year loss ratio127.3% 61.2 66.1% 87.8% 20.0 67.8% 
 Prior year reserve development(0.5%) 4.2 (4.7%) (2.1%) 1.1 (3.2%) 
 Acquisition cost ratio15.0% 1.1 13.9% 15.4% 1.4 14.0% 
 General and administrative expense ratio15.1% (4.0) 19.1% 17.6% (1.4) 19.0% 
 Combined ratio156.9% 62.5 94.4% 118.7% 21.1 97.6% 
              
54
nm – not meaningful




70




Gross Premiums Written:Written


The following table provides grossGross premiums written by line of business:business were as follows:
  Three months ended March 31,
  20242023% Change
Professional lines$236,665 15 %$221,615 16 %7%
Property478,835 30 %381,339 27 %26%
Liability287,705 18 %284,026 20 %1%
Cyber132,936 8 %152,788 11 %(13%)
Marine and aviation262,010 17 %233,424 16 %12%
Accident and health104,606 7 %79,384 6 %32%
Credit and political risk71,748 5 %63,036 4 %14%
Total$1,574,505 100 %$1,415,612 100 %11%

   Three months ended September 30,   Nine months ended September 30,   
   2017   2016   % Change 2017   2016   % Change 
                      
 Property$154,882
 19% $164,605
 25% (6%) $498,127
 22% $522,380
 24% (5%) 
 Marine42,483
 6% 33,677
 5% 26% 182,005
 8% 191,298
 9% (5%) 
 Terrorism12,147
 2% 9,394
 1% 29% 34,470
 2% 28,090
 1% 23% 
 Aviation23,814
 3% 9,684
 1% nm 59,434
 3% 37,111
 2% 60% 
 Credit and Political Risk19,793
 3% 5,423
 1% nm 51,105
 2% 34,299
 2% 49% 
 Professional Lines213,009
 29% 204,926
 30% 4% 612,597
 27% 590,417
 28% 4% 
 Liability131,975
 18% 108,447
 16% 22% 359,304
 16% 310,797
 15% 16% 
 Accident and Health146,263
 20% 139,274
 21% 5% 437,353
 20% 398,404
 19% 10% 
 Total$744,366
 100% $675,430
 100% 10% $2,234,395
 100% $2,112,796
 100% 6% 
                      
 
Constant currency(1)
$743,500
   $675,430
   10% $2,245,400
   $2,112,796
   6% 
                      
nm – not meaningful
(1)Amounts presented on a constant currency basis are non-GAAP financial measures as defined in SEC Regulation G. The constant currency basis is calculated by applying the average foreign exchange rate from the current year to the prior year balance.

Gross premiums written for the three months ended September 30, 2017March 31, 2024 increased by $69$159 million, or 10%11%, compared to the three months ended September 30, 2016. March 31, 2023. The increase in gross premiums written was primarily attributable to our liabilityproperty, marine and aviation, accident and health, professional lines, and our credit and political risk lines, driven by new business opportunities, together with an increase in our aviation lines associated with our recent acquisition of Aviabel. These increases were partially offset by a reductiondecrease in premiums writtencyber lines.

The increases in our property, and marine and aviation lines following our exit from some retail insurance operationswere due to new business and favorable rate changes. The increases in the U.S. last year.accident and health, professional lines, and credit and political risk lines were mainly driven by new business.


Gross premiums written for the nine months ended September 30, 2017 increased by $122 million or 6% compared to the nine months ended September 30, 2016. The increasedecrease in gross premiums writtencyber lines was attributable to our liability, our accidentpremium adjustments in the three months ended March 31, 2024, related to business written on a line slip basis, and health lines, and our professional lines primarily driven by new business opportunities, together with an increasea decrease in our aviation linespremiums associated with our recent acquisition of Aviabel. These increases weretwo significant programs, partially offset by a reduction in premiums written in our property lines following our exit from some U.S. retail insurance operations last year.new business.


Ceded Premiums Written:Written


Ceded premiums written for the three and nine months ended September 30, 2017 were $244March 31, 2024 was $552 million, or 33%35%, of gross premiums written, and $701compared to $533 million, or 31% of gross premiums written, respectively, compared to $242 million or 36% of gross premiums written and $680 million or 32%38%, of gross premiums written for the three and nine months ended September 30, 2016, respectively.

March 31, 2023. The decreaseincrease in the ratio of ceded premiums written toof $19 million, or 4%, was primarily driven by increases in property, and marine and aviation lines, partially offset by decreases in cyber, and professional lines.

The increase in property lines reflected the increase in gross premiums written for the three and nine months ended September 30, 2017March 31, 2024, compared to the same periodsthree months ended March 31, 2023. The increase in 2016,marine and aviation lines was primarilyattributable to reinstatement premiums associated with losses and loss expenses for the three months ended March 31, 2024. The decreases in cyber, and professional lines were due to an increasethe restructuring of significant existing quota share treaties.

The decrease in cyber lines also reflected the decrease in gross premiums written together with a decrease in premiums ceded in our property lines, partially offset by an increase in premiums ceded in our liability lines.for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

















55
71




Net Premiums Earned:Earned


The following table provides netNet premiums earned by line of business:business were as follows:
  Three months ended March 31,
  20242023
%
Change
Professional lines$196,581 21 %$188,953 23 %4%
Property253,593 28 %197,268 25 %29%
Liability124,639 14 %124,854 15 %—%
Cyber82,858 9 %81,820 10 %1%
Marine and aviation139,290 15 %125,330 15 %11%
Accident and health84,257 9 %64,543 8 %31%
Credit and political risk36,728 4 %33,688 4 %9%
Total$917,946 100 %$816,456 100 %12%
   Three months ended September 30,   Nine months ended September 30,   
   2017   2016   % Change 2017   2016   % Change 
                      
 Property$116,771
 22% $106,578
 25% 10% $355,392
 24% $312,804
 23% 14% 
 Marine34,217
 7% 36,218
 8% (6%) 108,822
 8% 113,693
 9% (4%) 
 Terrorism8,790
 2% 8,276
 2% 6% 25,577
 2% 26,011
 2% (2%) 
 Aviation22,500
 5% 9,015
 2% nm 53,265
 4% 33,528
 3% 59% 
 Credit and Political Risk9,073
 2% 12,274
 3% (26%) 29,957
 2% 42,661
 3% (30%) 
 Professional Lines126,946
 26% 126,574
 28% —% 379,426
 26% 386,241
 29% (2%) 
 Liability48,135
 10% 42,205
 9% 14% 134,467
 9% 126,429
 10% 6% 
 Accident and Health129,572
 26% 103,551
 23% 25% 361,364
 25% 281,282
 21% 28% 
 Total$496,004
 100% $444,691
 100% 12% $1,448,270
 100% $1,322,649
 100% 9% 
                      
 
Constant currency(1)
$497,350
   $444,691
   12% $1,458,850
   $1,322,649
   10% 
                      

nm - not meaningful
(1)Amounts presented on a constant currency basis are non-GAAP financial measures as defined in SEC Regulation G. The constant currency basis is calculated by applying the average foreign exchange rate from the current year to the prior year balance.

Net premiums earned for the three and nine months ended September 30, 2017March 31, 2024 increased by $51$101 million, or 12%, and $126 ($103 million, or 9% ($136 million or 10%13%, on a constant currency basis)basis(1)), compared to the three and nine months ended September 30, 2016, respectively.March 31, 2023.


The increase for the three and nine months ended September 30, 2017 compared to the same periods in 2016, was primarily driven by strong premium growthincreases in ourgross premiums earned in property, marine and aviation, and accident and health lines, as well as our aviation lines in recent periods, together with a decrease in ceded premiums earned in our propertyprofessional lines. NetThese amounts were partially offset by increases in ceded premiums earned for the nine months ended September 30, 2017, was also impacted by strong premium growth in our property, and marine and aviation lines, together with a decrease in recent periods.gross premiums earned in professional lines.


Loss Ratio:Ratio


The table below shows the components of ourthe loss ratio:ratio were as follows:
  Three months ended March 31,
2024% Point
Change		2023
Current accident year loss ratio54.1 %(1.1)55.2 %
Prior year reserve development ratio— %0.1(0.1 %)
Loss ratio54.1 %(1.0)55.1 %
   Three months ended September 30, Nine months ended September 30, 
  2017 
% Point
Change
 2016 2017 
% Point
Change
 2016 
              
 Current accident year127.3% 61.2 66.1% 87.8% 20.0 67.8% 
 Prior year reserve development(0.5%) 4.2 (4.7%) (2.1%) 1.1 (3.2%) 
 Loss ratio126.8% 65.4 61.4% 85.7% 21.1 64.6% 
              




72


CurrentCurrent Accident Year Loss Ratio:Ratio


The current accident year loss ratios increasedratio decreased to 127.3% and 87.8% for the three and nine months ended September 30, 2017, respectively, from 66.1% and 67.8% for the three and nine months ended September 30, 2016, respectively.

The increase in the current accident year loss ratios for the three and nine months ended September 30, 2017 compared to the same period in 2016, was impacted by a higher level of catastrophe and weather-related losses. During the three and nine months ended September 30, 2017 we incurred $317 million, or 64.0 points, and $379 million, or 26.1 points, respectively, in pre-tax catastrophe and weather-related losses, primarily attributable to Hurricanes Harvey, Irma and Maria and the two earthquakes in Mexico and U.S. weather-related events. Comparatively, during the three and nine months ended September 30, 2016, we incurred $15 million, or 3.3 points, and $73 million, or 5.5 points, respectively.

After adjusting for the impact of the catastrophe and weather-related losses, our current accident year loss ratio for the three and nine months ended September 30, 2017 was 63.3% and 61.7%, respectively, compared to 62.8% and 62.3% for the three and nine months ended September 30, 2016, respectively.

The increase in the current accident year loss ratio after adjusting for the impact of the catastrophe and weather-related losses54.1% for the three months ended September 30, 2017 compared toMarch 31, 2024, from 55.2% for the same period in 2016, was principally due to an increase in attritional loss experience in our property lines, together with the adverse impact of rate and trend, partially offset by changes in business mix.three months ended March 31, 2023.


The decrease in the current accident year loss ratio after adjustingfor the three months ended March 31, 2024, compared to the same period in 2023, was impacted by a lower level of catastrophe and weather-related losses. During the three months ended March 31, 2024, catastrophe and weather-related losses, were $19 million, or 2.1 points, attributable to weather-related events. Comparatively, during the three months ended March 31, 2023, catastrophe and weather-related losses, were $24 million, or 3.0 points, primarily attributable to New Zealand floods, Cyclone Gabrielle, and other weather-related events.

Adjusting for the impact of the catastrophe and weather-related losses, the current accident year loss ratio decreased to 52.0% for the ninethree months ended September 30, 2017 compared toMarch 31, 2024, from 52.2% for the same period in 2016,three months ended March 31, 2023. The decrease was principally due to changes in business mix associated with the recognitionincrease in property lines and the decrease in liability lines business written in recent periods.


(1) Amounts presented on a constant currency basis are non-GAAP financial measures as defined in Item 10 (e) of better than expected attritional loss experience in our professional lines, partially offsetSEC Regulation S-K. The constant currency basis is calculated by applying the adverse impact ofaverage foreign exchange rate and trend.

Referfrom the current year to the ‘prior year balance.

56

Prior Year Reserve Development’ section

Refer to Item 1, Note 6 to the Consolidated Financial Statements 'Reserve for further details.losses and loss expenses' for details on the lines of business and prior year reserve development.


