Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 01, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ARCH CAPITAL GROUP LTD. | |
Entity Central Index Key | 947,484 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 123,069,706 |
Unaudited Consolidated Balance
Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Investments: | ||
Fixed maturities available for sale, at fair value (amortized cost: $13,767,375 and $13,522,671) | $ 13,745,932 | $ 13,426,577 |
Short-term investments available for sale, at fair value (amortized cost: $803,624 and $611,878) | 803,619 | 612,005 |
Collateral received under securities lending, at fair value (amortized cost: $538,353 and $762,554) | 538,361 | 762,565 |
Equity securities available for sale, at fair value (cost: $369,189 and $475,085) | 428,594 | 518,041 |
Other investments available for sale, at fair value (cost: $197,431 and $149,077) | 228,437 | 167,970 |
Investments accounted for using the fair value option | 3,648,120 | 3,421,220 |
Investments accounted for using the equity method | 861,607 | 811,273 |
Total investments | 20,254,670 | 19,719,651 |
Cash | 703,754 | 842,942 |
Accrued investment income | 104,168 | 124,483 |
Securities pledged under securities lending, at fair value (amortized cost: $524,758 and $746,409) | 525,569 | 744,980 |
Premiums receivable | 1,254,048 | 1,072,435 |
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 2,133,148 | 2,114,138 |
Contractholder receivables | 1,766,340 | 1,717,436 |
Ceded unearned premiums | 941,923 | 859,567 |
Deferred acquisition costs | 487,925 | 447,560 |
Receivable for securities sold | 239,678 | 58,284 |
Goodwill and intangible assets | 750,315 | 781,553 |
Other assets | 930,688 | 889,080 |
Total assets | 30,092,226 | 29,372,109 |
Liabilities | ||
Reserve for losses and loss adjustment expenses | 10,296,821 | 10,200,960 |
Unearned premiums | 3,631,259 | 3,406,870 |
Reinsurance balances payable | 321,285 | 300,407 |
Contractholder payables | 1,766,340 | 1,717,436 |
Collateral held for insured obligations | 327,161 | 301,406 |
Senior notes | 1,732,410 | 1,732,258 |
Revolving credit agreement borrowings | 734,961 | 756,650 |
Securities lending payable | 538,353 | 762,554 |
Payable for securities purchased | 389,649 | 76,183 |
Other liabilities | 674,313 | 806,260 |
Total liabilities | 20,412,552 | 20,060,984 |
Commitments and Contingencies | ||
Redeemable noncontrolling interests | 205,644 | 205,553 |
Shareholders' Equity | ||
Non-cumulative preferred shares | 772,555 | 772,555 |
Convertible non-voting common equivalent preferred shares | 1,101,304 | 1,101,304 |
Common shares ($0.0033 par, shares issued: 174,935,104 and 174,644,101) | 583 | 582 |
Additional paid-in capital | 548,053 | 531,687 |
Retained earnings | 8,238,296 | 7,996,701 |
Accumulated other comprehensive income (loss), net of deferred income tax | (15,677) | (114,541) |
Common shares held in treasury, at cost (shares: 51,907,618 and 51,856,584) | (2,039,270) | (2,034,570) |
Total shareholders' equity available to Arch | 8,605,844 | 8,253,718 |
Non-redeemable noncontrolling interests | 868,186 | 851,854 |
Total shareholders' equity | 9,474,030 | 9,105,572 |
Total liabilities, noncontrolling interests and shareholders' equity | $ 30,092,226 | $ 29,372,109 |
Unaudited Consolidated Balance3
Unaudited Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Fixed maturities available for sale, at amortized cost | $ 13,767,375 | $ 13,522,671 |
Short-term investments available for sale, at amortized cost | 803,624 | 611,878 |
Collateral received under securities lending, at amortized cost | 538,353 | 762,554 |
Equity securities available for sale, at cost | 369,189 | 475,085 |
Other investments available for sale, at cost | 197,431 | 149,077 |
Securities pledged under securities lending, at amortized cost | $ 524,758 | $ 746,409 |
Common shares, par value per share | $ 0.0033 | $ 0.0033 |
Common shares issued (shares) | 174,935,104 | 174,644,101 |
Common shares held in treasury (shares) | 51,907,618 | 51,856,584 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues | ||
Net premiums written | $ 1,276,260 | $ 1,121,235 |
Change in unearned premiums | (159,243) | (169,656) |
Net premiums earned | 1,117,017 | 951,579 |
Net investment income | 117,874 | 93,735 |
Net realized gains (losses) | 34,153 | 37,324 |
Other-than-temporary impairment losses | (1,807) | (7,737) |
Less investment impairments recognized in other comprehensive income, before taxes | 0 | 98 |
