| Guarantor Financial Information | Guarantor Financial Information The following tables present condensed consolidating balance sheets at September 30, 2017 and December 31, 2016 , condensed consolidating statements of income and comprehensive income for the three and nine months ended September 30, 2017 and 2016 and condensed consolidating statements of cash flows for the nine months ended September 30, 2017 and 2016 for XL Group, XLIT, a 100% owned subsidiary of XL Group, and XL Group's other subsidiaries (excluding XL-Ireland), which are all 100% directly or indirectly owned subsidiaries of XLIT. For purposes of this disclosure, the results of XL-Ireland, which is currently in liquidation proceedings and whose assets are otherwise immaterial, at September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016 have been included within the results of XL Group. See Note 1, "Significant Accounting Policies ," for information regarding changes in the Company's organizational structure as a result of the Redomestication. For a discussion of debt instruments issued by XLIT, see Note 9, "Notes Payable and Debt and Financing Arrangements ." September 30, 2017 Condensed Consolidating Balance Sheet (U.S. dollars in thousands, except share data) XL-Group (1) XLIT Other XL Group Subsidiaries Consolidating Adjustments and Eliminations XL Group Consolidated ASSETS Investments: Total investments available for sale $ — $ 525,675 $ 32,497,830 $ — $ 33,023,505 Total investments trading — — 1,875,826 — 1,875,826 Investments in affiliates — — 2,100,378 — 2,100,378 Other investments — — 1,145,588 — 1,145,588 Total investments $ — $ 525,675 $ 37,619,622 $ — $ 38,145,297 Cash and cash equivalents 3,531 265,369 2,761,188 — 3,030,088 Restricted cash — — 159,627 — 159,627 Investments in subsidiaries (2) 9,905,108 13,351,408 — (23,256,516 ) — Accrued investment income 10 2,291 267,920 (10 ) 270,211 Deferred acquisition costs and value of business acquired — — 1,073,343 — 1,073,343 Ceded unearned premiums — — 2,311,619 — 2,311,619 Premiums receivable — — 7,078,700 — 7,078,700 Reinsurance balances receivable — — 1,079,821 — 1,079,821 Unpaid losses and loss expenses recoverable — — 6,962,787 — 6,962,787 Receivable from investments sold — — 195,837 — 195,837 Goodwill and other intangible assets — — 2,227,014 — 2,227,014 Deferred tax asset — — 301,322 — 301,322 Amounts due from subsidiaries/parent 39,908 — 67,755 (107,663 ) — Other assets 14,454 32,151 907,937 — 954,542 Total assets $ 9,963,011 $ 14,176,894 $ 63,014,492 $ (23,364,189 ) $ 63,790,208 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Unpaid losses and loss expenses $ — $ — $ 29,988,337 $ — $ 29,988,337 Deposit liabilities — — 1,030,290 — 1,030,290 Future policy benefit reserves — — 3,656,859 — 3,656,859 Funds withheld on GreyCastle life retrocession arrangements — — 920,571 — 920,571 Unearned premiums — — 8,344,536 — 8,344,536 Notes payable and debt — 3,210,063 — — 3,210,063 Reinsurance balances payable — — 3,706,120 — 3,706,120 Payable for investments purchased — 1,252 272,197 — 273,449 Deferred tax liability — — 107,157 — 107,157 Amounts due to subsidiaries/parent — 67,765 39,898 (107,663 ) — Other liabilities 23,164 35,785 965,367 — 1,024,316 Total liabilities $ 23,164 $ 3,314,865 $ 49,031,332 $ (107,663 ) $ 52,261,698 Shareholders' Equity: Shareholders' equity attributable to XL Group Ltd $ 9,939,847 $ 9,904,608 $ 13,351,408 $ (23,256,016 ) $ 9,939,847 Non-controlling interest in equity of consolidated subsidiaries — 957,421 631,752 (510 ) 1,588,663 Total shareholders' equity $ 9,939,847 $ 10,862,029 $ 13,983,160 $ (23,256,526 ) $ 11,528,510 Total liabilities and shareholders' equity $ 9,963,011 $ 14,176,894 $ 63,014,492 $ (23,364,189 ) $ 63,790,208 ____________ (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, "Significant Accounting Policies ." The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation. (2) XL Group balance includes investment in $0.5 million of XLIT Series E Non-Cumulative Preference Ordinary Shares. December 31, 2016 Condensed Consolidating Balance Sheet (U.S. dollars in thousands, except share data) XL Group (1) XLIT Other XL Group Subsidiaries Consolidating Adjustments and Eliminations XL Group Consolidated ASSETS Investments: Total investments available for sale $ — $ 638,236 $ 31,280,890 $ — $ 31,919,126 Total investments trading — — 1,626,577 — 1,626,577 Investments in affiliates — — 2,177,645 — 2,177,645 Other investments — 9 1,164,555 — 1,164,564 Total investments $ — $ 638,245 $ 36,249,667 $ — $ 36,887,912 Cash and cash equivalents 1,022 84,286 3,341,680 — 3,426,988 Restricted cash — — 153,504 — 153,504 Investments in subsidiaries 10,897,195 14,238,698 — (25,135,893 ) — Accrued investment income 55 2,981 281,385 (55 ) 284,366 Deferred acquisition costs and value of business acquired — — 946,721 — 946,721 Ceded unearned premiums — — 1,687,864 — 1,687,864 Premiums receivable — — 5,522,976 — 5,522,976 Reinsurance balances receivable — — 577,479 — 577,479 Unpaid losses and loss expenses recoverable — — 5,491,297 — 5,491,297 Receivable from investments sold — — 128,411 — 128,411 Goodwill and other intangible assets — — 2,203,653 — 2,203,653 Deferred tax asset — — 310,542 — 310,542 Amounts due from subsidiaries/parent 42,780 — 72,962 (115,742 ) — Other assets 15,188 40,108 757,093 — 812,389 Total assets $ 10,956,240 $ 15,004,318 $ 57,725,234 $ (25,251,690 ) $ 58,434,102 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Unpaid losses and loss expenses $ — $ — $ 25,939,571 $ — $ 25,939,571 Deposit liabilities — — 1,116,233 — 1,116,233 Future policy benefit reserves — — 3,506,047 — 3,506,047 Funds withheld on GreyCastle life retrocession arrangements — — 998,968 — 998,968 Unearned premiums — — 7,293,028 — 7,293,028 Notes payable and debt — 2,647,677 — — 2,647,677 Reinsurance balances payable — — 2,451,717 — 2,451,717 Payable for investments purchased — — 226,009 — 226,009 Deferred tax liability — — 77,271 — 77,271 Amounts due to subsidiaries/parent — 72,962 42,780 (115,742 ) — Other liabilities 17,728 41,984 1,157,190 — 1,216,902 Total liabilities $ 17,728 $ 2,762,623 $ 42,808,814 $ (115,742 ) $ 45,473,423 Shareholders' Equity: Shareholders' equity attributable to XL Group Ltd $ 10,938,512 $ 10,897,195 $ 14,238,698 $ (25,135,893 ) $ 10,938,512 Non-controlling interest in equity of consolidated subsidiaries — 1,344,500 677,722 (55 ) 2,022,167 Total shareholders' equity $ 10,938,512 $ 12,241,695 $ 14,916,420 $ (25,135,948 ) $ 12,960,679 Total liabilities and shareholders' equity $ 10,956,240 $ 15,004,318 $ 57,725,234 $ (25,251,690 ) $ 58,434,102 ____________ (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, "Significant Accounting Policies ." The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation. Three Months Ended September 30, 2017 Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data) XL Group (1) XLIT Other XL Group Subsidiaries Consolidating Adjustments and Eliminations XL Group Consolidated Revenues: Net premiums earned $ — $ — $ 2,620,902 $ — $ 2,620,902 Total net investment income 58 2,394 200,872 (545 ) 202,779 Total net realized gains (losses) on investments (213 ) 25 43,249 213 43,274 Net realized and unrealized gains (losses) on derivative instruments — — (20,434 ) — (20,434 ) Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets — — (31,662 ) — (31,662 ) Income (loss) from investment affiliates — — 57,656 — 57,656 Fee income and other — — 11,469 — 11,469 Total revenues $ (155 ) $ 2,419 $ 2,882,052 $ (332 ) $ 2,883,984 Expenses: Net losses and loss expenses incurred $ — $ — $ 3,066,723 $ — $ 3,066,723 Claims and policy benefits — — 10,592 — 10,592 Acquisition costs — — 445,685 — 445,685 Operating expenses 407 724 