Acquisition Cost Ratio:Ratio


The acquisition cost ratio increased to 15.0% and 15.4%19.2% for the three and nine months ended September 30, 2017, respectively,March 31, 2024, from 13.9% and 14.0%18.0% for the three and nine months ended September 30, 2016, respectively, attributableMarch 31, 2023, primarily related to changes in business mix in our accident and health lines. In addition, for the three months ended September 30, 2017 the increase in the acquisition cost ratio was related to an increase in variable acquisition costs associated with on certain lines of business, partially offsetdriven by an increase in property, and accident and health lines of business written in recent periods, together with a decrease in ceding commissions following increased cessionscommission mainly in our liabilityprofessional lines and cyber lines.


Underwriting-Related General and Administrative Expense Ratio:Ratio


The underwriting-related general and administrative expense ratio decreased to 15.1% and 17.6%13.3% for the three and nine months ended September 30, 2017, respectively,March 31, 2024, from 19.1% and 19.0%14.2% for the three and nine months ended September 30, 2016, respectively, reflecting a decrease in performance-related compensation costs andMarch 31, 2023, mainly driven by an increase in net premiums earned, partially offset by increases in the allocation of certain corporate expensesperformance-related compensation costs and information technology fees.personnel costs.







57
73

Reinsurance Segment
REINSURANCE SEGMENT


Results from ourthe reinsurance segment were as follows:
   Three months ended September 30, Nine months ended September 30, 
   2017 % Change 2016 2017 % Change 2016 
              
 Revenues:            
 Gross premiums written$441,208
 55% $284,532
 $2,225,377
 5% $2,126,762
 
 Net premiums written332,721
 105% 162,300
 1,764,689
 (5%) 1,855,529
 
 Net premiums earned521,127
 6% 489,724
 1,488,995
 2% 1,461,097
 
 Other insurance related income (losses)(3,723) nm 5,905
 (5,497) nm 4,907
 
              
 Expenses:            
 Current year net losses and loss expenses(651,667)   (314,433) (1,318,900)   (990,763) 
 Prior year reserve development45,165
   55,331
 112,755
   180,950
 
 Acquisition costs(120,493)   (128,055) (365,214)   (374,588) 
 General and administrative expenses(21,658)   (29,635) (82,474)   (99,980) 
              
 Underwriting income (loss)$(231,249) nm $78,837
 $(170,335) nm $181,623
 
 Ratios:  
% Point
Change
     
% Point
Change
   
 Current accident year loss ratio125.0% 60.8 64.2% 88.6% 20.8 67.8% 
 Prior year reserve development(8.6%) 2.7 (11.3%) (7.6%) 4.8 (12.4%) 
 Acquisition cost ratio23.1% (3.0) 26.1% 24.5% (1.1) 25.6% 
 General and administrative expense ratio4.2% (1.9) 6.1% 5.6% (1.3) 6.9% 
 Combined ratio143.7% 58.6 85.1% 111.1% 23.2 87.9% 
              
  Three months ended March 31,
  2024% Change2023
Revenues:
Gross premiums written$1,079,92212%$966,364
Net premiums written699,719(4%)725,780
Net premiums earned340,095(18%)413,743
Other insurance related income8,319nm523
Expenses:
Current accident year net losses and loss expenses(231,807)(274,172)
Prior year reserve development—2,997
Acquisition costs(78,225)(83,315)
Underwriting-related general and administrative expenses(15,706)(23,765)
Underwriting income$22,676$36,011
Ratios:
% Point
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses68.0 %5.063.0 %
Catastrophe and weather-related losses ratio0.2 %(3.1)3.3 %
Current accident year loss ratio68.2 %1.966.3 %
Prior year reserve development ratio— %0.8(0.8 %)
Net losses and loss expenses ratio68.2 %2.765.5 %
Acquisition cost ratio23.0 %2.920.1 %
Underwriting-related general and administrative expense ratio4.6 %(1.2)5.8 %
Combined ratio95.8 %4.491.4 %
nm – not meaningful



58


74




Gross Premiums Written:Written


The following table provides grossGross premiums written by line of business for the periods indicated:were as follows:
   Three months ended September 30,   Nine months ended September 30,   
   2017   2016   
% 
Change
 2017   2016   
% 
Change
 
                      
 Catastrophe$89,510
 19% $46,338
 16% 93% $411,004
 18% $316,692
 15% 30% 
 Property90,001
 20% 61,957
 22% 45% 341,265
 15% 283,555
 13% 20% 
 Professional Lines20,175
 5% 19,479
 7% 4% 217,772
 10% 235,094
 11% (7%) 
 Credit and Surety38,216
 9% 36,174
 13% 6% 183,284
 8% 315,102
 15% (42%) 
 Motor40,385
 9% 13,344
 5% nm 373,901
 17% 338,403
 16% 10% 
 Liability139,083
 32% 91,387
 32% 52% 368,999
 17% 365,380
 17% 1% 
 Agriculture11,152
 3% 1,286
 —% nm 218,437
 10% 151,315
 7% 44% 
 Engineering10,120
 2% 13,588
 5% (26%) 58,000
 3% 56,719
 3% 2% 
 Marine and Other2,566
 1% 979
 —% nm 52,715
 2% 64,502
 3% (18%) 
 Total$441,208
 100% $284,532
 100% 55% $2,225,377
 100% $2,126,762
 100% 5% 
                      
 
Constant currency(1)
$444,600
   $284,532
   56% $2,277,100
   $2,126,762
   7% 
                      
  Three months ended March 31,
  20242023
% 
Change
Liability$218,175 20 %$198,861 21 %10%
Accident and health310,792 29 %295,985 31 %5%
Professional lines146,832 14 %136,201 14 %8%
Credit and surety164,043 15 %115,237 12 %42%
Motor152,145 14 %140,115 14 %9%
Agriculture39,501 4 %22,399 2 %76%
Marine and aviation46,134 4 %30,531 3 %51%
Run-off lines
Catastrophe1,423 — %16,301 2 %(91%)
Property(156)— %9,605 1 %nm
Engineering1,033 — %1,129 — %(9%)
Total run-off lines2,300 — %27,035 3 %(91%)
Total$1,079,922 100 %$966,364 100 %12%
nm – not meaningful
(1)Amounts presented on a constant currency basis are non-GAAP financial measures as defined in SEC Regulation G. The constant currency basis is calculated by applying the average foreign exchange rate from the current year to the prior year balance.


Gross premiums written for the three months ended March 31, 2024, increased by $157$114 million, or 55% (56%12% ($102 million, or 11%, on a constant currency basis), forcompared to the three months ended September 30, 2017 compared to the same period in 2016.March 31, 2023. The increase was primarily attributable to ourcredit and surety, liability, catastrophe, propertyagriculture, marine and aviation, accident and health, motor, lines. The increase in our liability lines was primarily due to timing differences related to the restructuring of large quota share treaties which affected the timing of premium recognition. The increase in our catastrophe lines was largely due to reinstatement premiums associated with the third quarter catastrophe losses. The increase in our property and motor lines was primarily driven by new business opportunities. Timing differences also contributed to the increase in premiums written in our motor lines.

Gross premiums written increased by $99 million, or 5% (7% on a constant currency basis), for the nine months ended September 30, 2017 compared to the same period in 2016. The increase in gross premiums written was attributable to our catastrophe, agriculture, property and motorprofessional lines, partially offset by a decreasedecreases in ourcatastrophe and property lines.

The increase in credit and surety lines. The increase in our catastrophe and property lines was driven by new business, spread acrossincreased line sizes on surety contracts, the timing of renewals of several cedants. credit and surety contracts and positive premium adjustments in the three months ended March 31, 2024, compared to negative premium adjustments in the three months ended March 31, 2023.

The increase in ourliability lines was related to new business, an increased line size on a significant contract and the timing of renewals of significant contracts, partially offset by non-renewals and decreased line sizes on several contracts, and a lower level of premium adjustments in the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

The increase in agriculture lines was due to increased participation on a renewing treaty, which more than offsetnew business and the cancellationtiming of the renewal of a large treaty. Reinstatement premiums and favorablesignificant contract, partially offset by negative premium estimate adjustments also contributed to the increase in premiums written in our catastrophe and agriculture lines. adjustments.

The increase in our motormarine and aviation lines was driven by new businessmarine business.

The increase in accident and favorablehealth lines was related to positive premium adjustments in the three months ended March 31, 2024, compared to the negative premium adjustments in the three months ended March 31, 2023, and new business, partially offset by decreased line sizes on several contracts.

The increase in motor lines was due to the timing of the renewal of a lower level of premiums writtensignificant contract and new business, partially offset by non-renewals and decreased line sizes on several contracts associated with repositioning the portfolio.

The increase in professional lines was attributable to new business and an increased line size on a multi-year basis during 2017significant contract, partially offset by negative premium adjustments associated with unfavorable market conditions in the three months ended March 31, 2024, compared to 2016, togetherpositive premium adjustments related to favorable market conditions in three months ended March 31, 2023, and the timing of the renewal of a significant contract.

The decreases in catastrophe and property lines were associated with the impactexit from these lines of foreign exchange movements as the strengtheningbusiness in June 2022.

59


Ceded Premiums Written:Written


Ceded premiums written for the three and nine months ended September 30, 2017 were $108March 31, 2024, was $380 million, or 25%35%, of gross premiums written, and $461compared to $241 million, or 21%25%, of gross premiums written, respectively, compared to $122 million or 43% of gross premiums written and $271 million or 13% of gross premiums written for the three and nine months ended September 30, 2016, respectively.

The decrease in the ratio of ceded premiums written to gross premiums written for the three months ended September 30, 2017March 31, 2023.The increase in ceded premiums written of $140 million, or 58%, was primarily driven by increases in credit and surety, liability, accident and health, professional lines, motor, and marine and aviation lines, partially offset by a decrease in catastrophe lines.

The increases in credit and surety, liability, accident and health, professional lines and motor lines were primarily attributable to premiums ceded to a quota share retrocession agreement entered into with Monarch Point Re (ISA 2024) Ltd. on January 1, 2024 compared to the same periodpremiums ceded to a quota share retrocession agreement entered into with Monarch Point Re (ISA 2023) Ltd. on September 22, 2023 with an effective date of January 1, 2023.

The increase in 2016,credit and surety lines was primarilyalso due to an increase in gross premiums written in the quarter togetherthree months ended March 31, 2024, compared to the three months ended March 31, 2023, and the restructuring of a significant quota share retrocession treaty with a decrease in premiums ceded to our strategic capital partners. partner, partially offset by the non-renewal of a significant quota share retrocession treaty.

The decreaseincreases in premiums ceded was attributable to our professional and liability lines and professional lines were also due to the timingrestructuring of premiums ceded to the retrocessional cover entered intoa significant quota share retrocession treaty with Harrington Re Ltd., in the same period in 2016,a strategic capital partner, partially offset by an increase in premiums ceded in our catastrophe lines.the restructuring of another significant quota share retrocession treaty with a strategic capital partner.





75

The increase in motor lines was partially offset by the ratiorestructuring of ceded premiums written to gross premiums written for the nine months ended September 30, 2017 compared to the same perioda significant quota share retrocession treaty with a strategic capital partner.

The increase in 2016,marine and aviation lines was primarily dueattributable to an increase in gross premiums ceded in ourwritten in the three months ended March 31, 2024, compared to the three months ended March 31, 2023, and the restructuring of a significant quota share retrocessional treaty with a strategic capital partner.

The decrease in catastrophe agriculturelines was due to the decrease in gross premiums written in the three months ended March 31, 2024, compared to the three months ended March 31, 2023 following the exit from this line of business in June 2022.

