National General CORRESP Correspondence with SEC

December 14, 2017

Via EDGAR

Mr. Jim B. Rosenberg

Senior Assistant Chief Accountant

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549

Re: National General Holdings Corp.

Form 10-K for the Fiscal Year Ended December 31, 2016

Filed March 23, 2017

Form 10-Q for the Quarterly Period Ended September 30, 2017

Filed November 8, 2017

File No. 001-36311

Dear Mr. Rosenberg:

Thank you for your letter dated November 16, 2017 (the “Comment Letter”), regarding the Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”) and Quarterly Report on Form 10-Q for the period ended September 30, 2017 (the “2017 Form 10-Q”) of National General Holdings Corp. (“National General” or the “Company”) and for the follow-up call on November 29, 2017.

We have carefully considered the Staff’s comments and set forth our response below. Each response is numbered to correspond to the comment set forth in the Comment Letter, which for convenience we have incorporated into this response letter.

Form 10-K for the Fiscal Year Ended December 31, 2016

Notes to the Consolidated Financial Statements

Note 2: Significant Accounting Policies

Ceding Commission Revenue, page F-12


1.	Please provide us proposed disclosure to be included in future filings of your accounting policy for ceding commissions income recorded in the revenue section of your statements of income.

The accounting policy for Ceding Commission Revenue will be updated in future filings as follows:

“Ceding Commission Revenue. Commissions on reinsurance premiums ceded are earned in a manner consistent with the recognition of the costs to acquire the underlying policies, generally on a pro-rata basis over the terms of the policies reinsured. The portion of ceding commission which represents reimbursement of acquisition costs related to the underlying policies is recorded as an offset to acquisition costs and other underwriting expenses. Commission in excess of acquisition costs is recorded as ceding commission income over the terms of the policies. Certain reinsurance agreements contain provisions whereby the ceding commission rates vary based on

the loss experience of the policies covered by the agreements. The Company records ceding commission revenue based on its current estimate of losses on the reinsured policies subject to variable commission rates. The Company records adjustments to the ceding commission revenue in the period that changes in the estimated losses are determined.”

Note 12: Unpaid Losses and Loss Adjustment Expense Reserves, page F-57

Please provide us an analysis of the lines of business presented in your Property and Casualty loss development table presented on page F-59 to help us evaluate whether further disaggregation of the table is necessary under ASC 944-40-50-4H. In this regard, it appears that physical damage coverage has significantly different characteristics from liability coverage for your various automobile lines and that homeowners, recreational vehicle, motorcycle and lender-placed insurance may have significantly different characteristics.

On pages F-59 through F-61 of the 2016 Form 10-K, we filed incurred and paid loss development tables for each of our property and casualty, accident and health and reciprocal exchanges reporting segments in a manner consistent with how our chief operating decision makers evaluate our financial performance and how our financial statements are presented and reviewed by our investors and analysts. In consideration of your request for additional detail by line of business, for informational purposes we are providing the attached pro forma incurred and paid claim statistics for each of our property and casualty and reciprocal exchanges reporting segments disaggregated by the following lines of business: auto liability, auto physical damage and homeowners & other property.

Pro forma, for informational purposes only: incurred and paid claims development - property and casualty - auto liability, including recreational vehicles and motorcycles ($’s in thousands):



	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,														December 31, 2016
Accident Year	2010		2011		2012		2013		2014		2015		2016		Total of IBNR Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
	(unaudited)
2010	$	599,386	$	595,319	$	594,959	$	594,865	$	592,901	$	594,849	$	595,337	$	582	241,614
2011			494,657		495,760		495,984		496,668		495,908		497,109		5,571		238,189
2012					511,519		519,731		523,451		522,251		528,090		4,350		249,740
2013							543,694		554,922		555,783		563,834		8,730		249,691
2014									740,222		754,930		760,566		21,355		269,239
2015											825,925		838,040		62,652		288,899
2016													932,350		284,858		279,230
Total (A)													$	4,715,326



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,
Accident Year	2010		2011		2012		2013		2014		2015		2016
	(unaudited)
2010	$	287,058	$	474,640	$	534,107	$	562,918	$	579,237	$	590,417	$	592,932
2011			224,676		385,749		442,365		468,059		482,861		489,191
2012					242,285		413,018		470,515		501,819		518,079
2013							259,665		440,751		504,569		540,497
2014									342,710		601,980		694,002
2015											385,592		679,461
2016													400,052
Total (B)													$	3,914,214
Unpaid loss and allocated loss adjustment expense reserves before 2010, net of Reinsurance (C)													5,105
Unpaid loss and allocated loss adjustment expense reserves, net of Reinsurance (A) - (B) + (C)													$	806,217



