| Guarantor Financial Information | Guarantor Financial Information The following tables present condensed consolidating balance sheets as of September 30, 2016 and December 31, 2015 , condensed consolidating statements of income and comprehensive income for the three and nine months ended September 30, 2016 and 2015 and condensed consolidating statements of cash flows for the nine months ended September 30, 2016 and 2015 for XL-Bermuda, XL-Cayman, a 100% owned subsidiary of XL-Bermuda, and XL-Bermuda's other subsidiaries (excluding XL-Ireland), which are all 100% directly or indirectly owned subsidiaries of XL-Cayman. For purposes of this disclosure, the 2016 results of XL-Ireland, which is currently in liquidation proceedings and whose assets are otherwise immaterial, have been included within the results of XL-Bermuda. See Note 1, "Basis of Preparation and Consolidation " for 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 ." September 30, 2016 Condensed Consolidating Balance Sheet (U.S. dollars in thousands, except share data) XL- Bermuda (1) XL-Cayman Other XL-Bermuda Subsidiaries Consolidating Adjustments and Eliminations XL-Bermuda Consolidated ASSETS Investments: Total investments available for sale $ — $ 676,964 $ 32,948,108 $ — $ 33,625,072 Total investments trading — — 1,633,051 — 1,633,051 Investments in affiliates — — 2,118,489 — 2,118,489 Other investments — 897 1,260,041 — 1,260,938 Total investments $ — $ 677,861 $ 37,959,689 $ — $ 38,637,550 Cash and cash equivalents 12,875 14,495 3,365,907 — 3,393,277 Restricted cash — — 150,118 — 150,118 Investments in subsidiaries 11,791,273 14,923,541 — (26,714,814 ) — Accrued investment income 65 3,350 282,154 (65 ) 285,504 Deferred acquisition costs and value of business acquired — — 989,733 — 989,733 Ceded unearned premiums — — 1,917,127 — 1,917,127 Premiums receivable — — 5,925,969 — 5,925,969 Reinsurance balances receivable — — 524,343 — 524,343 Unpaid losses and loss expenses recoverable — — 5,481,882 — 5,481,882 Receivable from investments sold — — 105,781 — 105,781 Goodwill and other intangible assets — — 2,234,071 — 2,234,071 Deferred tax asset — — 219,905 — 219,905 Amounts due from subsidiaries/parent — 196,014 173,821 (369,835 ) — Other assets 2,294 40,938 863,558 — 906,790 Total assets $ 11,806,507 $ 15,856,199 $ 60,194,058 $ (27,084,714 ) $ 60,772,050 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Unpaid losses and loss expenses $ — $ — $ 26,170,383 $ — $ 26,170,383 Deposit liabilities — — 1,138,789 — 1,138,789 Future policy benefit reserves — — 3,721,451 — 3,721,451 Funds withheld on GreyCastle life retrocession arrangements — — 1,283,055 — 1,283,055 Unearned premiums — — 7,724,957 — 7,724,957 Notes payable and debt — 2,647,000 — — 2,647,000 Reinsurance balances payable — — 2,698,185 — 2,698,185 Payable for investments purchased — — 370,456 — 370,456 Deferred tax liability — — 108,996 — 108,996 Amounts due to subsidiaries/parent 173,821 — 196,014 (369,835 ) — Other liabilities 20,520 73,426 1,221,952 — 1,315,898 Total liabilities $ 194,341 $ 2,720,426 $ 44,634,238 $ (369,835 ) $ 47,179,170 Shareholders’ Equity: Shareholders’ equity attributable to XL Group Ltd $ 11,612,166 $ 11,791,273 $ 14,923,541 $ (26,714,814 ) $ 11,612,166 Non-controlling interest in equity of consolidated subsidiaries — 1,344,500 636,279 (65 ) 1,980,714 Total shareholders’ equity $ 11,612,166 $ 13,135,773 $ 15,559,820 $ (26,714,879 ) $ 13,592,880 Total liabilities and shareholders’ equity $ 11,806,507 $ 15,856,199 $ 60,194,058 $ (27,084,714 ) $ 60,772,050 ____________ (1) Results for the period include XL-Ireland, which prior to the Redomestication was the ultimate parent and is now in liquidation proceedings as outlined in Note 1, "Basis of Preparation and Consolidation ." The Company expects the net assets of XL-Ireland to ultimately be distributed to XL-Bermuda upon completion of the liquidation. 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 September 30, 2016 Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data) XL- Bermuda (1) XL-Cayman Other XL-Bermuda Subsidiaries Consolidating Adjustments and Eliminations XL-Bermuda Consolidated Revenues: Net premiums earned $ — $ — $ 2,434,037 $ — $ 2,434,037 Total net investment income 75 2,463 206,323 910 209,771 Total net realized gains (losses) on investments — 370 143,257 49 143,676 Net realized and unrealized gains (losses) on derivative instruments — — 5,490 — 5,490 Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets — — (225,610 ) — (225,610 ) Income (loss) from investment fund affiliates — — 12,156 — 12,156 Fee income and other — — 8,600 — 8,600 Total revenues $ 75 $ 2,833 $ 2,584,253 $ 959 $ 2,588,120 Expenses: Net losses and loss expenses incurred $ — $ — $ 1,491,803 $ — $ 1,491,803 Claims and policy benefits — — 5,875 — 5,875 Acquisition costs — — 403,888 — 403,888 Operating expenses 19,979 5,625 482,854 — 508,458 Exchange (gains) losses (180 ) 32 (1,547 ) — (1,695 ) Loss (Gain) on sale of subsidiary — — (3,670 ) — (3,670 ) Interest expense 10 35,320 14,115 — 49,445 Total expenses $ 19,809 $ 40,977 $ 2,393,318 $ — $ 2,454,104 Income (loss) before income tax and income (loss) from operating affiliates $ (19,734 ) $ (38,144 ) $ 190,935 $ 959 $ 134,016 Income (loss) from operating affiliates — — 12,410 — 12,410 Gain on sale of operating affiliate — — — — — Equity in net earnings (losses) of subsidiaries 90,335 164,390 — (254,725 ) — Provision (benefit) for income tax — — 17,749 — 17,749 Net income (loss) $ 70,601 $ 126,246 $ 185,596 $ (253,766 ) $ 128,677 Non-controlling interests — 35,911 22,240 (75 ) 58,076 Net income (loss) attributable to common shareholders $ 70,601 $ 90,335 $ 163,356 $ (253,691 ) $ 70,601 Comprehensive income (loss) $ 181,819 $ 201,553 $ 274,574 $ (476,127 ) $ 181,819 ____________ (1) Results for the period include XL-Ireland, which prior to the Redomestication was the ultimate parent and is now in liquidation proceedings as outlined in Note 1, "Basis of Preparation and Consolidation ." The Company expects the net assets of XL-Ireland to ultimately be distributed to XL-Bermuda upon completion of the liquidation. Three Months Ended September 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 $ — $ — $ 2,423,552 $ — $ 2,423,552 Total net investment income 20 2,522 222,006 598 225,146 Total net realized gains (losses) on investments — 10,291 51,115 (9,999 ) 51,407 Net realized and unrealized gains (losses) on derivative instruments — — (7,903 ) — (7,903 ) Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets — — (126,140 ) — (126,140 ) Income (loss) from investment fund affiliates — — (3,715 ) — (3,715 ) Fee income and other — — 7,355 — 7,355 Total revenues $ 20 $ 12,813 $ 2,566,270 $ (9,401 ) $ 2,569,702 