Net impairment losses recognized in earnings | (1,807) | (7,639) |
Other underwriting income | 4,633 | 5,047 |
Equity in net income (loss) of investment funds accounted for using the equity method | 48,088 | 6,655 |
Other income (loss) | (782) | (25) |
Total revenues | 1,319,176 | 1,086,676 |
Expenses | ||
Losses and loss adjustment expenses | 552,570 | 522,949 |
Acquisition expenses | 182,289 | 167,838 |
Other operating expenses | 174,719 | 150,148 |
Corporate expenses | 27,792 | 9,383 |
Amortization of intangible assets | 31,294 | 4,748 |
Interest expense | 28,676 | 16,107 |
Net foreign exchange losses (gains) | 19,404 | 23,566 |
Total expenses | 1,016,744 | 894,739 |
Income before income taxes | 302,432 | 191,937 |
Income tax expense | (28,397) | (16,310) |
Net income | 274,035 | 175,627 |
Net (income) loss attributable to noncontrolling interests | (20,908) | (20,829) |
Net income available to Arch | 253,127 | 154,798 |
Preferred dividends | (11,218) | (5,484) |
Net income available to Arch common shareholders | $ 241,909 | $ 149,314 |
Net income per common share | ||
Basic (per share) | $ 1.80 | $ 1.24 |
Diluted (per share) | $ 1.74 | $ 1.20 |
Weighted average common shares and common share equivalents outstanding | ||
Basic (shares) | 134,034,927 | 120,428,179 |
Diluted (shares) | 139,047,672 | 124,496,496 |
Unaudited Consolidated Stateme5
Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Comprehensive Income | ||
Net income | $ 274,035 | $ 175,627 |
Unrealized appreciation (decline) in value of available-for-sale investments: | ||
Unrealized holding gains (losses) arising during period | 100,792 | 132,981 |
Portion of other-than-temporary impairment losses recognized in other comprehensive income, net of deferred income tax | 0 | (98) |
Reclassification of net realized (gains) losses, net of income taxes, included in net income | (5,044) | (32,223) |
Foreign currency translation adjustments | 3,124 | 17,313 |
Comprehensive income | 372,907 | 293,600 |
Net (income) loss attributable to noncontrolling interests | (20,908) | (20,829) |
Foreign currency translation adjustments attributable to noncontrolling interests | (8) | 158 |
Comprehensive income available to Arch | $ 351,991 | $ 272,929 |
Unaudited Consolidated Stateme6
Unaudited Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Total | Non-cumulative preferred shares | Common shares | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss), net of deferred income tax | Unrealized appreciation (decline) in value of available-for-sale securities, net of deferred income tax | Foreign currency translation adjustments | Common shares held in treasury, at cost | Convertible non-voting common equivalent preferred shares |
Cumulative effect of an accounting change | $ 0 | |||||||||
Balance at beginning of year, as adjusted | 7,332,032 | |||||||||
Balance at beginning of year at Dec. 31, 2015 | $ 325,000 | $ 577 | $ 467,339 | 7,332,032 | $ (16,502) | $ 50,085 | $ (66,587) | $ (1,941,904) | $ 0 | |
Common shares issued, net | 2 | 0 | ||||||||
Exercise of stock options | 4,222 | |||||||||
Amortization of share-based compensation | 14,265 | |||||||||
Other | 117 | |||||||||
Net income | $ 175,627 | 175,627 | ||||||||
Net (income) loss attributable to noncontrolling interests | (20,829) | (20,829) | ||||||||
Preferred share dividends | (5,484) | (5,484) | ||||||||
Unrealized holding gains (losses) arising during period, net of reclassification adjustment | 100,758 | |||||||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income, net of deferred income tax | (98) | (98) | ||||||||
Foreign currency translation adjustments | 17,313 | 17,313 | ||||||||
Foreign currency translation adjustments attributable to noncontrolling interests | 158 | |||||||||
Shares repurchased for treasury | (77,345) | |||||||||
Balance at end of period at Mar. 31, 2016 | 6,375,248 | 325,000 | 579 | 485,943 | 7,481,346 | 101,629 | 150,745 | (49,116) | (2,019,249) | 0 |
Non-redeemable noncontrolling interests, end of period at Mar. 31, 2016 | 754,915 | |||||||||
Total shareholders’ equity at Mar. 31, 2016 | 7,130,163 | |||||||||
Cumulative effect of an accounting change | (314) | |||||||||
Balance at beginning of year, as adjusted | 7,996,387 | |||||||||
Balance at beginning of year at Dec. 31, 2016 | 8,253,718 | 772,555 | 582 | 531,687 | 7,996,701 | (114,541) | (27,641) | (86,900) | (2,034,570) | 1,101,304 |