Average Annual Percentage Payout of Accident Year Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7
	(unaudited)
Property and Casualty, Auto Liability	45.4	%	33.8	%	10.6	%	5.1	%	2.6	%	1.3	%	0.8	%

Pro forma, for informational purposes only: incurred and paid claims development - property and casualty - auto physical damage, including recreational vehicles, motorcycles and lender placed auto ($’s in thousands):



	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,														December 31, 2016
Accident Year	2010		2011		2012		2013		2014		2015		2016		Total of IBNR Plus Expected Development on Reported Claims			Cumulative Number of Reported Claims
	(unaudited)
2010	$	389,411	$	382,171	$	381,877	$	381,856	$	381,836	$	381,820	$	381,795	$	1		309,052
2011			314,941		308,766		308,511		308,482		308,524		308,512		(30		)	297,979
2012					306,376		298,154		295,891		296,023		296,050		(1		)	292,441
2013							334,764		328,831		328,360		328,284		(31		)	285,622
2014									496,457		486,693		486,206		(218		)	311,307
2015											542,782		544,097		(888		)	328,282
2016													626,643		53,309			319,357
Total (A)													$	2,971,587



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,
Accident Year	2010		2011		2012		2013		2014		2015		2016
	(unaudited)
2010	$	351,865	$	382,575	$	381,955	$	381,926	$	381,829	$	381,811	$	381,789
2011			283,501		308,824		308,634		308,608		308,578		308,571
2012					268,989		298,381		295,978		295,975		296,029
2013							291,064		328,832		328,456		328,299
2014									430,998		487,531		486,364
2015											478,268		544,754
2016													542,970
Total (B)													$	2,888,776
Unpaid loss and allocated loss adjustment expense reserves before 2010, net of Reinsurance (C)													(43		)
Unpaid loss and allocated loss adjustment expense reserves, net of Reinsurance (A) - (B) + (C)													$	82,768



Average Annual Percentage Payout of Accident Year Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7
	(unaudited)
Property and Casualty, Auto Physical Damage	89.1	%	11.2	%	(0.2	)%	—	%	—	%	—	%	—	%

Pro forma, for informational purposes only: incurred and paid claims development - property and casualty - homeowners & other property, including lender placed homeowners ($’s in thousands):



	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,														December 31, 2016
Accident Year	2010		2011		2012		2013		2014		2015		2016		Total of IBNR Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
	(unaudited)
2010	$	411,572	$	411,572	$	411,572	$	411,572	$	411,572	$	411,577	$	411,304	$	194	86,426
2011			496,799		496,799		496,799		496,799		496,795		495,246		546		107,742
2012					477,151		477,151		477,151		477,185		476,538		2,508		111,767
2013							297,132		297,074		297,126		296,618		2,325		75,323
2014									314,018		304,706		303,925		7,116		72,330
2015											352,665		349,559		14,565		67,562
2016													350,737		78,771		50,303
Total (A)													$	2,683,927



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,
Accident Year	2010		2011		2012		2013		2014		2015		2016
	(unaudited)
2010	$	247,802	$	370,301	$	393,226	$	404,490	$	408,195	$	409,781	$	410,875
2011			314,139		457,480		485,054		489,778		493,408		494,198
2012					300,271		452,589		466,266		471,084		473,190
2013							219,937		279,743		289,302		293,101
2014									198,781		278,255		289,456
2015											233,264		319,284
2016													227,649
Total (B)													$	2,507,753
Unpaid loss and allocated loss adjustment expense reserves before 2010, net of Reinsurance (C)													340
Unpaid loss and allocated loss adjustment expense reserves, net of Reinsurance (A) - (B) + (C)													$	176,514



Average Annual Percentage Payout of Accident Year Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7
	(unaudited)
Property and Casualty, Homeowners & Other Property	64.9	%	27.6	%	4.5	%	1.8	%	0.7	%	0.3	%	0.2	%

Pro forma, for informational purposes only: incurred and paid claims development - reciprocal exchanges - auto liability ($’s in thousands):



	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,														December 31, 2016
Accident Year	2010		2011		2012		2013		2014		2015		2016		Total of IBNR Plus Expected Development on Reported Claims			Cumulative Number of Reported Claims
	(unaudited)
2010	$	61,956	$	59,169	$	57,079	$	56,991	$	57,453	$	57,268	$	57,218	$	88		5,822
2011			47,666		47,834		47,459		48,841		51,107		50,898		(76		)	5,075
2012					44,834		47,275		48,044		48,665		50,370		1,008			5,003
2013							43,684		44,341		45,479		50,180		3,019			5,116
2014									38,656		40,850		45,930		3,999			5,014
2015											35,573		33,409		6,501			4,365
2016													24,619		11,416			2,204
Total (A)													$	312,624