Expenses: Net losses and loss expenses incurred $ — $ — $ 1,464,285 $ — $ 1,464,285 Claims and policy benefits — — 22,579 — 22,579 Acquisition costs — — 409,173 — 409,173 Operating expenses 34,514 2,289 533,339 — 570,142 Exchange (gains) losses (16 ) 135 11,542 — 11,661 Interest expense 9 35,623 16,297 — 51,929 Total expenses $ 34,507 $ 38,047 $ 2,457,215 $ — $ 2,529,769 Income (loss) before income tax and income (loss) from operating affiliates $ (34,487 ) $ (25,234 ) $ 109,055 $ (9,401 ) $ 39,933 Income (loss) from operating affiliates — — 8,196 — 8,196 Gain on sale of operating affiliate — — — — — Equity in net earnings (losses) of subsidiaries 61,769 122,593 — (184,362 ) — Provision (benefit) for income tax — — (37,042 ) — (37,042 ) Net income (loss) $ 27,282 $ 97,359 $ 154,293 $ (193,763 ) $ 85,171 Non-controlling interests — 35,590 22,319 (20 ) 57,889 Net income (loss) attributable to common shareholders $ 27,282 $ 61,769 $ 131,974 $ (193,743 ) $ 27,282 Comprehensive income (loss) $ (93,810 ) $ (59,323 ) $ 10,882 $ 48,441 $ (93,810 ) Nine Months Ended September 30, 2016 Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data) XL- Bermuda (1) XL-Cayman Other XL-Bermuda Subsidiaries Consolidating Adjustments and Eliminations XL-Bermuda Consolidated Revenues: Net premiums earned $ — $ — $ 7,320,859 $ — $ 7,320,859 Total net investment income 251 7,344 621,554 1,896 631,045 Total net realized gains (losses) on investments — 1,623 337,471 1,949 341,043 Net realized and unrealized gains (losses) on derivative instruments — — 2,774 — 2,774 Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets — — (691,432 ) — (691,432 ) Income (loss) from investment fund affiliates — — 20,756 — 20,756 Fee income and other — — 27,724 — 27,724 Total revenues $ 251 $ 8,967 $ 7,639,706 $ 3,845 $ 7,652,769 Expenses: Net losses and loss expenses incurred $ — $ — $ 4,506,674 $ — $ 4,506,674 Claims and policy benefits — — 16,294 — 16,294 Acquisition costs — — 1,227,675 — 1,227,675 Operating expenses 22,753 8,191 1,515,416 — 1,546,360 Exchange (gains) losses (633 ) (140 ) (53,841 ) — (54,614 ) Loss (Gain) on sale of subsidiary — — (3,670 ) — (3,670 ) Interest expense (5 ) 105,666 51,825 — 157,486 Total expenses $ 22,115 $ 113,717 $ 7,260,373 $ — $ 7,396,205 Income (loss) before income tax and income (loss) from operating affiliates $ (21,864 ) $ (104,750 ) $ 379,333 $ 3,845 $ 256,564 Income (loss) from operating affiliates — — 46,478 — 46,478 Gain on sale of operating affiliate — — — — — Equity in net earnings (losses) of subsidiaries 157,512 337,284 — (494,796 ) — Provision (benefit) for income tax (620 ) — 43,131 — 42,511 Net income (loss) $ 136,268 $ 232,534 $ 382,680 $ (490,951 ) $ 260,531 Non-controlling interests — 75,022 49,492 (251 ) 124,263 Net income (loss) attributable to common shareholders $ 136,268 $ 157,512 $ 333,188 $ (490,700 ) $ 136,268 Comprehensive income (loss) $ 969,457 $ 990,701 $ 1,166,377 $ (2,157,078 ) $ 969,457 ____________ (1) Results for the period include XL-Ireland, which prior to the Redomestication was the ultimate parent and is now in liquidation proceedings as outlined in Note 1, "Basis of Preparation and Consolidation ." The Company expects the net assets of XL-Ireland to ultimately be distributed to XL-Bermuda upon completion of the liquidation. Nine Months Ended September 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 $ — $ — $ 5,839,605 $ — $ 5,839,605 Total net investment income 154 8,222 645,776 2,711 656,863 Total net realized gains (losses) on investments — 14,092 148,908 (8,735 ) 154,265 Net realized and unrealized gains (losses) on derivative instruments — 12,365 44,762 — 57,127 Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets — — (116,333 ) — (116,333 ) Income (loss) from investment fund affiliates — — 62,991 — 62,991 Fee income and other — — 23,095 — 23,095 Total revenues $ 154 $ 34,679 $ 6,648,804 $ (6,024 ) $ 6,677,613 Expenses: Net losses and loss expenses incurred $ — $ — $ 3,385,307 $ — $ 3,385,307 Claims and policy benefits — — 64,047 — 64,047 Acquisition costs — — 904,486 — 904,486 Operating expenses 40,230 7,731 1,355,191 — 1,403,152 Exchange (gains) losses (287 ) 117 49,595 — 49,425 Interest expense 11 108,097 44,926 — 153,034 Total expenses $ 39,954 $ 115,945 $ 5,803,552 $ — $ 5,959,451 Income (loss) before income tax and income (loss) from operating affiliates $ (39,800 ) $ (81,266 ) $ 845,252 $ (6,024 ) $ 718,162 Income (loss) from operating affiliates — — 40,326 — 40,326 Gain on sale of operating affiliate — — 340,407 — 340,407 Equity in net earnings (losses) of subsidiaries 1,018,186 1,173,783 — (2,191,969 ) — Provision (benefit) for income tax (216 ) 245 20,106 — 20,135 Net income (loss) $ 978,602 $ 1,092,272 $ 1,205,879 $ (2,197,993 ) $ 1,078,760 Non-controlling interests — 74,086 26,226 (154 ) 100,158 Net income (loss) attributable to common shareholders $ 978,602 $ 1,018,186 $ 1,179,653 $ (2,197,839 ) $ 978,602 Comprehensive income (loss) $ 449,226 $ 488,810 $ 650,277 $ (1,139,087 ) $ 449,226 Nine Months Ended September 30, 2016 Condensed Consolidating Statement of Cash Flows (U.S. dollars in thousands) XL- Bermuda (1) XL-Cayman Other XL-Bermuda Subsidiaries Consolidating Adjustments and Eliminations XL-Bermuda Consolidated Cash flows provided by (used in) operating activities: Net cash provided by (used in) operating activities $ 921,608 $ 230,877 $ 1,812,974 $ (2,315,848 ) $ 649,611 Cash flows provided by (used in) investing activities: Proceeds from sale of fixed maturities and short-term investments $ — $ 300,452 $ 9,864,257 $ (583,466 ) $ 9,581,243 Proceeds from redemption of fixed maturities and short-term investments — 65,881 2,944,277 — 3,010,158 Proceeds from sale of equity securities — — 411,330 — 411,330 Purchases of fixed maturities and short-term investments — (526,206 ) (11,614,305 ) 583,466 (11,557,045 ) Purchases of equity securities — — (611,086 ) — (611,086 ) Proceeds from sale of affiliates — — 325,050 — 325,050 Purchases of affiliates — — (556,548 ) — (556,548 ) Purchase of subsidiaries, net of acquired cash — — (92,893 ) — (92,893 ) Proceeds from sale of subsidiary, net of cash sold — — 19,144 — 19,144 Returns of capital from subsidiaries 149,458 465,203 — (614,661 ) — Change in restricted cash — — 4,874 — 4,874 Other, net — — 193,392 — 193,392 Net cash provided by (used in) investing activities $ 149,458 $ 305,330 $ 887,492 $ (614,661 ) $ 727,619 Cash flows provided by (used in) financing activities: Proceeds from issuance of common shares and exercise of stock options $ 5,735 $ — $ — $ — $ 5,735 Buybacks of common shares (906,137 ) — — — (906,137 ) Dividends paid on common shares (169,346 ) (700,063 ) (1,615,785 ) 2,315,848 (169,346 ) Return of capital — (149,458 ) (465,203 ) 614,661 — Distributions to non-controlling interests — (42,188 ) (51,282 ) — (93,470 ) Contributions from non-controlling interests — — 6,394 — 6,394 Repayment of debt — — (8,248 ) — (8,248 ) Deposit liabilities — — (63,488 ) — (63,488 ) Net cash provided by (used in) financing activities $ (1,069,748 ) $ (891,709 ) $ (2,197,612 ) $ 2,930,509 $ (1,228,560 ) Effects of exchange rate changes on foreign currency cash — — (11,629 ) — (11,629 ) Increase (decrease) in cash and cash equivalents $ 1,318 $ (355,502 ) $ 491,225 $ — $ 137,041 Cash and cash equivalents – beginning of period 11,557 369,997 2,874,682 — 3,256,236 Cash and cash equivalents – end of period $ 12,875 $ 14,495 $ 3,365,907 $ — $ 3,393,277 ____________ (1) Results for the period include XL-Ireland, which prior to the Redomestication was the ultimate parent and is now in liquidation proceedings as outlined in Note 1, "Basis of Preparation and Consolidation ." The Company expects the net assets of XL-Ireland to ultimately be distributed to XL-Bermuda upon completion of the liquidation. Nine Months Ended September 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 $ 319,352 $ 1,422,263 $ (959,067 ) $ (273,048 ) $ 509,500 Cash flows provided by (used in) investing activities: Proceeds from sale of fixed maturities and short-term investments $ — $ 1,461,428 $ 9,467,177 $ (359,897 ) $ 10,568,708 Proceeds from redemption of fixed maturities and short-term investments — 161,989 2,625,881 — 2,787,870 Proceeds from sale of equity securities — — 443,941 — 443,941 Purchases of fixed maturities and short-term investments — (1,174,294 ) (11,906,540 ) 359,897 (12,720,937 ) Purchases of equity securities — — (436,622 ) — (436,622 ) Proceeds from sale of affiliates — — 724,382 — 724,382 Purchases of affiliates — — (94,745 ) — (94,745 ) Purchase of subsidiaries, net of acquired cash (2,287,579 ) (2,317,699 ) 1,267,564 2,317,699 (1,020,015 ) Proceeds from sale of subsidiary, net of cash sold 2,317,699 — — (2,317,699 ) — Returns of capital from subsidiaries 65,037 — — (65,037 ) — Change in restricted cash — — (147,810 ) — (147,810 ) Other, net — — (138,168 ) — (138,168 ) Net cash provided by (used in) investing activities $ 95,157 $ (1,868,576 ) $ 1,805,060 $ (65,037 ) $ (33,396 ) Cash flows provided by (used in) financing activities: Proceeds from issuance of common shares and exercise of stock options $ 7,904 $ — $ — $ — $ 7,904 Buybacks of common shares (292,269 ) — — — (292,269 ) Dividends paid on common shares (149,030 ) (273,048 ) — 273,048 (149,030 ) Return of capital — (65,037 ) — 65,037 — Distributions to non-controlling interests — (41,490 ) (39,151 ) — (80,641 ) Contributions from non-controlling interests — — 10,292 — 10,292 Proceeds from issuance of debt — 980,600 — — 980,600 Net proceeds from affiliated notional cash pooling programs (1) — (43,293 ) — 43,293 — Deposit liabilities — — (79,944 ) — (79,944 ) Net cash provided by (used in) financing activities $ (433,395 ) $ 557,732 $ (108,803 ) $ 381,378 $ 396,912 Effects of exchange rate changes on foreign currency cash — — (54,760 ) — (54,760 ) Increase (decrease) in cash and cash equivalents $ (18,886 ) $ 111,419 $ 682,430 $ 43,293 $ 818,256 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 $ 3,557 $ 197,682 $ 3,138,831 $ — $ 3,340,070 ____________ (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. |