Net Premium Earned

Net premiums earned by line of business were as follows:
  Three months ended March 31,
  2024  2023  % Change
Liability$84,419 25 %$102,441 25 %(18%)
Accident and health81,014 24 %83,184 20 %(3%)
Professional lines36,895 11 %57,011 14 %(35%)
Credit and surety55,797 16 %54,013 13 %3%
Motor31,824 9 %38,835 9 %(18%)
Agriculture23,485 7 %25,632 6 %(8%)
Marine and aviation18,900 6 %16,273 4 %16%
Run-off lines
Catastrophe3,484 1 %13,361 4 %(74%)
Property3,116 1 %18,609 4 %(83%)
Engineering1,161 — %4,384 1 %(74%)
Total run-off lines7,761 2 %36,354 9 %(79%)
Total$340,095 100 %$413,743 100 %(18%)

Net premiums earned for the three months ended March 31, 2024, decreased by $74 million, or 18% ($70 million, or 17%, on a constant currency basis), compared to the three months ended March 31, 2023.



60

The decrease was primarily driven by decreases in gross premiums earned in catastrophe, property and our credit and suretyprofessional lines, together with the impact of the retrocessional cover entered into with Harrington Re Ltd., which increasedincreases in ceded premiums cededearned in our liability, professional lines, and motor lines. These amounts were partially offset by an increase in gross premiums written.

Net Premiums Earned:

The following table provides net premiums earned by line of business:
   Three months ended September 30,   Nine months ended September 30,   
   2017    2016    % Change 2017    2016    % Change 
                      
 Catastrophe$63,032
 11% $48,799
 10% 29% $150,134
 12% $151,416
 12% (1%) 
 Property81,522
 16% 71,649
 15% 14% 228,043
 15% 208,179
 14% 10% 
 Professional Lines52,390
 10% 73,109
 15% (28%) 170,438
 11% 225,813
 15% (25%) 
 Credit and Surety62,215
 12% 67,430
 14% (8%) 176,754
 12% 192,135
 13% (8%) 
 Motor92,147
 18% 77,786
 16% 18% 273,568
 18% 232,383
 16% 18% 
 Liability89,927
 17% 80,137
 16% 12% 258,500
 17% 247,103
 17% 5% 
 Agriculture45,688
 9% 36,704
 7% 24% 138,554
 9% 106,251
 7% 30% 
 Engineering18,529
 4% 18,573
 4% —% 49,577
 3% 51,024
 3% (3%) 
 Marine and Other15,677
 3% 15,537
 3% 1% 43,427
 3% 46,793
 3% (7%) 
 Total$521,127
 100% $489,724
 100% 6% $1,488,995
 100% $1,461,097
 100% 2% 
                      
 
Constant currency(1)
$529,700
   $489,724
   8% $1,540,200
   $1,461,097
   5% 
                      
nm – not meaningful
(1)Amounts presented on a constant currency basis are non-GAAP financial measures as defined in SEC Regulation G. The constant currency basis is calculated by applying the average foreign exchange rate from the current year to the prior year balance.

Net premiums earned increased by $31 million, or 6% ($40 million or 8% on a constant currency basis), and $28 million, or 2% ($79 million or 5% on a constant currency basis), for the three and nine months ended September 30, 2017, compared to the same periods in 2016, respectively.

The increase in net premiums earned for the three months ended September 30, 2017 compared to the same period in 2016, was primarily driven by strong premium growth in our motor lines, as well as favorable reinstatement premiums impacting our catastrophe lines, and favorable premium estimate adjustments impacting our agriculture lines. These increases were partially offset by an increase in ceded premiums earned in our catastrophe and agriculture lines, together with the impact of the retrocession to Harrington Re, which increased ceded premiums earned in our professional lines, as well as a decrease in gross premium earned in our professional lines.

The increase in net premiums earned for the nine months ended September 30, 2017 compared to the same period in 2016, was primarily driven by an increase in gross premiums earned in our motor and agriculture lines, partially offset by an increase in ceded premiums earned in our agriculture and professionalliability lines, together with a decrease in grossceded premiums earned in our professionalcatastrophe lines.


Other Insurance Related Income (Losses):(Loss)


Other insurance related losses was $4income of $8 million for the three months ended September 30, 2017,March 31, 2024, compared to other insurance related income of $6$1 million for the same periodthree months ended March 31, 2023, was primarily associated with an increase in 2016. fees related to arrangements with strategic capital partners.

Loss Ratio

The decreasecomponents of $10 millionthe loss ratio were as follows:
  Three months ended March 31,
  2024% Point
Change		2023
Current accident year loss ratio68.2 %1.966.3 %
Prior year reserve development ratio— %0.8(0.8 %)
Loss ratio68.2 %2.765.5 %

Current Accident Year Loss Ratio

The current accident year loss ratio increased to 68.2% for the three months ended March 31, 2024, from 66.3% for the three months ended September 30, 2017March 31, 2023.

The current accident year loss ratio for three months ended March 31, 2024, compared to the same period in 2016, reflected a decrease in profit commissions associated withretrocessional agreements with strategic capital partners related to the third quarter catastrophe losses.

Other insurance related losses was $5 million for the nine months ended September 30, 2017, compared to other insurance related income of $5 million for the same period in 2016. The decrease of $10 million for the nine months ended September 30, 2017 compared to the same period in 2016, reflected net realized losses on our weather and commodities derivative portfolio, partially offset by fees from our strategic capital partners.



76


Loss Ratio:

The table below shows the components of our loss ratio:
   Three months ended September 30, Nine months ended September 30, 
   2017 
% Point
Change
 2016 2017 
% Point
Change
 2016 
              
 Current accident year125.0% 60.8 64.2% 88.6% 20.8 67.8% 
 Prior year reserve development(8.6%) 2.7 (11.3%) (7.6%) 4.8 (12.4%) 
 Loss ratio116.4% 63.5 52.9% 81.0% 25.6 55.4% 
              

Current Accident Year Loss Ratio:

The current accident year loss ratio increased to 125.0% and 88.6% for the three and nine months ended September 30, 2017, respectively, from 64.2% and 67.8% for the three and nine months ended September 30, 2016, respectively.

The increase in the current accident year loss ratios for the three and nine months ended September 30, 2017 compared to the same period in 2016,2023, was impacted by a higherlower level of catastrophe and weather-related losses. During the three and nine months ended September 30, 2017, we incurred pre-taxMarch 31, 2024, catastrophe and weather-related losses, net of reinstatement premiums, of $299were $1 million, or 58.7 points, and $323 million, or 22.2 points, respectively,0.2 point, attributable to Hurricanes Harvey, Irma and Maria, the two earthquakes in Mexico and U.S. weather-related events. Comparatively, during the three and nine months ended September 30, 2016 we incurred pre-taxMarch 31, 2023, catastrophe and weather-related losses, net of reinstatement premiums of $7were $13 million, or 1.53.3 points, primarily attributable to New Zealand floods, and $72 million, or 5.0 points, respectively.other weather-related events.


After adjustingAdjusting for the impact of the catastrophe and weather-related losses, our current accident year loss ratio for the three and nine months ended September 30, 2017 was 66.3% and 66.4%, respectively, compared to 62.7% and 62.8% for the three and nine months ended September 30, 2016, respectively. The increase in the current accident year loss ratio after adjusting for the impact of the catastrophe and weather-related lossesincreased to 68.0% for the three months ended September 30, 2017 compared toMarch 31, 2024, from 63.0% for the same period in 2016,three months ended March 31, 2023. The increase was principally due to an increase in mid-sizeelevated loss experience in our creditmarine and surety lines, the ongoing impact of the Ogden rate change on our motoraviation lines and changes in business mix associated with the adverse impact of rate and trend.

The increase in the current accident year loss ratio after adjusting for the impact of theexit from catastrophe and weather-related losses for the nine months ended September 30, 2017 compared to the same period in 2016 was principally due to a large risk loss in our property lines the ongoing impact of the Ogden rate change on our motor lines, and the adverse impact of rate and trend.business.


Refer ‘Prior Year Reserve Development’

Refer to Item 1, Note 6 to the Consolidated Financial Statements 'Reserve for further details. losses and loss expenses' for details on the lines of business and prior year reserve development.


Acquisition Cost Ratio:Ratio


The acquisition cost ratio decreasedincreased to 23.1%23.0% for the three months ended September 30, 2017 compared to 26.1%March 31, 2024, from 20.1% for the three months ended September 30, 2016March 31, 2023, primarily related to adjustments attributable to loss-sensitive features driven by improved loss performance mainly in liability, credit and surety, and accident and health lines, and higher costs associated with changes in business mix driven by increases in credit and the impactsurety, accident and health, and liability lines of favorable reinstatement premiums.

The acquisition cost ratio decreased to 24.5% for the nine months ended September 30, 2017 compared to 25.6% for the nine months ended September 30, 2016, attributable to changesbusiness written in recent periods, together with decreases in catastrophe and property lines of business mix,written in recent periods, partially offset by the impact of retrocessional contracts.contracts on credit and surety, accident and health, and liability lines


Underwriting-Related General and Administrative Expense Ratio:Ratio


The underwriting-related general and administrative expense ratio decreased to 4.2% and 5.6% for the three and nine months ended September 30, 2017, respectively, from 6.1% and 6.9% for the three and nine months ended September 30, 2016, respectively, reflecting a decrease performance-related compensation costs, together with an increase in fees from strategic capital partners.





77

OTHER EXPENSES (REVENUES), NET

The following table provides a breakdown of our other expenses (revenues), net:
   Three months ended September 30, Nine months ended September 30, 
   2017 % Change 2016 2017 % Change 2016 
              
 Corporate expenses$27,933
 (3%) $28,683
 $97,922
 13% $86,922
 
 Foreign exchange losses (gains)32,510
 nm (13,795) 90,093
 nm (69,781) 
 Interest expense and financing costs12,835
 —% 12,839
 38,377
 (1%) 38,586
 
 Income tax expense (benefit)(25,877) nm 9,352
 (38,547) nm 7,712
 
 Total$47,401
 nm $37,079
 $187,845
 nm $63,439
 
              
nm – not meaningful

Corporate Expenses:

Our corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company. As a percentage of net premiums earned, corporate expenses were 2.7% and 3.3% for the three and nine months ended September 30, 2017, respectively, compared to 3.1% and 3.1% for the same periods in 2016, respectively.

The decrease in corporate expenses 4.6% for the three months ended September 30, 2017 was primarily driven by a decrease in performance related compensation costs, an increase inMarch 31, 2024, from 5.8% for the allocation of corporate costs to the insurance and reinsurance segments, and a decrease in professional fees, partially offset by higher personnel expenses.

The increase in corporate expenses for the ninethree months ended September 30, 2017 was primarilyMarch 31, 2023, mainly driven by an increase in personnel expensesfees related to arrangements with strategic capital partners and information technologya decrease in personnel costs, partially offset by an increase in the allocation of corporate expenses to the insurance and reinsurance segments and a decrease in performance related compensation costs.

Foreign Exchange Losses (Gains):

Some of our business is written in currencies other than the U.S. dollar. Foreign exchange losses of $33 million for the three months ended September 30, 2017 were primarily attributable to the impact of the weakening of the U.S. dollar on the remeasurement of net insurance-related liabilities mainly denominated in pound sterling and euro.

Foreign exchange losses of $90 million for the nine months ended September 30, 2017 were primarily attributable to the impact of the weakening of the U.S. dollar on the remeasurement of net insurance-related liabilities mainly denominated in pound sterling and euro and the reclass of a cumulative translation adjustment balance of $24 million related to the wind-down of AXIS Specialty Australia from accumulated other comprehensive income to foreign exchange losses.