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,
Accident Year	2010		2011		2012		2013		2014		2015		2016
	(unaudited)
2010	$	18,879	$	32,181	$	41,020	$	49,764	$	53,635	$	55,155	$	55,700
2011			15,857		26,603		35,911		41,931		46,559		49,570
2012					13,568		29,286		37,241		42,768		46,358
2013							14,683		29,218		35,105		41,787
2014									13,925		26,070		32,382
2015											11,910		19,501
2016													7,516
Total (B)													$	252,814
Unpaid loss and allocated loss adjustment expense reserves before 2010, net of Reinsurance (C)													852
Unpaid loss and allocated loss adjustment expense reserves, net of Reinsurance (A) - (B) + (C)													$	60,662



Average Annual Percentage Payout of Accident Year Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7
	(unaudited)
Reciprocal Exchanges, Auto Liability	30.8	%	25.7	%	15.0	%	12.9	%	7.6	%	4.2	%	1.0	%

Pro forma, for informational purposes only: incurred and paid claims development - reciprocal exchanges - auto physical damage ($’s in thousands):



	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,														December 31, 2016
Accident Year	2010		2011		2012		2013		2014		2015		2016		Total of IBNR Plus Expected Development on Reported Claims			Cumulative Number of Reported Claims
	(unaudited)
2010	$	29,664	$	24,572	$	24,646	$	24,700	$	24,682	$	24,665	$	24,659	$	(2	)	12,374
2011			26,936		26,055		26,022		26,060		26,037		26,029		(4		)	12,040
2012					25,752		26,459		26,189		25,914		25,842		(13		)	11,300
2013							23,375		25,214		25,292		24,709		(21		)	11,067
2014									29,240		27,424		25,806		(200		)	11,563
2015											21,247		18,592		(428		)	10,335
2016													12,270		(827		)	5,074
Total (A)													$	157,907



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,
Accident Year	2010		2011		2012		2013		2014		2015		2016
	(unaudited)
2010	$	25,583	$	24,873	$	24,725	$	24,701	$	24,681	$	24,665	$	24,661
2011			28,274		26,269		26,106		26,056		26,037		26,033
2012					23,760		26,651		26,172		25,914		25,854
2013							22,651		25,088		24,549		24,725
2014									24,528		26,165		25,772
2015											19,080		18,797
2016													12,579
Total (B)													$	158,421
Unpaid loss and allocated loss adjustment expense reserves before 2010, net of Reinsurance (C)													(1		)
Unpaid loss and allocated loss adjustment expense reserves, net of Reinsurance (A) - (B) + (C)													$	(515	)



Average Annual Percentage Payout of Accident Year Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7
	(unaudited)
Reciprocal Exchanges, Auto Physical Damage	99.1	%	2.7	%	(1.4	)%	(0.2	)%	(0.1	)%	—	%	—	%

Pro forma, for informational purposes only: incurred and paid claims development - reciprocal exchanges - homeowners & other property ($’s in thousands):



	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,														December 31, 2016
Accident Year	2010		2011		2012		2013		2014		2015		2016		Total of IBNR Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
	(unaudited)
2010	$	38,125	$	37,831	$	37,167	$	36,347	$	36,691	$	35,788	$	35,723	$	—	5,070
2011			38,470		28,869		28,511		28,209		27,954		27,950		12		6,654
2012					25,289		20,625		21,184		19,971		20,403		130		8,438
2013							22,638		21,232		20,132		20,309		260		3,166
2014									27,706		24,846		25,625		513		4,231
2015											30,081		21,031		740		5,522
2016													36,838		6,361		3,677
Total (A)													$	187,879



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,
Accident Year	2010		2011		2012		2013		2014		2015		2016
	(unaudited)
2010	$	23,881	$	31,051	$	32,488	$	34,587	$	35,265	$	35,428	$	35,388
2011			21,474		24,997		25,799		26,700		27,661		27,656
2012					11,087		18,021		19,367		19,847		19,961
2013							11,277		17,435		18,107		19,104
2014									15,344		22,834		23,820
2015											12,979		18,518
2016													20,978
Total (B)													$	165,425
Unpaid loss and allocated loss adjustment expense reserves before 2010, net of Reinsurance (C)													677
Unpaid loss and allocated loss adjustment expense reserves, net of Reinsurance (A) - (B) + (C)													$	23,131



