| Guarantor Financial Information | Guarantor Financial Information The following tables present condensed consolidating balance sheets as of June 30, 2016 and December 31, 2015 , condensed consolidating statements of income and comprehensive income for the three and six months ended June 30, 2016 and 2015 and condensed consolidating statements of cash flows for the six months ended June 30, 2016 and 2015 for XL-Ireland, XL-Cayman, a 100% owned subsidiary of XL-Ireland as of June 30, 2016, and XL-Ireland's other subsidiaries, which are all 100% directly or indirectly owned subsidiaries of XL-Cayman. See Note 1, "Basis of Preparation and Consolidation " information regarding changes in the Company's organizational structure as a result of the Redomestication. For a discussion of debt instruments issued by XL-Cayman, see Note 10, "Notes Payable and Debt and Financing Arrangements ." June 30, 2016 Condensed Consolidating Balance Sheet (U.S. dollars in thousands, except share data) XL- Ireland XL-Cayman Other XL-Ireland Subsidiaries Consolidating Adjustments and Eliminations XL-Ireland Consolidated ASSETS Investments: Total investments available for sale $ — $ 761,877 $ 32,580,941 $ — $ 33,342,818 Total investments trading — — 1,496,906 — 1,496,906 Investments in affiliates — — 1,968,801 — 1,968,801 Other investments — 934 1,296,770 — 1,297,704 Total investments $ — $ 762,811 $ 37,343,418 $ — $ 38,106,229 Cash and cash equivalents (1) 13,436 133,711 3,344,256 (174,654 ) 3,316,749 Restricted cash — — 181,858 — 181,858 Investments in subsidiaries 11,651,980 16,727,899 — (28,379,879 ) — Accrued investment income 48 3,366 286,497 — 289,911 Deferred acquisition costs and value of business acquired — — 1,050,653 — 1,050,653 Ceded unearned premiums — — 2,174,219 — 2,174,219 Premiums receivable — — 6,469,371 — 6,469,371 Reinsurance balances receivable — — 563,673 — 563,673 Unpaid losses and loss expenses recoverable — — 5,426,773 — 5,426,773 Receivable from investments sold — — 222,558 — 222,558 Goodwill and other intangible assets — — 2,217,973 — 2,217,973 Deferred tax asset — — 224,786 — 224,786 Amounts due from subsidiaries/parent 26,754 — 1,784,972 (1,811,726 ) — Other assets 238 42,946 910,303 — 953,487 Total assets $ 11,692,456 $ 17,670,733 $ 62,201,310 $ (30,366,259 ) $ 61,198,240 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Unpaid losses and loss expenses $ — $ — $ 26,020,564 $ — $ 26,020,564 Deposit liabilities — — 1,178,113 — 1,178,113 Future policy benefit reserves — — 3,798,278 — 3,798,278 Funds withheld on GreyCastle life retrocession arrangements — — 1,145,314 — 1,145,314 Unearned premiums — — 8,274,300 — 8,274,300 Notes payable and debt — 2,646,324 — — 2,646,324 Reinsurance balances payable — — 2,911,974 — 2,911,974 Payable for investments purchased — — 175,153 — 175,153 Deferred tax liability — — 107,778 — 107,778 Amounts due to subsidiaries/parent — 1,811,726 — (1,811,726 ) — Other liabilities (1) 7,268 216,203 1,227,693 (174,654 ) 1,276,510 Total liabilities $ 7,268 $ 4,674,253 $ 44,839,167 $ (1,986,380 ) $ 47,534,308 Shareholders’ Equity: Shareholders’ equity attributable to XL Group plc $ 11,685,188 $ 11,651,980 $ 16,727,899 $ (28,379,879 ) $ 11,685,188 Non-controlling interest in equity of consolidated subsidiaries — 1,344,500 634,244 — 1,978,744 Total shareholders’ equity $ 11,685,188 $ 12,996,480 $ 17,362,143 $ (28,379,879 ) $ 13,663,932 Total liabilities and shareholders’ equity $ 11,692,456 $ 17,670,733 $ 62,201,310 $ (30,366,259 ) $ 61,198,240 ____________ (1) The Company maintains a notional multi-currency cash pool with a third-party bank. At June 30, 2016, the cash pool balance of one or more entities was negative and reflected as part of Other Liabilities. Overall, the pool balance maintained by the Company is