Foreign exchange gains $14 million and $70 million for the three and nine months ended September 30, 2016, respectively, were primarily attributable to the impact the strengthening of the U.S. dollar on the remeasurement of net insurance-related liabilities denominated in pound sterling.


premiums earned.



61
78




Income Tax Expense (Benefit):

Income tax primarily results from income generated by our foreign operations in the U.S. and Europe. Our effective tax rate is calculated as income tax expense divided by net income before tax including interest in loss of equity method investments. This effective rate can vary between periods depending on the distribution of net income amongst tax jurisdictions, as well as other factors.

The tax benefit of $26 million recognized in the three months ended September 30, 2017 was primarily driven by an underwriting loss associated with catastrophe losses recognized in our U.S. operations.

The tax benefit of $39 million recognized in the nine months ended September 30, 2017 was primarily driven by an underwriting loss associated with catastrophe losses recognized in our U.S. operations, share based compensation excess tax benefits which were recognized in the income statement, and a tax adjustment related to the bargain purchase gain recognized in connection with the acquisition of Aviabel.

Income tax expenses recognized in the three and nine months ended September 30, 2016 were primarily driven by the generation of consolidated pre-tax net income in our European operations.




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NET INVESTMENT INCOME AND NET REALIZED INVESTMENT GAINS (LOSSES)


Net Investment Income


The following table provides a breakdown ofNet investment income earned from our cash and investment portfolio by major asset class:class was as follows:
  Three months ended March 31,
  2024% Change2023
Fixed maturities$139,39618%$118,262
Other investments5,673nm486
Equity securities2,76213%2,455
Mortgage loans9,1309%8,386
Cash and cash equivalents13,66136%10,012
Short-term investments3,463nm1,660
Gross investment income174,08523%141,261
Investment expense(6,702)(11%)(7,490)
Net investment income$167,38325%$133,771
Pre-tax yield:(1)
Fixed maturities4.2 %3.7 %
   Three months ended September 30, Nine months ended September 30, 
   2017 % Change 2016 2017 % Change 2016 
              
 Fixed maturities$74,978
 (1%) $75,827
 $230,603
 1% $229,423
 
 Other investments17,373
 (55%) 38,248
 59,973
 nm 25,770
 
 Equity securities3,223
 (30%) 4,633
 11,048
 (14%) 12,843
 
 Mortgage loans2,895
 32% 2,191
 7,970
 40% 5,683
 
 Cash and cash equivalents3,111
 (17%) 3,768
 9,640
 36% 7,071
 
 Short-term investments698
 nm 337
 1,797
 nm 708
 
 Gross investment income102,278
 (18%) 125,004
 321,031
 14% 281,498
 
 Investment expense(7,109) (12%) (8,081) (21,132) (11%) (23,680) 
 Net investment income$95,169
 (19%) $116,923
 $299,899
 16% $257,818
 
              
 
Pre-tax yield:(1)
            
 Fixed maturities2.7%   2.7% 2.7%   2.6% 
              
(1) Pre-tax yield is calculated by dividing annualized net investment income by the average month-end amortized cost balances.
nm - not meaningful
(1)Pre-tax yield is annualized and calculated as net investment income divided by the average month-end amortized cost balances for the periods indicated.


Fixed Maturities


Net investment income attributable to fixed maturities for the three and nine months ended September 30, 2017 was comparableMarch 31, 2024 increased to same periods$139 million, compared to net investment income of $118 million for the three months ended March 31, 2023, due to an increase in 2016.yields.


Other Investments

Net investment income from other investments was as follows:
  Three months ended March 31,
  20242023
Multi-strategy, direct lending, private equity and real estate funds$3,335$(448)
Other privately held investments2,338500
CLO-Equities—434
Total net investment income from other investments$5,673$486
Pre-tax return on other investments(1)
0.6 %— %
(1)The following table provides a breakdown ofpre-tax return on other investments is calculated by dividing total net investment income from other investments:investments by the average month-end fair value balances held for the periods indicated.
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Hedge, direct lending, private equity and real estate funds$14,786
 $29,459
 $52,526
 $6,127
 
 Other privately held investments1,185
 370
 3,517
 177
 
 CLO - Equities1,402
 8,419
 3,930
 19,466
 
 Total net investment income from other investments$17,373
 $38,248
 $59,973
 $25,770
 
          
 
Pre-tax return on other investments(1)
2.1% 4.5% 7.5% 3.1% 
          
(1)The pre-tax return on other investments is non-annualized and calculated by dividing total net investment income from other investments by the average month-end fair value balances held for the periods indicated.


Net investment income attributable to other investments was $17 million and $60 million for the three and nine months ended September 30, 2017, respectively,March 31, 2024 increased to $6 million, compared to net investment income of $38 million and $26$0.5 million for the three and nine months ended September 30, 2016, respectively, as the improvement in the performance of the globalMarch 31, 2023, primarily related to higher returns from private equity funds and credit markets translated into higher valuations of our hedge and direct lending funds.


other privately held investments.



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80





Net Realized Investment Gains (Losses)


The following table provides a breakdown of net realizedNet investment gains (losses):
were as follows:
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 On sale of investments:        
 Fixed maturities and short-term investments$3,404
 $4,303
 $(25,659) $(22,869) 
 Equity securities17,935
 4,994
 33,536
 2,881
 
  21,339
 9,297
 7,877
 (19,988) 
 OTTI charges recognized in earnings(5,412) (4,247) (13,493) (20,346) 
 Change in fair value of investment derivatives(1,295) 155
 (9,195) 39
 
 Net realized investment gains (losses)$14,632
 $5,205
 $(14,811) $(40,295) 
          
  Three months ended March 31,
  20242023
On sale of investments:
Fixed maturities and short-term investments$(29,533)$(41,279)
Equity securities22,914 1,121 
 (6,619)(40,158)
(Increase) decrease in allowance for expected credit losses, fixed maturities, available for sale6,522 (911)
(Increase) decrease in allowance for expected credit losses, mortgage loans(1,858)(1,900)
Impairment losses (1)
(8)— 
Change in fair value of investment derivatives795 (947)
Net unrealized gains (losses) on equity securities(8,039)23,726 
Net investment gains (losses)$(9,207)$(20,190)

(1)Related to instances where we intend to sell securities, or it is more likely than not that we will be required to sell securities before their anticipated recovery.

On saleSale of investmentsInvestments and Net Unrealized Gains (Losses) on Equity Securities


Generally, sales of individual securities occur when there are changes in the relative value, credit quality, or duration of a particular issue. We may also sell securities to re-balance our investment portfolio in order to change exposure to particular asset classes or sectors.


Net realized investment gainslosses for the three months ended September 30, 2017March 31, 2024 were $15$9 million, compared to net realized investment gainslosses of $5$20 million foror the three months ended September 30, 2016, an increase of $9 million. March 31, 2023.

For the three months ended September 30, 2017,March 31, 2024, the net realized investment gainslosses were primarily due to improved pricingnet realized losses on the sale of corporate debt and U.S. government securities and net unrealized losses on equity securities, partially offset by net realized gains on the sale of equity securities. For the three months ended September 30, 2016,March 31, 2023, the net realized investment gains were driven by improved pricing on fixed maturities and equity securities.

Net realized investment losses for the nine months ended September 30, 2017 were $15 million compared to net realized investment losses of $40 million for the nine months ended September 30, 2016, a decrease of $25 million. For the nine months ended September 30, 2017 and 2016, net realized investment losses were primarily due to foreign exchangenet realized losses on non-U.S. denominatedthe sale of corporate debt and Non-U.S. government securities, partially offset by net unrealized gains on equity securities.


OTTI charges(Increase) decrease in allowance for expected credit losses, fixed maturities, available for sale


The OTTI charges for the three months ended September 30, 2017 were $5 million, compared to $4 million for the three months ended September 30, 2016, a decrease of $1 million. The OTTI charges for the nine months ended September 30, 2017 were $13 million, compared to $20 million for the nine months ended September 30, 2016, a decrease of $7 million. For all periods presented the OTTI charges were primarily due to impairments on non-U.S. denominated securities as a result of the decline in foreign exchange rates against the U.S. dollar.

Change in fair value of investment derivatives

From time to time, we may economically hedge the foreign exchange exposure of non-U.S. denominated securities by entering into foreign exchange forward contracts.

During 2017, we also introduced the use of interest rate swaps to reduce duration risk of our fixed income portfolio.

For the three months ended September 30, 2017, we recordedMarch 31, 2024, the allowance for expected credit losses decreased by $7 million, primarily related to the sale of $2 million relatingsecurities. Refer to foreign exchange contracts and gains of $1 million relatingNote 3(i) to interest rates swaps. the Consolidated Financial Statements 'Investments'.

(Increase) decrease in allowance for expected credit losses, mortgage loans

For the three months ended September 30, 2016March 31, 2024, the fair value of foreign exchange contracts was unchanged.allowance for expected credit losses increased by $2 million, primarily related to one collateral dependent mortgage loans. Refer to Note 3(d) to the Consolidated Financial Statements 'Investments'.


For the nine months ended September 30, 2017, we recorded losses of $6 million relating to foreign exchange contracts and losses of $3 million relating to interest rates swaps. For the nine months ended September 30, 2016 the fair value of foreign exchange contracts was unchanged.





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81




Change in Fair Value of Investment Derivatives


We economically hedge foreign exchange exposure with derivative contracts.

For the three months ended March 31, 2024, foreign exchange hedges resulted in net gains of $1 million, primarily attributable to securities denominated in euro and pound sterling. For the three months ended March 31, 2023, foreign exchange hedges resulted in $1 million of net losses primarily attributable to securities denominated in euro and pound sterling.

Total Return

Total return on cash and investments was as follows:
  Three months ended March 31,
  20242023
Net investment income$167,383$133,771
Net investments gains (losses)(9,207)(20,190)
Change in net unrealized gains (losses) on fixed maturities (1)
(51,963)212,922
Interest in income (loss) of equity method investments1,169(2,205)
Total$107,382$324,298
Average cash and investments(2)
$16,822,621$15,832,861
Total return on average cash and investments, pre-tax:
Including investment related foreign exchange movements0.6 %2.0 %
Excluding investment related foreign exchange movements(3)
0.8 %1.9 %
(1)Change in net unrealized gains (losses) on fixed maturities is calculated by taking net unrealized gains (losses) at period end less net unrealized gains (losses) at the prior period end.
(2)The average cash and investments balance is calculated by taking the average of the monthly fair value balances.
(3)Pre-tax total return on cash and investments excluding foreign exchange movements is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to pre-tax total return on cash and investments, the most comparable GAAP financial measure, included foreign exchange (losses) gains of $(25) million and $19 million for the three months ended March 31, 2024 and 2023, respectively.




























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OTHER EXPENSES (REVENUES), NET

The following table provides a breakdownsummary of other expenses (revenues), net:
  Three months ended March 31,
  2024% Change2023
Corporate expenses$25,580 (3%)$26,416 
Foreign exchange losses (gains)(23,552)nm8,710 
Interest expense and financing costs17,147 1%16,894 
Income tax expense (benefit)(124,654)nm15,896 
Total$(105,479)$67,916 
nm – not meaningful

Corporate Expenses

Corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company.

As a percentage of net premiums earned, corporate expenses decreased to 2.0% for the three months ended March 31, 2024, from to 2.1% for the three months ended March 31, 2023 mainly driven by decreases in performance-related compensation costs and information technology costs, largely offset by increases in personnel costs and professional fees.

Foreign Exchange Losses (Gains)

Some of our business is written in currencies other than the U.S. dollar.

Foreign exchange gains of $24 million for the three months ended March 31, 2024 were mainly driven by the impact of the strengthening of the U.S. dollar on the remeasurement of net insurance-related liabilities denominated in euro, Canadian dollar and pound sterling.