Average Annual Percentage Payout of Accident Year Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7
	(unaudited)
Reciprocal Exchanges, Homeowners & Other Property	62.3	%	24.4	%	4.0	%	4.3	%	2.1	%	0.2	%	(0.1	)%

Please tell us why the development for 2016 for Property and Casualty, Accident and Health, and Reciprocal Exchanges as depicted in the table on F-57 differ from the 2016 development depicted in their respective incurred claims and allocated claim adjustment expenses, net of reinsurance table on pages F-59 through F-61. For example, the table you provide on F-59 for Property and Casualty presents total adverse development of $27.1 million for 2016 while your financial statements, as depicted in the table on page F-57, present only $5.1 million in adverse development. In your response, tell us the amount of development, if any, for accident years older than presented in your development table and otherwise reconcile and explain for us the differences.

The $27.1 million of unfavorable prior year development for Property and Casualty shown in the table on page F-59 relates to Loss and ALAE, which does not include ULAE. The table on Page F-57 shows prior year development for Loss and LAE, which includes favorable prior year development from ULAE of $22.0 million for Property and Casualty resulting in total Property and Casualty Loss and LAE unfavorable prior year development of $5.1 million shown in the table on page F-57.

The $16.6 million of unfavorable prior year development for Accident and Health shown in the table on page F-60 relates to Loss and ALAE for all short-duration contracts except for those excluded as indicated in footnote 2 at the bottom of the reconciliation table on page F-62 and also does not include ULAE. The table on page F-57 shows prior year development for Loss and LAE, which includes development from ULAE, short-duration contracts excluded from the table, and insurance lines other than short-duration, each of which were identified as separate line items in the reconciliation table on page F-62. Favorable prior year development of $7.3 million in total attributable to liabilities excluded from the development tables resulted in total Accident and Health Loss and LAE unfavorable prior year development of $9.3 million shown on page F-57.

The $3.6 million of favorable prior year development for the Reciprocal Exchanges shown in the table on page F-61excludes $1.1 million of total unfavorable prior year development on a combined basis for ULAE, accident years prior to 2010, and the small commercial book of business in runoff as indicated in footnote 3 of the reconciliation table on page F-62, which would otherwise have resulted in a total of $2.5 million of favorable prior year development shown in the table on page F-61 had such items been included in that table. Furthermore, the table on page F-61 includes $1.6 million of total favorable prior year loss and ALAE development during the first quarter of 2016 which was excluded from the table on page F-57 due to deconsolidation at January 1, 2016 and subsequent consolidation at March 31, 2016 of the Reciprocal Exchanges, resulting in total Reciprocal Exchanges favorable prior year development of $0.9 million shown in the table on page F-57.

For each of the reporting segments, any development attributable to accident years older than presented in our development tables is immaterial.

In footnote 1 to the liability reconciliation table on page F-62 you indicate that, for acquired businesses in your Property and Casualty segment, the development tables assume no historical change in ultimates in years prior to the year that you acquired the business. Please explain to us what this means and more specifically how you reflect incurred and paid claims and allocated claim adjustment expenses for acquired businesses within the table. Also, if your presentation commingles legacy and acquired claims, tell us how it provides meaningful information, and alternatively why you do not present the acquired claims in a separate table prospectively.

For acquired businesses in our Property and Casualty segment, presenting the development tables assuming no historical change in ultimates in years prior to the year that we acquired the business means that we have eliminated any favorable or unfavorable development as a result of changes to IBNR reserves as estimated and recorded by the previous owner(s) of such businesses prior to acquisition.

Paid claims and allocated claim adjustment expenses for acquired businesses in our Property and Casualty segment were reflected within the development tables by the retroactive inclusion of actual historical paid claims and allocated claim adjustment expenses reported for such acquired businesses. Incurred claims and allocated claim adjustment expenses for acquired businesses in our Property and Casualty segment were reflected within the development tables by the retroactive inclusion of actual historical paid claims and allocated claim adjustment expenses plus corresponding historical case reserves reported for such acquired businesses with the IBNR component of the reserves in years prior to the year that we acquired the business derived by subtracting the historical case incurred from the total incurred reported as of the year end that we acquired the business. From the year end immediately following the closing date of each acquisition, any changes in paid and incurred claims and allocated claim adjustment expenses (including IBNR reserves) are included on a prospective basis as reported in our financial statements.