positive. December 31, 2015 Condensed Consolidating Balance Sheet (U.S. dollars in thousands, except share data) XL- Ireland XL-Cayman Other XL-Ireland Subsidiaries Consolidating Adjustments and Eliminations XL-Ireland Consolidated ASSETS Investments: Total investments available for sale $ — $ 516,425 $ 33,237,473 $ — $ 33,753,898 Total investments trading — — 1,296,029 — 1,296,029 Investments in affiliates — — 1,708,899 — 1,708,899 Other investments — 877 1,432,180 — 1,433,057 Total investments $ — $ 517,302 $ 37,674,581 $ — $ 38,191,883 Cash and cash equivalents 11,557 369,997 2,874,682 — 3,256,236 Restricted cash — — 154,992 — 154,992 Investments in subsidiaries 11,648,673 15,836,651 — (27,485,324 ) — Accrued investment income — 2,323 310,344 — 312,667 Deferred acquisition costs and value of business acquired — — 890,568 — 890,568 Ceded unearned premiums — — 1,821,793 — 1,821,793 Premiums receivable — — 4,712,493 — 4,712,493 Reinsurance balances receivable — — 418,666 — 418,666 Unpaid losses and loss expenses recoverable — — 5,262,706 — 5,262,706 Receivable from investments sold — — 231,158 — 231,158 Goodwill and other intangible assets — — 2,210,266 — 2,210,266 Deferred tax asset — — 282,311 — 282,311 Amounts due from subsidiaries/parent 33,417 — 1,054,177 (1,087,594 ) — Other assets 2,748 44,570 889,881 — 937,199 Total assets $ 11,696,395 $ 16,770,843 $ 58,788,618 $ (28,572,918 ) $ 58,682,938 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Unpaid losses and loss expenses $ — $ — $ 25,439,744 $ — $ 25,439,744 Deposit liabilities — — 1,168,376 — 1,168,376 Future policy benefit reserves — — 4,163,500 — 4,163,500 Funds withheld on GreyCastle life retrocession arrangements — — 914,629 — 914,629 Unearned premiums — — 7,043,358 — 7,043,358 Notes payable and debt — 2,644,970 — — 2,644,970 Reinsurance balances payable — — 2,117,727 — 2,117,727 Payable for investments purchased — — 130,060 — 130,060 Deferred tax liability — — 120,651 — 120,651 Amounts due to subsidiaries/parent — 1,087,594 — (1,087,594 ) — Other liabilities 19,316 45,106 1,221,038 — 1,285,460 Total liabilities $ 19,316 $ 3,777,670 $ 42,319,083 $ (1,087,594 ) $ 45,028,475 Shareholders’ Equity: Shareholders’ equity attributable to XL Group plc $ 11,677,079 $ 11,648,673 $ 15,836,651 $ (27,485,324 ) $ 11,677,079 Non-controlling interest in equity of consolidated subsidiaries — 1,344,500 632,884 — 1,977,384 Total shareholders’ equity $ 11,677,079 $ 12,993,173 $ 16,469,535 $ (27,485,324 ) $ 13,654,463 Total liabilities and shareholders’ equity $ 11,696,395 $ 16,770,843 $ 58,788,618 $ (28,572,918 ) $ 58,682,938 Three Months Ended June 30, 2016 Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data) XL- Ireland XL-Cayman Other XL-Ireland Subsidiaries Consolidating Adjustments and Eliminations XL-Ireland Consolidated Revenues: Net premiums earned $ — $ — $ 2,532,212 $ — $ 2,532,212 Total net investment income 64 3,096 211,747 481 215,388 Total net realized gains (losses) on investments — 976 103,274 367 104,617 Net realized and unrealized gains (losses) on derivative instruments — — 906 — 906 Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets — — (229,742 ) — (229,742 ) Income (loss) from investment fund affiliates — — 13,179 — 13,179 Fee income and other — — 10,862 — 10,862 Total revenues $ 64 $ 4,072 $ 2,642,438 $ 848 $ 2,647,422 Expenses: Net losses and loss expenses incurred $ — $ — $ 1,632,386 $ — $ 1,632,386 Claims and policy benefits — — 5,482 — 5,482 Acquisition costs — — 420,520 — 420,520 Operating expenses (499 ) 1,071 521,949 — 522,521 Exchange (gains) losses (470 ) (136 ) (18,494 ) — (19,100 ) Interest expense (9 ) 35,177 20,570 — 55,738 Total expenses $ (978 ) $ 36,112 $ 2,582,413 $ — $ 2,617,547 Income (loss) before income tax and income (loss) from operating affiliates $ 1,042 $ (32,040 ) $ 60,025 $ 848 $ 29,875 Income (loss) from operating affiliates — — 21,418 — 21,418 Gain on sale of operating affiliate — — — — — Equity in net earnings (losses) of subsidiaries 42,740 78,114 — (120,854 ) — Provision (benefit) for income tax — — 2,467 — 2,467 Net income (loss) $ 43,782 $ 46,074 $ 78,976 $ (120,006 ) $ 48,826 Non-controlling interests — 3,334 1,710 — 5,044 Net income (loss) attributable to ordinary shareholders $ 43,782 $ 42,740 $ 77,266 $ (120,006 ) $ 43,782 Comprehensive income (loss) $ 357,812 $ 356,770 $ 391,296 $ (748,066 ) $ 357,812 Three Months Ended June 30, 2015 Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data) XL- Ireland XL-Cayman Other XL-Ireland Subsidiaries Consolidating Adjustments and Eliminations XL-Ireland Consolidated Revenues: Net premiums earned $ — $ — $ 2,082,053 $ — $ 2,082,053 Total net investment income 54 2,668 220,018 464 223,204 Total net realized gains (losses) on investments — 2,532 44,956 2,479 49,967 Net realized and unrealized gains (losses) on derivative instruments — 76,065 (27,556 ) — 48,509 Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets — — 239,174 — 239,174 Income (loss) from investment fund affiliates — — 31,377 — 31,377 Fee income and other — — 11,012 — 11,012 Total revenues $ 54 $ 81,265 $ 2,601,034 $ 2,943 $ 2,685,296 Expenses: Net losses and loss expenses incurred $ — $ — $ 1,151,195 $ — $ 1,151,195 Claims and policy benefits — — 22,081 — 22,081 Acquisition costs — — 341,617 — 341,617 Operating expenses 2,954 2,442 501,958 — 507,354 Exchange (gains) losses (9 ) (51 ) 10,434 — 10,374 Interest expense 1 34,701 14,965 — 49,667 Total expenses $ 2,946 $ 37,092 $ 2,042,250 $ — $ 2,082,288 Income (loss) before income tax and income (loss) from operating affiliates $ (2,892 ) $ 44,173 $ 558,784 $ 2,943 $ 603,008 Income (loss) from operating affiliates — — 9,462 — 9,462 Gain on sale of operating affiliate — — 340,407 — 340,407 Equity in net earnings (losses) of subsidiaries 917,931 876,763 — (1,794,694 ) — Provision (benefit) for income tax — — 32,959 — 32,959 Net income (loss) $ 915,039 $ 920,936 $ 875,694 $ (1,791,751 ) $ 919,918 Non-controlling interests — 3,005 1,874 — 4,879 Net income (loss) attributable to ordinary shareholders $ 915,039 $ 917,931 $ 873,820 $ (1,791,751 ) $ 915,039 Comprehensive income (loss) $ 286,043 $ 288,935 $ 244,824 $ (533,759 ) $ 286,043 Six Months Ended June 30, 2016 Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data) XL- Ireland XL-Cayman Other XL-Ireland Subsidiaries Consolidating Adjustments and Eliminations XL-Ireland Consolidated Revenues: Net premiums earned $ — $ — $ 4,886,822 $ — $ 4,886,822 Total net investment income 177 4,881 415,054 1,162 421,274 Total net realized gains (losses) on investments — 1,253 194,214 1,900 197,367 Net realized and unrealized gains (losses) on derivative instruments — — (2,716 ) — (2,716 ) Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets — — (465,822 ) — (465,822 ) Income (loss) from investment fund affiliates — — 8,600 — 8,600 Fee income and other — — 19,124 — 19,124 Total revenues $ 177 $ 6,134 $ 5,055,276 $ 3,062 $ 5,064,649 Expenses: Net losses and loss expenses incurred $ — $ — $ 3,014,871 $ — $ 3,014,871 Claims and policy benefits — — 10,419 — 10,419 Acquisition costs — — 823,787 — 823,787 Operating expenses 2,775 2,566 1,032,561 — 1,037,902 Exchange (gains) losses (453 ) (172 ) (52,294 ) — (52,919 ) Interest expense (15 ) 70,346 37,710 — 108,041 Total expenses $ 2,307 $ 72,740 $ 4,867,054 $ — $ 4,942,101 Income (loss) before income tax and income (loss) from operating affiliates $ (2,130 ) $ (66,606 ) $ 188,222 $ 3,062 $ 122,548 Income (loss) from operating affiliates — — 34,068 — 34,068 Gain on sale of operating affiliate — — — — — Equity in net earnings (losses) of