Foreign exchange losses of $9 million for the three months ended March 31, 2023 were mainly driven by the impact of the weakening of the U.S. dollar on the remeasurement of net insurance-related liabilities denominated in euro, partially offset by the strengthening of the U.S. dollar on the remeasurement of net insurance-related liabilities denominated in Turkish lira.

Interest Expense and Financing Costs

Interest expense and financing costs are related to interest due onthe 5.150% senior unsecured notes ("5.150% Senior Notes") issued in 2014, the 4.000% senior unsecured notes ("4.000% Senior Notes") issued in 2017, the 3.900% senior unsecured notes ("3.900% Senior Notes"), the 4.900% fixed-rate reset junior subordinated notes ("Junior Subordinated Notes") issued in 2019, and the Federal Home Loan advances ("FHLB advances") received in 2022 and 2023.

Interest expense and financing costs were $17 million for the three months ended March 31, 2024 and 2023.


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Income Tax Expense (Benefit)

Income tax expense (benefit) primarily results from income (loss) generated by our foreign operations in the U.S., U.K., and Europe. Our effective tax rate which is calculated as income tax expense (benefit) divided by income (loss) before tax including interest in income (loss) of equity method investments was (46.0)% for the three months ended March 31, 2024, and 8.1% for the three months ended March 31, 2023, respectively. This effective rate can vary between periods depending on the distribution of net income (loss) among tax jurisdictions, as well as other factors.

The income tax benefit of $125 million for the three months ended March 31, 2024 was principally due to the recognition of an income tax benefit of $163 million related to a future Bermuda corporate income tax rate of 15%, pursuant to the Corporate Income Tax Act 2023, partially offset by income tax expense associated with the generation of pre-tax income in our U.S. and U.K. operations.

The income tax expense of $16 million for the three months ended March 31, 2023 was principally due to the generation of pre-tax income in our U.S., U.K and European operations, partially offset by a decrease in the valuation allowance on deferred tax assets in Europe.




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FINANCIAL MEASURES

We believe the following financial indicators are important in evaluating performance and measuring the overall growth in value generated for common shareholders:
  Three months ended March 31,
  20242023
Annualized return on average common equity(1)
32.1 %16.2 %
Annualized operating return on average common equity(2)
18.2 %18.8 %
Book value per diluted common share(3)
$57.13$50.31
Cash dividends declared per common share$0.44$0.44
Increase (decrease) in book value per diluted common share adjusted for dividends$3.51$3.80
(1)Annualized return on average common equity ("ROACE") is calculated by dividing annualized net income (loss) available (attributable) to common shareholders for the period by the average common shareholders' equity determined using the common shareholders' equity balances at the beginning and end of the period.
(2)Annualized operating return on average common equity ("operating ROACE") is a non-GAAP financial measures as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to the most comparable GAAP financial measure, annualized ROACE, and a discussion of the rationale for its presentation is provided in 'Management's Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures Reconciliation'.
(3)Book value per diluted common share represents total common shareholders’ equity divided by the number of diluted common share outstanding, determined using the treasury stock method.

Return on Average Common Equity

Our objective is to generate superior returns on capital that appropriately reward common shareholders for the risks we assume and to grow revenue only when we expect the returns will meet or exceed our requirements. We recognize that the nature of underwriting cycles and the frequency or severity of large loss events in any one year may challenge the ability to achieve a profitability target in any specific period.

ROACE reflects the impact of net income (loss) available (attributable) to common shareholders, including net investment gains (losses), foreign exchange losses (gains), reorganization expenses, interest in income (loss) of equity method investments and Bermuda net deferred tax asset.

The increase in ROACE for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, was primarily driven by an income tax benefit, an increase in net investment income and underwriting income, foreign exchange gains and a decrease in net investment losses, partially offset by increases in average common shareholders' equity and reorganization expenses.

Operating ROACE excludes the impact of net investment gains (losses), foreign exchange losses (gains), reorganization expenses, interest in income (loss) of equity method investments and Bermuda net deferred tax asset.

The decrease in operating ROACE for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, was primarily driven by an increase in average common shareholders' equity, partially offset by an increase in net investment income and underwriting income.


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Book Value per Diluted Common Share

We consider book value per diluted common share to be an appropriate measure of returns to common shareholders, as we believe growth in book value on a diluted basis will ultimately translate into appreciation of our stock price.

During the three months ended March 31, 2024, book value per diluted common share increased by 5.7% due to net income for the period, partially offset by net unrealized investment losses reported in accumulated other comprehensive income (loss) and common dividends declared.

During the three months ended March 31, 2023, book value per diluted common share increased by 7% due to net income for the period, and a decrease in net unrealized investment losses reported in accumulated other comprehensive income (loss), partially offset by common dividends declared.

Cash Dividends Declared per Common Share

We believe in returning excess capital to shareholders by way of dividends and share repurchases. Accordingly, dividend policy is an integral part of the value we create for shareholders. Our Board of Directors has approved quarterly common share dividends for twenty-one consecutive years.

Book Value per Diluted Common Share Adjusted for Dividends

Taken together, we believe that growth in book value per diluted common share and common share dividends declared represent the total value created for common shareholders. As companies in the insurance industry have differing dividend payout policies, we believe investors use the book value per diluted common share adjusted for dividends metric to measure comparable performance across the industry.

During the three months ended March 31, 2024, the increase in total value of $3.51, or 6%, was driven by net income for the period, partially offset by net unrealized investment losses recognized in accumulated other comprehensive income (loss).

During the three months ended March 31, 2023, the increase in total value of $3.80, or 8%, was driven by net income for the period, and a decrease in net unrealized investment losses recognized in accumulated other comprehensive income (loss).

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NON-GAAP FINANCIAL MEASURES RECONCILIATION

Three months ended March 31,
20242023
Net income available to common shareholders$387,896$172,534
Net investment (gains) losses9,20720,190
Foreign exchange losses (gains)(23,552)8,710
Reorganization expenses12,299—
Interest in (income) loss of equity method investments(1,169)2,205
Bermuda net deferred tax asset(1)
(162,705)—
Income tax benefit(2)
(1,814)(3,585)
Operating income$220,162$200,054
Earnings per diluted common share$4.53$2.01
Net investment (gains) losses0.110.24
Foreign exchange losses (gains)(0.27)0.10
Reorganization expenses0.14—
Interest in (income) loss of equity method investments(0.01)0.03
Bermuda net deferred tax asset(1.90)—
Income tax benefit(0.03)(0.05)
Operating income per diluted common share$2.57$2.33
Weighted average diluted common shares outstanding(3)
85,69385,853
Average common shareholders' equity$4,834,176$4,250,070
Annualized return on average common equity32.1 %16.2 %
Annualized operating return on average common equity(4)
18.2 %18.8 %
(1)Net deferred tax benefit due to the recognition of deferred tax assets net of deferred tax liabilities related to a future Bermuda corporate income tax rate of 15%, pursuant to the Corporate Income Tax Act 2023.
(2)Tax expense (benefit) associated with the adjustments to net income (loss) available (attributable) to common shareholders. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.
(3)Refer to Item 1, Note 7 to our Consolidated Financial Statements 'Earnings per Common Share' for further details.
(4)Annualized operating ROACE is a non-GAAP financial measures as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to the most comparable GAAP financial measure, annualized ROACE, is presented above, and a discussion of the rationale for its presentation is provided below.

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Rationale for the Use of Non-GAAP Financial Measures

We present our results of operations in a way we believe will be meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements we use are considered non-GAAP financial measures under SEC rules and regulations. In this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), we present underwriting-related general and administrative expenses, consolidated underwriting income (loss), operating income (loss) (in total and on a per share basis), annualized operating return on average common equity ("operating ROACE"), amounts presented on a constant currency basis and pre-tax total return on cash and investments excluding foreign exchange movements, which are non-GAAP financial measures as defined in Item 10(e) of SEC Regulation S-K. We believe that these non-GAAP financial measures, which may be defined and calculated differently by other companies, help explain and enhance the understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Underwriting-Related General and Administrative Expenses

Underwriting-related general and administrative expenses include those general and administrative expenses that are incremental and/or directly attributable to our underwriting operations. While this measure is presented in Item 1, Note 2 to the Consolidated Financial Statements 'Segment Information', it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.

Corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company. As these costs are not incremental and/or directly attributable to our underwriting operations, these costs are excluded from underwriting-related general and administrative expenses, and therefore, consolidated underwriting income (loss). General and administrative expenses, the most comparable GAAP financial measure to underwriting-related general and administrative expenses, also includes corporate expenses.

The reconciliation of underwriting-related general and administrative expenses to general and administrative expenses, the most comparable GAAP financial measure, is presented in 'Management's Discussion and Analysis of Financial Condition and Results of Operations – Consolidated Results of Operations'.

Consolidated Underwriting Income (Loss)

Consolidated underwriting income (loss) is a pre-tax measure of underwriting profitability that takes into account net premiums earned and other insurance related income (loss) as revenues and net losses and loss expenses, acquisition costs and underwriting-related general and administrative expenses as expenses. While this measure is presented in Item 1, Note 2 to the Consolidated Financial Statements 'Segment Information', it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.

We evaluate our underwriting results separately from the performance of our investment portfolio. As a result, we believe it is appropriate to exclude net investment income and net investment gains (losses) from our underwriting profitability measure.

Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on our net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio, including unrealized foreign exchange losses (gains) on our equity securities, and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities recognized in net investment gains (losses), and unrealized foreign exchange losses (gains) on our available for sale investments in other comprehensive income (loss), generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio, thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As a result, we believe that foreign exchange losses (gains) in our consolidated statements of operations in isolation are not a meaningful contributor to our underwriting performance. Therefore, foreign exchange losses (gains) are excluded from consolidated underwriting income (loss).

Interest expense and financing costs primarily relate to interest payable on our debt and Federal Home Loan Bank advances. As these expenses are not incremental and/or directly attributable to our underwriting operations, these expenses are excluded from underwriting-related general and administrative expenses and, therefore, consolidated underwriting income (loss).

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Reorganization expenses in 2024 primarily relate to severance costs mainly attributable to our "How We Work" program which is focused on simplifying our operating structure. Reorganization expenses are primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from consolidated underwriting income (loss).

Amortization of intangible assets arose from business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from consolidated underwriting income (loss).

We believe that the presentation of underwriting-related general and administrative expenses and consolidated underwriting income (loss) provides investors with an enhanced understanding of our results of operations, by highlighting the underlying pre-tax profitability of our underwriting activities. The reconciliation of consolidated underwriting income (loss) to net income (loss), the most comparable GAAP financial measure, is presented in 'Management's Discussion and Analysis of Financial Condition and Results of Operations – Consolidated Results of Operations'.

Operating Income (Loss)

Operating income (loss) represents after-tax operational results exclusive of net investment gains (losses), foreign exchange losses (gains), reorganization expenses, interest in income (loss) of equity method investments and Bermuda net deferred tax asset.

Although the investment of premiums to generate income and investment gains (losses) is an integral part of our operations, the determination to realize investment gains (losses) is independent of the underwriting process and is heavily influenced by the availability of market opportunities. Furthermore, many users believe that the timing of the realization of investment gains (losses) is somewhat opportunistic for many companies.

Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio, including unrealized foreign exchange losses (gains) on our equity securities and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities recognized in net investment gains (losses) and unrealized foreign exchange losses (gains) on our available for sale investments in other comprehensive income (loss), generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio, thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As a result, we believe that foreign exchange losses (gains) in our consolidated statements of operations in isolation are not a meaningful contributor to the performance of our business. Therefore, foreign exchange losses (gains) are excluded from operating income (loss).