We believe our presentation provides more meaningful information to investors than presenting the acquired claims in a separate table on either a retrospective or prospective basis because our presentation blends historical paid losses of acquired lines of business that are homogeneous with our core legacy lines of business without any potential bias or distortion due to previous owners’ IBNR reserving practices or potentially different historical reinsurance arrangements. We also believe that presenting prospective stand-alone tables for such acquired business would be less

meaningful to investors or analysts reviewing such information in order to assess the overall reasonableness of our most recent estimates of Property and Casualty reserves. Prospective stand-alone presentation also eliminates the paid loss and allocated claims adjustment expense history prior to acquisition which would eliminate an investors’ or analysts’ ability to review the full actual paid development history.


5.	In footnote 5 to the liability reconciliation table on page F-62 you indicate that you exclude forward looking reserves for certain Accident and Health short-duration contracts from your development table because they are provisionally assigned to the most current accident year. Please address the following:


•	Tell us how these forward-looking reserves comply with the requirement under ASC 944-40-25-1 to record a liability for insured events that have occurred.


•	If these forward looking reserves relate to insured events that have occurred, explain why these amounts are not, and apparently cannot be, reflected in the table in the accident year in which the insured events occurred.

After additional review, the reserves referenced in footnote 5 to the liability table on page F-62 should actually have been included as IBNR reserves for the most recent accident year as they relate to not yet reported claims on certain of our short-duration Accident and Health insurance contracts in the current plan year. We will be including such reserves in the Accident and Health incurred loss development table for the most recent accident year on a going forward basis.

Accident and Health - Pro forma, for informational purposes only: incurred and paid claims development - revised current accident year incurred.



	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,														December 31, 2016
Accident Year	2010		2011		2012		2013		2014		2015		2016		Total of IBNR Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
	(unaudited)
2010	$	20,906	$	21,671	$	23,428	$	24,083	$	25,102	$	26,402	$	26,012	$	98	22,906
2011			19,675		25,580		26,124		27,721		30,067		29,192		38		24,523
2012					21,026		27,828		30,845		34,438		33,533		180		27,538
2013							46,005		57,023		60,398		61,847		773		56,051
2014									80,361		88,287		90,943		2,068		95,152
2015											211,620		226,327		7,180		264,651
2016													258,728		103,363		229,532
Total (A)													$	726,582



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Year Ended December 31,
Accident Year	2010		2011		2012		2013		2014		2015		2016
	(unaudited)
2010	$	11,311	$	17,742	$	20,508	$	22,528	$	23,701	$	24,263	$	24,503
2011			11,569		21,224		24,012		26,008		27,137		27,552
2012					13,678		23,053		27,110		29,235		30,239
2013							27,652		49,038		53,904		56,251
2014									46,668		78,132		82,725
2015											140,220		208,364
2016													147,674
Total (B)													$	577,308
Unpaid loss and allocated loss adjustment expense reserves before 2010, net of Reinsurance (C)													2,026
Unpaid loss and allocated loss adjustment expense reserves, net of Reinsurance (A) - (B) + (C)													$	151,300

Reconciliation of claims development tables above to the reserve as of December 31, 2016, revisions to Accident and Health only.



Net outstanding liabilities:
Property and Casualty⁽¹⁾	$	1,065,499
Accident and Health (excluding DE captive subsidiaries)⁽²⁾	151,300
Accident and Health - DE captive subsidiaries⁽²⁾	5,922
Reciprocal Exchanges (excluding commercial book)⁽³⁾	83,278
Reciprocal Exchanges - commercial book⁽³⁾	1,264
Net reserve for claims and allocated claim adjustment expenses	1,307,263

Reinsurance recoverable:
Property and Casualty⁽¹⁾⁽⁴⁾	827,672
Accident and Health (excluding DE captive subsidiaries)⁽²⁾	10,363
Reciprocal Exchanges (excluding commercial book)⁽³⁾	39,078
Reciprocal Exchanges - commercial book⁽³⁾	1,201
Reinsurance recoverable on unpaid claims and allocated claim adjustment expenses	878,314

Insurance lines other than short-duration	19,403
Unallocated claims adjustment expenses	60,092
Subtotal	79,495

Gross reserve for claims and claim adjustment expenses	$	2,265,072

⁽¹⁾ For acquired business, the development tables above for the Property and Casualty segment assume no historical change in ultimates in years prior to the year that NGHC first acquired the business.
⁽²⁾ The development tables above for the Accident and Health segment exclude the Company's Delaware captive subsidiaries due to impracticability of obtaining complete historical information. The Delaware captive subsidiaries are comprised of three legal entities (AIBD Insurance Company IC, Distributors Insurance Company PCC and Professional Service Captive Corporation IC) which were acquired by the Company in 2012.
⁽³⁾ The development tables above for the Reciprocal Exchanges segment exclude a small commercial book of business in runoff previously underwritten by Mountain Valley Indemnity Company.
⁽⁴⁾ Reinsurance recoverable on unpaid losses for the Property and Casualty segment primarily include $663.9 million from the Michigan Catastrophic Claims Association (“MCCA”) and $100.5 million from the North Carolina Reinsurance Facility ("NCRF").