subsidiaries 67,177 172,894 — (240,071 ) — Provision (benefit) for income tax (620 ) — 25,382 — 24,762 Net income (loss) $ 65,667 $ 106,288 $ 196,908 $ (237,009 ) $ 131,854 Non-controlling interests — 39,111 27,076 — 66,187 Net income (loss) attributable to ordinary shareholders $ 65,667 $ 67,177 $ 169,832 $ (237,009 ) $ 65,667 Comprehensive income (loss) $ 787,638 $ 789,148 $ 891,803 $ (1,680,951 ) $ 787,638 Six Months Ended June 30, 2015 Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data) XL- Ireland XL-Cayman Other XL-Ireland Subsidiaries Consolidating Adjustments and Eliminations XL-Ireland Consolidated Revenues: Net premiums earned $ — $ — $ 3,416,053 $ — $ 3,416,053 Total net investment income 134 5,700 423,635 2,248 431,717 Total net realized gains (losses) on investments — 3,801 97,793 1,264 102,858 Net realized and unrealized gains (losses) on derivative instruments — 12,365 52,665 — 65,030 Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets — — 9,807 — 9,807 Income (loss) from investment fund affiliates — — 66,706 — 66,706 Fee income and other — — 15,740 — 15,740 Total revenues $ 134 $ 21,866 $ 4,082,399 $ 3,512 $ 4,107,911 Expenses: Net losses and loss expenses incurred $ — $ — $ 1,921,022 $ — $ 1,921,022 Claims and policy benefits — — 41,468 — 41,468 Acquisition costs — — 495,313 — 495,313 Operating expenses 5,716 5,442 821,852 — 833,010 Exchange (gains) losses (271 ) (18 ) 38,053 — 37,764 Interest expense 1 72,474 28,630 — 101,105 Total expenses $ 5,446 $ 77,898 $ 3,346,338 $ — $ 3,429,682 Income (loss) before income tax and income (loss) from operating affiliates $ (5,312 ) $ (56,032 ) $ 736,061 $ 3,512 $ 678,229 Income (loss) from operating affiliates — — 32,130 — 32,130 Gain on sale of operating affiliate — — 340,407 — 340,407 Equity in net earnings (losses) of subsidiaries 956,416 1,051,189 — (2,007,605 ) — Provision (benefit) for income tax (216 ) 245 57,148 — 57,177 Net income (loss) $ 951,320 $ 994,912 $ 1,051,450 $ (2,004,093 ) $ 993,589 Non-controlling interests — 38,496 3,773 — 42,269 Net income (loss) attributable to ordinary shareholders $ 951,320 $ 956,416 $ 1,047,677 $ (2,004,093 ) $ 951,320 Comprehensive income (loss) $ 543,036 $ 548,132 $ 639,393 $ (1,187,525 ) $ 543,036 Six Months Ended June 30, 2016 Condensed Consolidating Statement of Cash Flows (U.S. dollars in thousands) XL-Ireland XL-Cayman Other XL-Ireland Subsidiaries Consolidating Adjustments and Eliminations XL-Ireland Consolidated Cash flows provided by (used in) operating activities: Net cash provided by (used in) operating activities $ 665,895 $ 656,809 $ (500,387 ) $ (655,063 ) $ 167,254 Cash flows provided by (used in) investing activities: Proceeds from sale of fixed maturities and short-term investments $ — $ 231,600 $ 7,796,365 $ (578,010 ) $ 7,449,955 Proceeds from redemption of fixed maturities and short-term investments — 42,744 2,045,573 — 2,088,317 Proceeds from sale of equity securities — — 114,958 — 114,958 Purchases of fixed maturities and short-term investments — (515,794 ) (8,418,324 ) 578,010 (8,356,108 ) Purchases of equity securities — — (255,442 ) — (255,442 ) Proceeds from sale of affiliates — — 153,928 — 153,928 Purchases of affiliates — — (408,886 ) — (408,886 ) Purchase of Allied International Holdings, Inc., net of acquired cash — — (69,745 ) — (69,745 ) Returns of capital from subsidiaries 132,374 — — (132,374 ) — Change in restricted cash — — (26,866 ) — (26,866 ) Other, net — — 108,095 — 108,095 Net cash provided by (used in) investing activities $ 132,374 $ (241,450 ) $ 1,039,656 $ (132,374 ) $ 798,206 Cash flows provided by (used in) financing activities: Proceeds from issuance of ordinary shares and exercise of stock options $ 1,727 $ — $ — $ — $ 1,727 Buybacks of ordinary shares (684,386 ) — — — (684,386 ) Dividends paid on ordinary shares (113,731 ) (655,063 ) — 655,063 (113,731 ) Return of capital (132,374 ) — 132,374 — Distributions to non-controlling interests — (38,862 ) (26,820 ) — (65,682 ) Contributions from non-controlling interests — — 1,130 — 1,130 Proceeds from issuance of debt — — — — — Repayment of debt — — (8,248 ) — (8,248 ) Net proceeds from affiliated notional cash pooling programs (1) — 174,654 — (174,654 ) — Deposit liabilities — — (14,807 ) — (14,807 ) Net cash provided by (used in) financing activities $ (796,390 ) $ (651,645 ) $ (48,745 ) $ 612,783 $ (883,997 ) Effects of exchange rate changes on foreign currency cash — — (20,950 ) — (20,950 ) Increase (decrease) in cash and cash equivalents $ 1,879 $ (236,286 ) $ 469,574 $ (174,654 ) $ 60,513 Cash and cash equivalents – beginning of period 11,557 369,997 2,874,682 — 3,256,236 Cash and cash equivalents – end of period $ 13,436 $ 133,711 $ 3,344,256 $ (174,654 ) $ 3,316,749 ____________ (1) Net proceeds from affiliated notional cash pooling arrangements reflect the net impact of bank transfers to settle overdraft positions within the Company's multi-currency cash pool. Six Months Ended June 30, 2015 Condensed Consolidating Statement of Cash Flows (U.S. dollars in thousands) XL- Ireland XL-Cayman Other XL-Ireland Subsidiaries Consolidating Adjustments and Eliminations XL-Ireland Consolidated Cash flows provided by (used in) operating activities: Net cash provided by (used in) operating activities $ 80,185 $ 1,241,157 $ (1,175,887 ) $ (124,951 ) $ 20,504 Cash flows provided by (used in) investing activities: Proceeds from sale of fixed maturities and short-term investments $ — $ 1,407,859 $ 5,261,230 $ (316,963 ) $ 6,352,126 Proceeds from redemption of fixed maturities and short-term investments — 144,867 1,793,755 — 1,938,622 Proceeds from sale of equity securities — — 271,367 — 271,367 Purchases of fixed maturities and short-term investments — (1,132,590 ) (7,226,569 ) 316,963 (8,042,196 ) Purchases of equity securities — — (239,535 ) — (239,535 ) Proceeds from sale of affiliates — — 86,156 — 86,156 Purchases of affiliates — — (33,298 ) — (33,298 ) Purchase of Catlin Group Limited, net of acquired cash (2,287,579 ) (2,317,699 ) 1,267,564 2,317,699 (1,020,015 ) Proceeds from sale of subsidiary 2,317,699 — — (2,317,699 ) — Proceeds from sale of ARX Holding Corp. — — 560,552 — 560,552 Returns of capital from subsidiaries 65,037 — — (65,037 ) — Change in restricted cash — — (135,638 ) — (135,638 ) Other, net — — (87,516 ) — (87,516 ) Net cash provided by (used in) investing activities $ 95,157 $ (1,897,563 ) $ 1,518,068 $ (65,037 ) $ (349,375 ) Cash flows provided by (used in) financing activities: Proceeds from issuance of ordinary shares and exercise of stock options $ 4,827 $ — $ — $ — $ 4,827 Buybacks of ordinary shares (112,385 ) — — — (112,385 ) Dividends paid on ordinary shares (89,053 ) (124,951 ) — 124,951 (89,053 ) Return of capital — (65,037 ) — 65,037 — Distributions to non-controlling interests — (38,487 ) (14,969 ) — (53,456 ) Contributions from non-controlling interests — — 4,658 — 4,658 Proceeds from issuance of debt — 980,600 — — 980,600 Repayment of debt — — — — — Net proceeds from affiliated notional cash pooling programs (1) — (43,293 ) — 43,293 — Deposit liabilities — — (49,388 ) — (49,388 ) Net cash provided by (used in) financing activities $ (196,611 ) $ 708,832 $ (59,699 ) $ 233,281 $ 685,803 Effects of exchange rate changes on foreign currency cash — — (37,905 ) — (37,905 ) Increase (decrease) in cash and cash equivalents $ (21,269 ) $ 52,426 $ 244,577 $ 43,293 $ 319,027 Cash and cash equivalents – beginning of period 22,443 86,263 2,456,401 (43,293 ) 2,521,814 Cash and cash equivalents – end of period $ 1,174 $ 138,689 $ 2,700,978 $ — $ 2,840,841 |