Reorganization expenses in 2024 primarily relate to severance costs mainly attributable to our "How We Work" program which is focused on simplifying our operating structure. Reorganization expenses are primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from operating income (loss).

Interest in income (loss) of equity method investments is primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, this income (loss) is excluded from operating income (loss).

Bermuda net deferred tax asset is due to the recognition of deferred tax assets net of deferred tax liabilities related to a future Bermuda corporate income tax rate of 15%, pursuant to the Corporate Income Tax Act 2023 effective for fiscal years beginning on or after January 1, 2025. The Bermuda net deferred tax asset is not related to the underwriting process. Therefore, this income is excluded from operating income (loss).

Certain users of our financial statements evaluate performance exclusive of after-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses, interest in income (loss) of equity method investments and Bermuda net deferred tax asset in order to understand the profitability of recurring sources of income.


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We believe that showing net income (loss) available (attributable) to common shareholders exclusive of after-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses, interest in income (loss) of equity method investments and Bermuda net deferred tax asset reflects the underlying fundamentals of our business. In addition, we believe that this presentation enables investors and other users of our financial information to analyze performance in a manner similar to how our management analyzes the underlying business performance. We also believe this measure follows industry practice and, therefore, facilitates comparison of our performance with our peer group. We believe that equity analysts and certain rating agencies that follow us, and the insurance industry as a whole, generally exclude these items from their analyses for the period indicated:same reasons. The reconciliation of operating income (loss) to net income (loss) available (attributable) to common shareholders, the most comparable GAAP financial measure, is presented above.

We also present operating income (loss) per diluted common share and annualized operating ROACE, which are derived from the operating income (loss) measure and are reconciled above to the most comparable GAAP financial measures, earnings (loss) per diluted common share and annualized return on average common equity ("ROACE"), respectively.

Constant Currency Basis

We present gross premiums written and net premiums earned on a constant currency basis in this MD&A. The amounts presented on a constant currency basis are calculated by applying the average foreign exchange rate from the current year to the prior year amounts. We believe this presentation enables investors and other users of our financial information to analyze growth in gross premiums written and net premiums earned on a constant basis. The reconciliation to gross premiums written and net premiums earned on a GAAP basis is presented in 'Management's Discussion and Analysis of Financial Condition and Results of Operations – Results by Segment'.

Pre-Tax Total Return on Cash and Investments excluding Foreign Exchange Movements

Pre-tax total return on cash and investments excluding foreign exchange movements measures net investment income (loss), net investments gains (losses), interest in income (loss) of equity method investments, and change in unrealized gains (losses) generated by average cash and investment balances. We believe this presentation enables investors and other users of our financial information to analyze the performance of our investment portfolio. The reconciliation of pre-tax total return on cash and investments excluding foreign exchange movements to pre-tax total return on cash and investments, the most comparable GAAP financial measure, is presented in 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Net Investment Income and Net Investment Gains (Losses)'.


72
   Three months ended September 30, Nine months ended September 30, 
   2017 2016 2017 2016 
          
 Net investment income$95,169
 $116,923
 $299,899
 $257,818
 
 Net realized investments gains (losses)14,632
 5,205
 (14,811) (40,295) 
 
Change in net unrealized gains (losses)(1)
48,506
 35,075
 223,630
 303,573
 
 Interest in loss of equity method investments(661) (2,434) (8,402) (2,434) 
 Total$157,646
 $154,769
 $500,316
 $518,662
 
          
 
Average cash and investments(2)
$14,533,027
 $14,470,231
 $14,519,902
 $14,457,978
 
          
 Total return on average cash and investments, pre-tax:        
 Inclusive of investment related foreign exchange movements1.1% 1.1% 3.4% 3.6% 
 
Exclusive of investment related foreign exchange movements(3)
0.9% 1.1% 3.0% 3.9% 
          

(1)Change in net unrealized gains (losses) is calculated by taking net unrealized gains (losses) at period end less net unrealized gains (losses) at the prior period end.
(2)The average cash and investments balance is calculated by taking the average of the month-end fair value balances held for the periods indicated.
(3)Pre-tax return on cash and investments excluding foreign exchange movements is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to pre-tax total return on cash and investments, the most comparable GAAP financial measure included foreign exchange gains (losses) of $22 million and $(8) million for the three months ended September 30, 2017 and 2016, respectively, and foreign exchange gains (losses) of $62 million and $(39) million for the nine months ended September 30, 2017 and 2016, respectively.



CASH AND INVESTMENTS


The table below provides a breakdownDetails of our cash and investments:investments are as follows:
  March 31, 2024December 31, 2023
  Fair ValueFair Value
Fixed maturities, available for sale$12,269,310 $12,234,742 
Fixed maturities, held to maturity(1)
683,726 675,851 
Equity securities582,178 588,511 
Mortgage loans609,704 610,148 
Other investments934,724 949,413 
Equity method investments182,594 174,634 
Short-term investments75,879 17,216 
Total investments$15,338,115 $15,250,515 
Cash and cash equivalents(2)
$1,841,574 $1,383,985 
(1)Presented at net carrying value of $693 million (2023: $686 million) in the consolidated balance sheets.
(2)Includes restricted cash and cash equivalents of $698 million and $431 million at March 31, 2024 and at December 31, 2023, respectively.




   September 30, 2017 December 31, 2016 
    Fair Value  Fair Value 
        
 Fixed maturities $11,086,386
  $11,397,114
 
 Equity securities 659,751
  638,744
 
 Mortgage loans 360,381
  349,969
 
 Other investments 830,253
  830,219
 
 Equity method investments 108,597
  116,000
 
 Short-term investments 15,282
  127,461
 
 Total investments $13,060,650
  $13,459,507
 
        
 
Cash and cash equivalents(1)
 $1,631,127
  $1,241,507
 
        
73
(1)
Includes restricted cash and cash equivalents of $281 million and $202 million at September 30, 2017 and at December 31, 2016, respectively.




82




Overview


The fair value of total investments decreasedincreased by $399$88 million forin the ninethree months ended September 30, 2017, due to the funding of financing and operating activities, partially offsetMarch 31, 2024, driven by the improvement in valuationsreinvestment of fixedinterest income and equity securities.cashflows from operations.


The following provides a furtherAn analysis onof our investment portfolio by asset classes:class is detailed below:


Fixed Maturities


The following provides a breakdownDetails of our investment in fixed maturities:maturities portfolio are as follows:
  March 31, 2024December 31, 2023
  Fair Value% of TotalFair Value% of Total
Fixed maturities:
U.S. government and agency$2,593,717 20 %$3,007,528 23 %
Non-U.S. government738,198 6 %723,959 6 %
Corporate debt5,006,972 39 %4,560,843 35 %
Agency RMBS1,585,620 12 %1,634,661 13 %
CMBS820,393 6 %839,696 7 %
Non-agency RMBS139,992 1 %153,396 1 %
ABS1,910,597 15 %1,832,151 14 %
Municipals(1)
157,547 1 %158,359 1 %
Total$12,953,036 100 %$12,910,593 100 %
Credit ratings:
U.S. government and agency$2,593,717 20 %$3,007,528 23 %
AAA(2)
2,810,599 22 %2,745,192 21 %
AA2,641,746 20 %2,646,798 21 %
A2,081,113 16 %2,044,683 16 %
BBB1,497,935 12 %1,416,552 11 %
Below BBB(3)
1,327,926 10 %1,049,840 8 %
Total$12,953,036 100 %$12,910,593 100 %
   September 30, 2017 December 31, 2016 
   Fair Value % of Total Fair Value % of Total 
          
 Fixed maturities:        
 U.S. government and agency$1,547,318
 14% $1,656,069
 15% 
 Non-U.S. government573,640
 5% 565,834
 5% 
 Corporate debt4,503,967
 41% 4,600,743
 40% 
 Agency RMBS2,306,822
 21% 2,465,135
 22% 
 CMBS669,736
 6% 666,237
 6% 
 Non-Agency RMBS43,817
 —% 56,921
 —% 
 ABS1,288,870
 12% 1,222,214
 11% 
 
Municipals(1)
152,216
 1% 163,961
 1% 
 Total$11,086,386
 100% $11,397,114
 100% 
          
 Credit ratings:        
 U.S. government and agency$1,547,318
 14% $1,656,069
 15% 
 
AAA(2)
4,381,049
 40% 4,165,226
 36% 
 AA875,668
 8% 1,124,167
 10% 
 A1,659,488
 15% 1,747,857
 15% 
 BBB1,602,395
 14% 1,563,352
 14% 
 
Below BBB(3)
1,020,468
 9% 1,140,443
 10% 
 Total$11,086,386
 100% $11,397,114
 100% 
          
(1)Includes bonds issued by states, municipalities, and political subdivisions.
(2)Includes U.S. government-sponsored agency RMBS and CMBS.
(3)Non-investment grade and non-rated securities.

(1)Includes bonds issued by states, municipalities, and political subdivisions.
(2)Includes U.S. government-sponsored agencies, residential mortgage-backed securities ("RMBS") and commercial mortgage-backed securities ("CMBS").
(3)Non-investment grade and non-rated securities.

At September 30, 2017,March 31, 2024, fixed maturities had a weighted average credit rating of A+ (2023: AA-), a book yield of 4.3% (2023: 4.2%), and an average duration of 3.0 years (2023: 3.0 years). At March 31, 2024, fixed maturities together with short-term investments and cash and cash equivalents (i.e. total investments of $14.9 billion) had an average credit rating of AA- (2016:(2023: AA-) and an average duration of 3.3 years (2016: 3.5 years), and duration inclusive of interest rate swaps of 3.2 years. At September 30, 2017, inclusive of the short-term investments and cash and cash equivalents, the average credit rating was AA- (2016: AA-) and duration (including interest rate swaps) was 2.8 years (2016: 3.2(2023: 2.7 years).


NetAt March 31, 2024, net unrealized investment gainslosses on fixed maturities were $43$445 million, at September 30, 2017 compared to net unrealized investment losses of $126$400 million at December 31, 2016, primarily2023, an increase of $45 million due to a decline in market values, partially offset by realized losses associated with sales in the strengthening of the pound sterling and the euro against U.S. dollar which positively impacted valuations of non-U.S. denominated fixed maturity securities, together with the impact of the tightening of credit spreads on investment grade and high yield corporate debt.period.


Equity Securities


NetAt March 31, 2024, net unrealized investment gains on equity securities were $41$37 million, compared to $45 million at December 31, 2016 compared to $972023, a decrease of $8 million at September 30, 2017, an increase of $56 million due to an improvementdriven by realized gains associated with sales in valuations reflective of performance of the global equity markets.


period.



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83




Mortgage Loans


During the nine months ended September 30, 2017, ourAt March 31, 2024, investment in commercial mortgage loans was comparable$610 million, compared to $610 million at December 31, 2016.2023. The commercial mortgage loans are high quality, and collateralized by a variety of commercial properties and are diversified both geographically throughout the U. S.U.S. and by property type to reduce the risk of concentration. At September 30, 2017,March 31, 2024, there were noare three collateral dependent loans with estimated loan-to-value ratios in excess of 100%, resulting in an allowance for credit losses associated with our commercial mortgage loans portfolio.of $8 million.