Form 10-Q for the Quarterly Period Ended September 30, 2017

Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview, page 46

On your earnings conference call for the second quarter of 2017 held on August 8, 2017 your Chief Executive Officer indicated that you had strong performance in most areas of your Property and Casualty segment with offsetting margin pressures in your lender services business. On your earnings conference call for the third quarter of 2017 held on November 9, 2017, he indicated that your lender-placed business was roughly break even for the quarter. Although it is clear from your disclosures throughout your June 30, 2017 and September 30, 2017 Forms 10-Q that lender-placed premiums are down in 2017, the impact on margin is not necessarily evident. Please tell us

your consideration for summarizing your operating results by line of business in your disclosure and whether the margin pressures in your lender services business are a known trend that should be highlighted and discussed.

We believe that our current disclosure accurately summarizes operating results in the manner in which management evaluates performance and that all known trends are appropriately disclosed in the manner regularly reviewed by management in evaluating performance and in a manner useful to, and used by, investors. As noted in our disclosure, premiums are disclosed by product type. The discussions of margin pressure were merely a brief and immaterial explanation of an item which we believe is readily understandable by investors - diminishing premium directly impacts results due to fixed expenses. We have taken action to lower certain fixed expenses and do not expect further discussion of this point to be necessary as it does not constitute a known trend.

Results of Operations

Consolidated Results of Operations for the Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016, page 53

In the third paragraph on page 54 you disclose that your consolidated net loss ratio increased in 2017 as compared to 2016 in part because you prospectively reclassified costs associated with claims handling that were previously recorded within general and administrative expense. Please address the following and reference for us, where appropriate, the authoritative literature you rely upon to support your position:


•	Tell us the nature of these claims handling expenses.

•

Tell us whether these costs are “claim adjustment expenses” outlined in ASC 944-40-05-2 that are required to be accrued when the claim is incurred under ASC 944-40-25-1. If not, tell us why not. If so, tell us how your historical presentation is appropriate when these costs were included in general and administrative expenses and your historical rollforwards of your unpaid loss and loss adjustment expense reserve liabilities under ASC 944-40-50-3 do not include these expenses.


•	Tell us why it is appropriate to present your reclassification prospectively instead of retrospectively recasting all results presented.

These expenses are the salaries of the claims department personnel and related costs of the claims department personnel. These costs are required to be accrued and have been accrued in our calculation of unpaid loss adjustment expenses in accordance with ASC 944-40-25-1.

In our consideration of presenting the reclassification prospectively vs. retrospectively recasting, we considered the following items:


▪	There was no impact on pretax income or operating earnings (Non-GAAP);


▪	There was no impact on total revenue or total expense; and


▪	There was no impact on the combined ratio, which is a key measure reviewed by our management, investors and analysts.

While there was an impact of equal amount on the loss and expense ratio, our analysts and investors focus on the combined ratio, as the definition of expense ratio often differs across different companies. The loss ratio is a derivative of the combined ratio (loss ratio + expense ratio = combined ratio). The loss ratio as a single data point is not very informative to the user of the financial statements as it does not convey any information about the overall expenses being

incurred by the Company. The loss ratio when used in conjunction with the combined ratio provides the user of the financial statement a more comprehensive view of expenses and profit.

We note that we have disclosed the exact prior period impact in both our Form 10-Q - “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and press release to enable our investors and analysts to make a direct period-to-period comparison.

Consolidated Results of Operations for the Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016

Earnings (losses) of equity method investments, page 57

You attribute the $35.2 million decline in earnings from equity method investments in the first nine months of 2017 as compared to the same period in 2016 primarily to your proportionate share of losses in certain real estate joint ventures. In response to analyst questions on your earnings conference call for the second quarter of 2017 you attribute these losses in that quarter to the receipt of audited information from the general partner that reflects amortization of lease intangible assets associated with acquisition accounting and imply that there is no underlying change in cash flows.