408,225 — 409,356 Foreign exchange (gains) losses 738 7,020 47,259 — 55,017 Extinguishment of debt — 1,582 — — 1,582 Interest expense — 39,897 (5,978 ) — 33,919 Total expenses $ 1,145 $ 49,223 $ 3,972,506 $ — $ 4,022,874 Income (loss) before income tax and income (loss) from operating affiliates $ (1,300 ) $ (46,804 ) $ (1,090,454 ) $ (332 ) $ (1,138,890 ) Income (loss) from operating affiliates — — 4,872 — 4,872 Equity in net earnings (losses) of subsidiaries (1,042,389 ) (1,001,592 ) — 2,043,981 — Provision (benefit) for income tax — — (60,132 ) — (60,132 ) Net income (loss) $ (1,043,689 ) $ (1,048,396 ) $ (1,025,450 ) $ 2,043,649 $ (1,073,886 ) Non-controlling interests — (6,007 ) (23,858 ) (332 ) (30,197 ) Net income (loss) attributable to common shareholders $ (1,043,689 ) $ (1,042,389 ) $ (1,001,592 ) $ 2,043,981 $ (1,043,689 ) Comprehensive income (loss) $ (995,926 ) $ (994,626 ) $ (953,829 ) $ 1,915,721 $ (995,926 ) ____________ (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, "Significant Accounting Policies ." The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation. Three Months Ended September 30, 2016 Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data) XL Group (1) XLIT Other XL Group Subsidiaries Consolidating Adjustments and Eliminations XL Group 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 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 Foreign exchange (gains) losses (180 ) 32 (1,547 ) — (1,695 ) (Gain) Loss 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 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, "Significant Accounting Policies ." The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation. Nine Months Ended September 30, 2017 Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data) XL Group (1) XLIT Other XL Group Subsidiaries Consolidating Adjustments and Eliminations XL Group Consolidated Revenues: Net premiums earned $ — $ — $ 7,660,610 $ — $ 7,660,610 Total net investment income 152 6,810 605,637 (614 ) 611,985 Total net realized gains (losses) on investments (213 ) 694 136,494 213 137,188 Net realized and unrealized gains (losses) on derivative instruments — — (28,409 ) — (28,409 ) Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets — — (116,359 ) — (116,359 ) Income (loss) from investment affiliates — — 126,735 — 126,735 Fee income and other — — 35,355 — 35,355 Total revenues $ (61 ) $ 7,504 $ 8,420,063 $ (401 ) $ 8,427,105 Expenses: Net losses and loss expenses incurred $ — $ — $ 6,179,262 $ — $ 6,179,262 Claims and policy benefits — — 25,478 — 25,478 Acquisition costs — — 1,315,138 — 1,315,138 Operating expenses 43,976 2,384 1,303,812 — 1,350,172 Foreign exchange (gains) losses 1,850 7,046 37,142 — 46,038 Extinguishment of debt — 1,582 — — 1,582 Interest expense — 110,321 28,327 — 138,648 Total expenses $ 45,826 $ 121,333 $ 8,889,159 $ — $ 9,056,318 Income (loss) before income tax and income (loss) from operating affiliates $ (45,887 ) $ (113,829 ) $ (469,096 ) $ (401 ) $ (629,213 ) Income (loss) from operating affiliates — — 61,185 — 61,185 Equity in net earnings (losses) of subsidiaries (543,339 ) (399,228 ) — 942,567 — Provision (benefit) for income tax — — (18,034 ) — (18,034 ) Net income (loss) $ (589,226 ) $ (513,057 ) $ (389,877 ) $ 942,166 $ (549,994 ) Non-controlling interests — 30,282 9,351 (401 ) 39,232 Net income (loss) attributable to common shareholders $ (589,226 ) $ (543,339 ) $ (399,228 ) $ 942,567 $ (589,226 ) Comprehensive income (loss) $ (335,844 ) $ (289,957 ) $ (145,846 ) $ 435,803 $ (335,844 ) ____________ (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, "Significant Accounting Policies ." The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation. Nine Months Ended September 30, 2016 Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data) XL Group (1) XLIT Other XL Group Subsidiaries