Other Investments


The compositionDetails of our other investments portfolio is summarizedare as follows:
March 31, 2024December 31, 2023
  Fair Value% of TotalFair Value% of Total
Multi-strategy funds$24,950 3 %$24,619 3 %
Direct lending funds168,987 18 %192,270 20 %
Private equity funds309,399 33 %301,712 32 %
Real estate funds309,545 33 %317,325 33 %
Total multi-strategy, direct lending, private equity and real estate funds812,881 87 %835,926 88 %
CLO-Equities4,986 — %5,300 1 %
Other privately held investments116,857 13 %108,187 11 %
Total other investments$934,724 100 %$949,413 100 %
          
   September 30, 2017 December 31, 2016 
          
 Hedge funds        
 Long/short equity funds$64,067
 8% $118,619
 14% 
 Multi-strategy funds286,452
 35% 285,992
 34% 
 Event-driven funds48,578
 6% 93,539
 11% 
 Total hedge funds399,097
 49% 498,150
 59% 
          
 Direct lending funds232,389
 28% 134,650
 16% 
 Private equity funds71,896
 9% 81,223
 10% 
 Real estate funds46,691
 6% 13,354
 2% 
 Total hedge, direct lending, private equity and real estate funds750,073
 92% 727,377
 87% 
          
 Other privately held investments43,398
 5% 42,142
 5% 
 CLO - Equities36,782
 3% 60,700
 8% 
 Total other investments$830,253
 100% $830,219
 100% 
          


The fair value of total hedge funds decreased by $99 million during the nine month period ended September 30, 2017 driven by $127 million of net redemptions offset by $28 million of price appreciation. Certain of these funds may be subjectRefer to restrictions on redemptions which may limit our ability to liquidate these investments in the short term. See Note 4(c)3(e) to the Consolidated Financial Statements 'Investments' for further details on these restrictions and details on unfunded commitments relating to our other investment portfolio..


Equity Method Investments


During 2016, we paid $108 million including direct transactions costs to acquire 19% of the common equity of Harrington, the parent company of Harrington Re, an independent reinsurance company jointly sponsored by AXIS Capital and Blackstone. Harrington is not a variable interest entity. Given that we exercise significant influence over this investee we account for ourOur ownership interests in Harrington under the equity method of accounting.

During the nine months ended September 30, 2017, we recorded an impairment charge of $9 million, related to a U.S. based insurance company, which reduced its carrying value to $nil. This charge is includedReinsurance Holdings Limited ("Harrington") and Monarch Point Re (ISAC) Ltd., Monarch Point Re (ISA 2023) Ltd. and Monarch Point Re (ISA 2024) Ltd. (individually or collectively "Monarch Point Re") are reported in interest in income (loss) of equity method investments. Interest in income (loss) of equity method investments inwas $1 million for the Consolidated Statement of Operations.three months ended March 31, 2024, compared to $(2) million for the three months ended March 31, 2023 attributable to these ownership interests.







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84



LIQUIDITY AND CAPITAL RESOURCES


Refer to the ‘Liquidity and Capital Resources’ section included underin Item 7 of our Annual Report on Form 10-K for the year ended December 31, 20162023 for a general discussion of our liquidity and capital resources. During the nine months ended September 30, 2017, we:

redeemed the remaining $351 million of 6.875% Series C preferred shares on April 17, 2017; and

suspended our open market share repurchase program following the announcement of the offer to acquire Novae on July 5, 2017.


The following table summarizes our consolidated capital at:capital:
March 31, 2024December 31, 2023
Debt$1,314,074 $1,313,714 
Preferred shares550,000 550,000 
Common equity4,955,155 4,713,196 
Shareholders’ equity5,505,155 5,263,196 
Total capital$6,819,229 $6,576,910 
Ratio of debt to total capital19.3 %20.0 %
  September 30, 2017 December 31, 2016 
      
 Senior notes$993,797
 $992,950
 
      
 Preferred shares775,000
 1,126,074
 
 Common equity4,679,699
 5,146,296
 
 Shareholders’ equity5,454,699
 6,272,370
 
 Total capital$6,448,496
 $7,265,320
 
      
 Ratio of debt to total capital15.4% 13.7% 
      
 Ratio of debt and preferred equity to total capital27.4% 29.2% 
      


We finance our operations with a combination of debt and equity capital. OurThe debt to total capital and debt and preferred equity to total capital ratios provideratio provides an indication of our capital structure, along with some insight into our financial strength. A company with higher ratios in comparison to industry average may show weak financial strength because the cost of its debts may adversely affect results of operations and/or increase its default risk.

Our consolidated balance sheet at September 30, 2017 reflected a decrease in preferred equity due to redemption of the remaining $351 million of 6.875% Series C preferred shares on April 17, 2017.

We believe that our financial flexibility remains strong.strong, and adjustments will be made if there are developments that differ from our expectations.

Federal Home Loan Bank Advances
Credit Facilities

The Company's subsidiaries, AXIS Insurance Company and AXIS Surplus Insurance Company, are members of the Federal Home Loan Bank of Chicago ("FHLB").

At March 31, 2024, the Company had $86 million of borrowings under the FHLB program, with maturities in 2024 and 2025 and interest payable at interest rates between 5.6% and 5.7%. The Company incurred interest expense of $1 million for the three months ended March 31, 2024 and 2023, respectively. The borrowings under the FHLB program are secured by investments with a fair value of $90 million.

Line of credit

On March 27, 2017,26, 2024, the $250 million credit facility entered into by AXIS Capital and certain of its subsidiaries and a syndication of lenders expired.

On March 27, 2017, certain of AXIS Capital’s operating subsidiaries (the "Participating Subsidiaries") amended their existing $500 million Facility was amended to reduce the committed utilization capacity available under the Facility to $300 million, enter into an uncommitted secured letter of credit facility (the “LOC Facility”) with Citibank Europe plc, (“Citibank”) to include an additional
$250 millionand extend the tenors of secured letter of credit capacity (the “$250 Million Facility”) pursuant to a Committed Facility Letter and an amendment to the Master Reimbursement Agreement (the “LOC Facility Documents”). Under the terms of the $250 Million Facility,issuable letters of credit to a maximum aggregate amount of $250 million are available for issuance on behalf ofMarch 31, 2026 and make certain updates to the Participating Subsidiaries. These letters of credit will principally be used to support the reinsurance obligations of the Participating Subsidiaries. The $250 Million Facility is subject to certain covenants, including the requirement to maintain sufficientfacility's collateral as defined in the LOC Facility Documents, to cover all of the obligations under the LOC Facility.

and fee arrangements.



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85





Such obligations include contingent reimbursement obligations for outstanding letters of credit and fees payable to Citibank. In the event of default, Citibank may exercise certain remedies, including the exercise of control over pledged collateral and the termination of the availability of the LOC Facility to any or all of the Participating Subsidiaries. The $250 million Facility expires March 31, 2018. The terms and conditions of the $500 million Facility remain unchanged. 

Common Equity

During the ninethree months endedSeptember 30, 2017, our March 31, 2024, common equity decreasedincreased by $467 million. 242 million. The following table reconciles our opening and closing common equity positions:
 Nine months ended September 30,2017 
    
 Common equity - opening$5,146,296
 
 Net loss(341,541) 
 Shares repurchased for treasury(285,659) 
 Change in unrealized appreciation on available for sale investments, net of tax216,630
 
 Common share dividends(98,273) 
 Preferred share dividends(36,154) 
 Share-based compensation expense recognized in equity30,692
 
 Foreign currency translation adjustment46,824
 
 Cost of treasury shares reissued884
 
 Common equity - closing$4,679,699
 
    
Three months ended March 31,2024
Common equity - opening$4,713,196
Share-based compensation expense11,426 
Change in unrealized gains (losses) on available for sale investments, net of tax(37,062)
Foreign currency translation adjustment(8,951)
Net income395,459 
Preferred share dividends(7,563)
Common share dividends(37,866)
Treasury shares repurchased(75,728)
Treasury shares reissued2,244 
Common equity - closing$4,955,155


During the ninethree months ended September 30, 2017,March 31, 2024, we repurchased 4.31.3 million common shares repurchased for a total of $286$76 million, (including $261including $62 million repurchased pursuant to our Board-authorized share repurchase program and $25$14 million relating from employees to shares purchased in connection withsatisfy personal withholding tax liabilities that arise on the vesting of share-settled restricted stock awardsunits granted under our 20072017 Long-Term Equity Compensation Plan).Plan.
During April 2024, we repurchased 40,000 common shares for a total of $2 million pursuant to our Board-authorized share repurchase program. At November 8, 2017, theApril 26, 2024, we had $36 million of remaining authorization under the commonour Board-authorized share repurchase program approved by our Board of Directors was $739 millionfor common share repurchases through December 31, 2024 (refer to Part II, Item 2 'Unregistered'Unregistered Sales of Equity Securities and Use of Proceeds'Proceeds' for additional information)further details).
However, following the Company's announcement of the offer to acquire Novae on July 5, 2017, the Company suspended its open market share repurchase program.

We continue to expect that cash flows generated from our operations, combined with the liquidity provided by our investment portfolio, will be sufficient to cover our required cash outflows and other contractual commitments through the foreseeable future.





86


CRITICAL ACCOUNTING ESTIMATES


Our Consolidated Financial StatementsThe consolidated financial statements include certain amounts that are inherently uncertain and judgmental in nature. As a result, we are required to make assumptions and best estimates in order to determine the reported values. We consider an accounting estimate to be critical if: (1) it requires that significant assumptions be made in order to deal with uncertainties and (2) changes in the estimate could have a material impact on our results of operations, financial condition or liquidity.


As disclosed in our 2016 Annual Report on Form 10-K, weWe believe that the material items requiring such subjective and complex estimates are our:are:


•reserves for losses and loss expenses;


•reinsurance recoverable balances;on unpaid losses and loss expenses, including the allowance for expected credit losses;


premiums;•gross premiums written and net premiums earned;


•fair value measurements for ourof financial assets and liabilities; and


assessments of other-than-temporary impairments.•the allowance for expected credit losses associated with fixed maturities, available for sale.


We believe that the critical accounting estimates discussion in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2016,2023, continues to describe the significant estimates and judgments included in the preparation of our Consolidated Financial Statements.the consolidated financial statements.


77



RECENT ACCOUNTING PRONOUNCEMENTS

At March 31, 2024, there were no recently issued accounting pronouncements that we have not yet adopted that we expect could have a material impact on our results of operations, financial condition or liquidity.


ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to Item 1, Note 1 'Basis of Presentation and Accounting Policies' to the Consolidated Financial Statements and Item 8, Note 2 'Significant Accounting Policies' to the Consolidated Financial Statements7A included in our Annual Report on Form 10-K for the year ended December 31, 2016, for a discussion of recently issued accounting pronouncements that we2023. There have not yet adopted.
OFF-BALANCE SHEET AND SPECIAL PURPOSE ENTITY ARRANGEMENTS
At September 30, 2017, we have not entered into any off-balance sheet arrangements, as defined by Item 303(a)(4) of Regulation S-K.




87

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Referbeen no material changes to Item 7A included in our 2016 Form 10-K. Withthis item since December 31, 2023, with the exception of the changes in exposure to foreign currency risk presented below, there have been no material changes to this item since December 31, 2016.below.