The $35.2 million represents the decline in earnings recorded for all of National General’s equity method investments, which includes both real estate partnerships in which we hold limited partnership interests and investments in entities holding life settlement contracts. Approximately $24.9 million of the decline relates to two real estate partnership investments managed by a General Partner. Prior to filing our 10-Q for the second quarter of 2017, we received audited information from the General Partner and recorded a $23.8 million loss due to a change in value of the equity method investment based on the results in the audited financial statements in the period in which the information was received, which was the first time audited information was available to National General. The change in value was related to amortization and depreciation not previously included in the General Partner’s unaudited financial statements, which we had previously used to record the equity adjustment. Additionally, approximately $9.8 million of the decline in earnings from equity method investments relates to entities that own a portfolio of life settlement contracts and approximately $0.5 million relates to other equity method investments.

Please address the following:


•	Tell us your share of the lease intangible amortization recorded during each quarter of 2017 for each of the relevant joint ventures.

The amount of the quarterly losses recorded in each quarter of 2017 related to the audited information received from the General Partner are $0 million in 1Q; $14.4 million in 2Q related to Illinois Center and $4.9 million related to North Dearborn; and in Q3, $3.4 million related to Illinois Center and $1.1 million related to North Dearborn. This includes all adjustments in the underlying partnerships including amortization and depreciation.


•	Tell us whether the amortization identified in the preceding bullet includes incremental amortization that was not recorded in prior periods and, if so, the amounts of this incremental amortization for each relevant joint venture.

The incremental adjustments related to prior periods for each joint venture is illustrated in the following table ($’s in millions):



	Illinois Center Building, L.P.								North Dearborn Building Company, L.P.
	1Q17		2Q17		3Q17		Year-to-Date 3Q17		1Q17		2Q17		3Q17		Year-to-Date 3Q17		Total
3Q17	$	—	$	—	$	1.7	$	1.7	$	—	$	—	$	0.5	$	0.5	$	2.2
2Q17	—		—		1.7		1.7		—		—		0.6		0.6		2.3
1Q17	—		1.7		—		1.7		—		0.6		—		0.6		2.3
4Q16	—		1.9		—		1.9		—		0.5		—		0.5		2.4
3Q16	—		1.9		—		1.9		—		0.5		—		0.5		2.4
2Q16	—		1.9		—		1.9		—		0.6		—		0.6		2.5
1Q16	—		1.9		—		1.9		—		0.6		—		0.6		2.5
4Q15	—		3.0		—		3.0		—		0.5		—		0.5		3.5
3Q15	—		2.1		—		2.1		—		0.5		—		0.5		2.6
2Q15	—		—		—		—		—		0.6		—		0.6		0.6
1Q15	—		—		—		—		—		0.5		—		0.5		0.5
Total	$	—	$	14.4	$	3.4	$	17.8	$	—	$	4.9	$	1.1	$	6.0	$	23.8

The total amount related to 2015 amortization and depreciation was $7.2 million and the total amount related to 2016 amortization and depreciation was $9.8 million.


•	Tell us whether the amortization recorded during each quarter of 2017 includes any intangible asset impairment charges and, if so, the amounts of the impairment charges for each relevant joint venture.

The audited information received from the General Partner did not result in the need for any intangible asset impairment charges.


•	Tell us why any incremental amortization or impairment charges from the preceding two bullets were recorded for each joint venture.

National General is a limited partner in the two real estate partnerships and records its share of earnings from the joint ventures based on the quarterly information provided by the General Partner. Prior to the issuance of National General’s 2Q17 10-Q, the audited information related to a prior year was provided. Such audited financial statements included amortization and depreciation expenses that were not included in the prior unaudited financial statements provided by the General Partner. Based on the audited information received, an incremental expense for amortization and depreciation was required to properly reflect National General’s investment in the two real estate partnerships.


•	Explain how any incremental amortization or impairment charges were recorded if there is no underlying change to the anticipated cash flows for each joint venture.

These adjustments were related to non-cash flow specific items (amortization/depreciation) related to the application of purchase accounting by the General Partner in the audited statement. The cash flows of the property since inception have remained stable and did not contribute to the adjustments from the audited statement.


•	Tell us your consideration for disclosing the underlying cause for the losses recorded by the joint ventures as a material component of your interim 2017 operating results under Item 303(b)(2) of Regulation S-K.

Our investors and analysts are primarily focused on our core insurance related operating results such as underwriting income, net combined ratio and changes in premium earned and written. They view our investments in equity method investments as non-core components of our net income. Accordingly, as a limited partner in these investments, we believe that our disclosure regarding the losses was appropriate.