Consolidating Adjustments and Eliminations XL Group 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 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 Foreign exchange (gains) losses (633 ) (140 ) (53,841 ) — (54,614 ) (Gain) Loss 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 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, "Significant Accounting Policies ." The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation. Nine Months Ended September 30, 2017 Condensed Consolidating Statement of Cash Flows (U.S. dollars in thousands) XL Group (1) XLIT Other XL Group Subsidiaries Consolidating Adjustments and Eliminations XL Group Consolidated Cash flows provided by (used in) operating activities: Net cash provided by (used in) operating activities $ 284,889 $ 651,559 $ 293,840 $ (1,046,474 ) $ 183,814 Cash flows provided by (used in) investing activities: Proceeds from sale of fixed maturities and short-term investments $ — $ 164,364 $ 11,190,012 $ — $ 11,354,376 Proceeds from redemption of fixed maturities and short-term investments — 122,743 2,671,772 — 2,794,515 Proceeds from sale of equity securities 4,788 45,680 456,212 (49,791 ) 456,889 Purchases of fixed maturities and short-term investments — (175,067 ) (14,281,279 ) — (14,456,346 ) Purchases of equity securities — (45,582 ) (314,752 ) 45,582 (314,752 ) Proceeds from sale of affiliates — — 375,628 — 375,628 Purchases of affiliates — — (119,835 ) — (119,835 ) Returns of capital from subsidiaries 406,683 — — (406,683 ) — Change in restricted cash — — (6,123 ) — (6,123 ) Other, net — — (37,147 ) — (37,147 ) Net cash provided by (used in) investing activities $ 411,471 $ 112,138 $ (65,512 ) $ (410,892 ) $ 47,205 Cash flows provided by (used in) financing activities: Proceeds from issuance of common shares and exercise of stock options $ 49,640 $ — $ — $ — $ 49,640 Buybacks of common shares (571,586 ) — — — (571,586 ) Repurchase of preference shares — (370,698 ) (45,003 ) 4,209 (411,492 ) Employee withholding on share-based compensation — — (24,156 ) — (24,156 ) Dividends paid on common shares (171,905 ) (295,987 ) (750,000 ) 1,045,987 (171,905 ) Return of capital — (406,683 ) — 406,683 — Distributions to non-controlling interests — (49,648 ) (60,052 ) 487 (109,213 ) Contributions from non-controlling interests — — 49,474 — 49,474 Proceeds from issuance of debt — 558,311 — — 558,311 Repayment of debt — (17,909 ) — (17,909 ) Deposit liabilities — — (34,407 ) — (34,407 ) Net cash provided by (used in) financing activities $ (693,851 ) $ (582,614 ) $ (864,144 ) $ 1,457,366 $ (683,243 ) Effects of exchange rate changes on foreign currency cash — — 55,324 — 55,324 Increase (decrease) in cash and cash equivalents $ 2,509 $ 181,083 $ (580,492 ) $ — $ (396,900 ) Cash and cash equivalents – beginning of period 1,022 84,286 3,341,680 — 3,426,988 Cash and cash equivalents – end of period $ 3,531 $ 265,369 $ 2,761,188 $ — $ 3,030,088 ____________ (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, "Significant Accounting Policies ." The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation. Nine Months Ended September 30, 2016 Condensed Consolidating Statement of Cash Flows (U.S. dollars in thousands) XL Group (1) XLIT Other XL Group Subsidiaries Consolidating Adjustments and Eliminations XL Group Consolidated Cash flows provided by (used in) operating activities: Net cash provided by (used in) operating activities $ 921,608 $ 230,877 $ 1,841,145 $ (2,315,848 ) $ 677,782 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 ) Employee withholding on share-based compensation — — (28,171 ) — (28,171 ) 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 ) $ (2,225,783 ) $ 2,930,509 $ (1,256,731 ) 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, "Significant Accounting Policies ." The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation. |