Foreign Currency Risk
The table below provides a sensitivity analysis of our total net foreign currency exposures.exposures:
AUDCADEURGBPJPYOtherTotal
At March 31, 2024
Net managed assets (liabilities), excluding derivatives$73,505 $436,321 $(287,374)$(32,939)$(35,413)$84,830 $238,930 
Foreign currency derivatives, net(60,972)(441,220)304,779 (49,722)38,825 (119,632)(327,942)
Net managed foreign currency exposure12,533 (4,899)17,405 (82,661)3,412 (34,802)(89,012)
Other net foreign currency exposure— 185 (136)237 — — 286 
Total net foreign currency exposure$12,533 $(4,714)$17,269 $(82,424)$3,412 $(34,802)$(88,726)
Net foreign currency exposure as a percentage of total shareholders’ equity0.2 %(0.1 %)0.3 %(1.5 %)0.1 %(0.6 %)(1.6 %)
Pre-tax impact of net foreign currency exposure on shareholders’ equity given a hypothetical 10% rate movement(1)
$1,253 $(471)$1,727 $(8,242)$341 $(3,480)$(8,873)
                  
  AUD NZD CAD EUR GBP JPY Other Total 
                  
 At September 30, 2017                
 Net managed assets (liabilities), excluding derivatives$(29,134) $(9,733) $85,047
 $(177,485) $167,796
 $38,025
 $156,473
 $230,989
 
 Foreign currency derivatives, net12,702
 7,221
 (101,930) 249,587
 89,740
 (8,879) 9,880
 258,321
 
 Net managed foreign currency exposure(16,432) (2,512) (16,883) 72,102
 257,536
 29,146
 166,353
 489,310
 
 Other net foreign currency exposure1
 —
 (49) 1,558
 1,049
 —
 83,283
 85,842
 
 Total net foreign currency exposure$(16,431) $(2,512) $(16,932) $73,660
 $258,585
 $29,146
 $249,636
 $575,152
 
 Net foreign currency exposure as a percentage of total shareholders’ equity(0.3%) —% (0.3%) 1.4% 4.7% 0.5% 4.6% 10.5% 
 
Pre-tax impact of net foreign currency exposure on shareholders’ equity given a hypothetical 10% rate movement(1)
$(1,643) $(251) $(1,693) $7,366
 $25,859
 $2,915
 $24,964
 $57,517
 
                  
(1)Assumes 10% appreciation in underlying currencies relative to the U.S. dollar.
(1)Assumes 10% change in underlying currencies relative to the U.S. dollar.


Total Net Foreign Currency Exposure


At September 30, 2017, ourMarch 31, 2024, total net foreign currency liabilities were $89 million primarily driven by exposures to the pound sterling, other non-core currencies primarily the Indian rupee, Swiss Franc, Brazilian Real, and Canadian dollar. During the three months ended March 31, 2024, the change in total net foreign currency exposure was $575 million net long, driven by increases in our exposures to the euro, pound sterling, Japanese yen and other non-core currencies primarily due to new business written duringin the nine months ended September 30, 2017. In addition, our pound sterling exposure was increased to fund the acquisitionperiod.










78



ITEM 4.     CONTROLS AND PROCEDURES


Disclosure Controls and Procedures

The Company’s management has performed an evaluation, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of ourthe Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”"Exchange Act")) as of September 30, 2017.at March 31, 2024. Based upon that evaluation, ourthe Company's Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2017, ourat March 31, 2024, the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by usthe Company in reports that we fileit files or submitsubmits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.


Changes in Internal Control Over Financial Reporting

The Company’s management has performed an evaluation, with the participation of the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of changes in the Company’s internal control over financial reporting that occurred during the three months ended September 30, 2017. March 31, 2024.

Based upon that evaluation, there were no changes in ourthe Company's internal control over financial reporting that occurred during the three months ended September 30, 2017March 31, 2024 that have materially affected, or are reasonably likely to materially affect, ourthe Company's internal control over financial reporting.




88


PART II     OTHER INFORMATION



ITEM 1.     LEGAL PROCEEDINGS


From time to time, we are subject to routine legal proceedings, including arbitrations, arising in the ordinary course of business. These legal proceedings generally relate to claims asserted by or against us in the ordinary course of our insurance or reinsurance operations; estimatedoperations. Estimated amounts payable under suchrelated to these proceedings are included in the reserve for losses and loss expenses in the Consolidated Balance Sheets.our consolidated balance sheets.


We are not a party to any material legal proceedings arising outside the ordinary course of business.



ITEM 1A.     RISK FACTORS
Other than the additional risk factor disclosed in our Quarterly Report on Form 10-Q for the period ended June 30, 2017, there have been
There were no material changes tofrom the risk factors previously disclosed in ourthe Company's Annual Report on Form 10-K for the year ended December 31, 2016.





2023.



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89



ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


Issuer Purchases of Equity Securities

The following table presentsshows information regarding the number of common shares we repurchased duringin the three monthsquarter ended September 30, 2017:March 31, 2024:
Period
Total number
of shares
purchased (a) (b)
Average
price paid
per share
Total number of shares purchased as part of
publicly announced
programs (a)
Maximum number (or approximate
dollar value) of shares that may yet be
purchased under the announced programs (c)
January 1-31, 20243 $55.37 48 $97 million
February 1-29, 20246 $57.16 848 $48 million
March 1-31, 2024224 $60.86 152 $38 million
Total  
233  1,048 $38 million

(a) In thousands.
ISSUER PURCHASES OF EQUITY SECURITIES(b) Includes shares repurchased from employees to satisfy personal withholding tax liabilities that arise on the vesting of share-settled restricted stock units.

(c) On December 7, 2023, our Board of Directors authorized a share repurchase program for up to $100 million of our common shares, effective January 1, 2024 through to December 31, 2024. Share repurchases may be effected from time to time in the open market or privately negotiated transactions, depending on market conditions.
Common Shares

Period
Total Number
of Shares
Repurchased
Average
Price Paid
Per Share
Total Number of Shares
Repurchased as Part of
Publicly Announced
Plans or Programs(1)
Maximum Number (or Approximate
Dollar Value) of Shares That May Yet Be
Repurchased Under the Announced Plans
or Programs(2)
 
      
July 1-31, 201751

$65.74
49
$739.0 million 
August 1-31, 2017
—

$—
—
$739.0 million 
September 1-30, 2017
—

$—
—
$739.0 million 
Total  
51
 49
$739.0 million 
      
(1)From time to time, we purchase shares in connection with the vesting of restricted stock awards granted to our employees under our 2007 Long-Term Equity Compensation Plan. The purchase of these shares is separately authorized and is not part of our Board-authorized share repurchase program, described below.
(2)On December 9, 2016, our Board of Directors authorized a share repurchase plan to repurchase up to $1 billion of our common shares through to December 31, 2017. The share repurchase authorization which became effective on January 1, 2017, replaced the previous plan which had $253 million available through the end of 2016. Share repurchases may be effected from time to time in the open market or privately negotiated transactions, depending on market conditions.




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ITEM 5.     OTHER INFORMATION


Disclosure of Certain Activities Under Section 13(r) of the Securities Exchange Act of 1934


Section 13(r) of the Securities Exchange Act of 1934, as amended, requires issuers to disclose in their annual and quarterly reports whether they or any of their affiliates knowingly engaged in certain activities with Iran or with individuals or entities that are subject to certain sanctions under U.S. law. Issuers are required to provide this disclosure even where the activities, transactions or dealings are conducted outside of the U.S. in compliance with applicable law.


As and when allowed by the applicable law and regulations, certain of our non-U.S. subsidiaries provide treaty reinsurance coverage to non-U.S. insurers on a worldwide basis, including insurers of liability, marine, aviation and energy risks, and as a result, these underlying insurance and reinsurance portfolios may have some exposure to Iran. In addition, we underwriteprovide insurance and facultative reinsurance on a global basis to non-U.S. insureds and insurers, including for liability, marine, aviation and energy risks. Coverage provided to non-Iranian business may indirectly cover an exposure in Iran. For example, certain of our operations underwrite global marine hull war and cargo policies that provide coverage for vessels navigating into and out of ports worldwide, including Iran. For the quarter ended September 30, 2017,March 31, 2024, there has been no material amount of premium allocated or apportioned to activities relating to Iran. As we believe these activities are permitted under applicable laws and regulations, weWe intend for our non-U.S. subsidiaries to continue to provide such coverage only to the extent permitted by applicable law.



Insider Trading Arrangements and Policies

During the three months ended March 31, 2024, no director or officer of the Company adopted, terminated or is currently party to a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.



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Table of Contents





ITEM 6.     EXHIBITS
2.1
Rule 2.7 Announcement, dated July 5, 2017 in connection with acquisition of Novae Group plc (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on July 6, 2017).
2.2
Rule 2.7 Announcement, dated August 24, 2017 in connection with acquisition of Novae Group plc (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on August 25, 2017).
3.1
Certificate of Incorporation and Memorandum of Association (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1(Amendment No. 1) (No. 333-103620) filed on April 16, 2003).
3.2
Amended and Restated Bye-Laws (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 filed on May 15, 2009).
4.1
Specimen Common Share Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (Amendment No. 3) (No. 333-103620) filed on June 10, 2003).
4.2
Certificate of Designations establishing the specific rights, preferences, limitations and other terms of the Series D Preferred Shares (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 20, 2013).
4.3
Certificate of Designations establishing the specific rights, preferences, limitations and other terms of the Series E Preferred Shares (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on November 7, 2016).
†*10.1
2018 Directors Annual Compensation Program.Amendment and Restatement Agreement dated March 26, 2024, by and among AXIS Specialty Limited, AXIS Re SE, AXIS Specialty Europe SE, AXIS Insurance Company, AXIS Reinsurance Company, AXIS Surplus Insurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 28, 2024).
10.2
Amendment to Master Agreement dated March 26, 2024, by and among AXIS Specialty Limited, AXIS Re SE, AXIS Specialty Europe SE, AXIS Insurance Company, AXIS Reinsurance Company, AXIS Surplus Insurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on March 28, 2024).
10.3
Amended and Restated Committed Letter of Credit Facility Letter dated March 26, 2024, by and among AXIS Specialty Limited, AXIS Re SE, AXIS Specialty Europe SE, AXIS Insurance Company, AXIS Reinsurance Company, AXIS Surplus Insurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on March 28, 2024).
10.4
Uncommitted Facility Letter for Issuance of Credits dated March 26, 2024, by and among AXIS Specialty Limited, AXIS Re SE, AXIS Specialty Europe SE, AXIS Insurance Company, AXIS Reinsurance Company, AXIS Surplus Insurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on March 28, 2024).
*10.5
Amended and Restated Long-Term Equity Compensation Program effective February 2024 (incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K filed on February 27, 2024).
*10.6
Amended and Restated Executive Annual Incentive Plan effective February 2024 (incorporated by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K filed on February 27, 2024).
*10.7
Form of Employee Restricted Stock Unit Award Agreement (Three Year - Performance Vesting based on relative total shareholder return and absolute diluted book value per share) (incorporated by reference to Exhibit 10.39 to the Company's Annual Report on Form 10-K filed on February 27, 2024).
*†10.8
Form of Employee Restricted Stock Unit Award Agreement.
†31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
†31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
†32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
†32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
†101The following financial information from AXIS Capital Holdings Limited’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017March 31, 2024 formatted in Inline XBRL: (i) Consolidated Balance Sheets at September 30, 2017March 31, 2024 and December 31, 2016;2023; (ii) Consolidated Statements of Operations for the three and nine months ended September 30, 2017March 31, 2024 and 2016;2023; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017March 31, 2024 and 2016;2023; (iv) Consolidated Statements of Changes in Shareholders' Equity for the ninethree months ended September 30, 2017March 31, 2024 and 2016;2023; (v) Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2024 and 2016;2023; and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.
†104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Management contract, compensatory plan or arrangement.
*Exhibit 10.1 represents a management contract, compensatory plan or arrangement in which directors and/or executive officers are eligible to participate.
†Filed herewith.

† Filed herewith.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 8, 2017May 1, 2024
AXIS CAPITAL HOLDINGS LIMITED
By:
/S/ ALBERT BENCHIMOLS/ VINCENT TIZZIO
Albert BenchimolVincent Tizzio
President and Chief Executive Officer
(Principal Executive Officer)
/S/ JOSEPH HENRYS/ PETER VOGT
Joseph HenryPeter Vogt
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)






































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