SAB 99 Assessment

The Company has concluded that the failure to include the prior period related amortization/depreciation in 2015 and 2016 was an error. In assessing the materiality of including the amortization and depreciation amounts in the current period upon our receipt of such information from the General Partner, we assessed the materiality on our previously issued financial statements from a quantitative and qualitative perspective in accordance with Staff Accounting Bulletin No. 99 - Materiality (“SAB 99”) and do not believe that there is a substantial likelihood that a reasonable investor would have considered this item important in assessing our financial statements for prior periods, taking into account all other information available. As noted above, our investors and analysts are focused primarily on insurance driven metrics such as underwriting income, net combined ratio and premium written and earned. They are less focused on the Company’s passive investments in unconsolidated subsidiaries over which management does not possess control.

Management also considered the qualitative items specifically listed in SAB 99 in its assessment.


▪	whether the misstatement arises from an item capable of precise measurement or whether it arises from an estimate and, if so, the degree of imprecision inherent in the estimate - The misstatement does not arise from an estimate.

▪

whether the misstatement masks a change in earnings or other trends - The misstatement in prior years does not impact income before equity in earnings of unconsolidated subsidiaries or mask any trends. As noted above, our investors and analysts primarily focus on core insurance related measures rather than our limited partnerships in equity method investments that management does not control. The impact on 2016 investment income inclusive of equity method investments is 7.8% ($9.8 million / ($25.4 million plus $99.6 million)) and the impact on 2015 is 8.4% ($7.2 million / ($10.6 million plus $75.3 million)).


▪	whether the misstatement hides a failure to meet analysts' consensus expectations for the enterprise - As described above, the items do not impact line items that our investors and analysts deem to be core insurance related measures and did not hide a failure to meet expectations.


▪	whether the misstatement changes a loss into income or vice versa - The misstatements did not have this impact.


▪	whether the misstatement concerns a segment or other portion of the registrant's business that has been identified as playing a significant role in the registrant's operations or profitability - As described above, the misstatement does not concern a segment or business that plays a significant role in the Company’s operations or profitability.


▪	whether the misstatement affects the registrant's compliance with regulatory requirements - This misstatement did not have any impact on our compliance with any regulatory requirements.


▪	whether the misstatement affects the registrant's compliance with loan covenants or other contractual requirements - None of our financial covenants and contractual requirements are impacted by a change in income in earnings of our unconsolidated subsidiaries.


▪	whether the misstatement has the effect of increasing management's compensation - for example, by satisfying requirements for the award of bonuses or other forms of incentive compensation - The effects of applying the amounts of this misstatement in prior years would not have had any impact on management’s compensation.


▪	whether the misstatement involves concealment of an unlawful transaction - The misstatement of the amortization and depreciation amounts in prior years did not involve concealment of an unlawful transaction.

From a quantitative perspective, we assessed the impact of the incremental adjustments to our prior period financial statements. The amount of the incremental adjustments related to 2016 noted above is approximately 4.2% of the full year 2016 pretax income, inclusive of Earnings in Equity Method Investments ($9.8 million / $235.5 million); 0.5% change in 2016 Total Investments ($17.0 million / $3,548 million); and 0.9% change in 2016 Total Stockholders’ Equity ($17.0 million / $1,926 million). The incremental adjustment noted above for 2015 represents 4.1% of the full year 2015 pretax income, inclusive of Earnings in Equity Method Investments ($7.2 million / $175.2 million); 0.3% change in 2015 Total Investments ($7.2 million / $2,668 million); and 0.5% change in 2015 Total Stockholders’ Equity ($7.2 million / $1,537 million). Management does not believe these amounts are material to the previously issued financial statements for the years ended December 31, 2016 and 2015 and has concluded that their exclusion did not change or influence the judgment of a reasonable person or significantly alter the total mix of information available with respect to any of those years. In accordance with the guidance set forth in SAB Topic 1-N, the Company currently intends to correct the cumulative impact prior year items would have on its 2017 financial statements by adjusting prior period information in its Form 10-K for the year ended December 31, 2017 (through what is commonly referred to as a “little r” restatement).

In connection with our response to the Comment Letter, we hereby acknowledge that:


•	we are responsible for the adequacy and accuracy of the disclosure in the filings;


•	Staff comments or changes to the disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and


•	the Commission has taken the position that we may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

We trust that you will find the foregoing to be responsive to the Staff’s comments. Please contact the undersigned at (212) 380-9492 if you require any further information.

Sincerely,

/s/ Michael Weiner

Michael Weiner, Chief Financial Officer

cc: Jeffrey Weissmann, National General Holdings Corp.

National General (NTTNP) CORRESPCorrespondence with SEC