Common shares issued, net | 1 | (1) | ||||||||
Exercise of stock options | 710 | |||||||||
Amortization of share-based compensation | 15,657 | |||||||||
Other | 0 | |||||||||
Net income | 274,035 | 274,035 | ||||||||
Net (income) loss attributable to noncontrolling interests | (20,908) | (20,908) | ||||||||
Preferred share dividends | (11,218) | (11,218) | ||||||||
Unrealized holding gains (losses) arising during period, net of reclassification adjustment | 95,748 | |||||||||
Portion of other-than-temporary impairment losses recognized in other comprehensive income, net of deferred income tax | 0 | 0 | ||||||||
Foreign currency translation adjustments | 3,124 | 3,124 | ||||||||
Foreign currency translation adjustments attributable to noncontrolling interests | (8) | |||||||||
Shares repurchased for treasury | (4,700) | |||||||||
Balance at end of period at Mar. 31, 2017 | 8,605,844 | $ 772,555 | $ 583 | $ 548,053 | $ 8,238,296 | $ (15,677) | $ 68,107 | $ (83,784) | $ (2,039,270) | $ 1,101,304 |
Non-redeemable noncontrolling interests, end of period at Mar. 31, 2017 | 868,186 | |||||||||
Total shareholders’ equity at Mar. 31, 2017 | $ 9,474,030 |
Unaudited Consolidated Stateme7
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Operating Activities | ||
Net income | $ 274,035 | $ 175,627 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Net realized (gains) losses | (40,855) | (43,034) |
Net impairment losses recognized in earnings | 1,807 | 7,639 |
Equity in net income or loss of investment funds accounted for using the equity method and other income or loss | (36,141) | 3,243 |
Amortization of intangible assets | 31,294 | 4,748 |
Share-based compensation | 15,657 | 14,265 |
Changes in: | ||
Reserve for losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable | 53,027 | 111,255 |
Unearned premiums, net of ceded unearned premiums | 159,243 | 169,656 |
Premiums receivable | (176,350) | (217,348) |
Deferred acquisition costs | (41,728) | (30,050) |
Reinsurance balances payable | 20,114 | 51,929 |
Other items, net | (51,985) | 74,613 |
Net Cash Provided By Operating Activities | 208,118 | 322,543 |
Investing Activities | ||
Purchases of fixed maturity investments | (10,476,918) | (8,133,537) |
Purchases of equity securities | (143,833) | (128,263) |
Purchases of other investments | (427,039) | (305,198) |
Proceeds from sales of fixed maturity investments | 10,386,746 | 7,827,536 |
Proceeds from sales of equity securities | 253,347 | 216,012 |
Proceeds from sales, redemptions and maturities of other investments | 317,518 | 211,125 |
Proceeds from redemptions and maturities of fixed maturity investments | 174,718 | 163,894 |
Net settlements of derivative instruments | (3,921) | 21,091 |
Net (purchases) sales of short-term investments | (397,851) | (65,594) |
Change in cash collateral related to securities lending | 180,946 | (43,118) |
Purchases of fixed assets | (5,194) | (3,952) |
Change in other assets | 19,603 | 6,737 |
Net Cash Provided By (Used For) Investing Activities | (121,878) | (233,267) |
Financing Activities | ||
Purchases of common shares under share repurchase program | 0 | (75,256) |
Proceeds from common shares issued, net | (3,990) | 202 |
Proceeds from borrowings | 0 | |
Repayments of borrowings | (22,000) | (74,171) |
Change in cash collateral related to securities lending | (180,946) | 43,118 |
Dividends paid to redeemable noncontrolling interests | (4,497) | (4,497) |
Other | (5,018) | 29,115 |
Preferred dividends paid | (11,218) | (5,484) |
Net Cash Provided By (Used For) Financing Activities | (227,669) | (86,973) |
Effects of exchange rate changes on foreign currency cash | 2,241 | 2,332 |
Increase (decrease) in cash | (139,188) | 4,635 |
Cash beginning of year | 842,942 | 553,326 |
Cash end of period | 703,754 | 557,961 |
Income taxes paid | 711 | 2,504 |
Interest paid | $ 5,829 | $ 3,813 |
General
General | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General Arch Capital Group Ltd. (“ACGL”) is a Bermuda public limited liability company which provides insurance and reinsurance on a worldwide basis through its wholly-owned subsidiaries. As used herein, the “Company” means ACGL and its subsidiaries. The Company’s consolidated financial statements include the results of Watford Holdings Ltd. and its wholly owned subsidiaries. See Note 3 . On December 31, 2016, the Company completed the acquisition of United Guaranty Corporation, a North Carolina corporation (“UGC”). The acquisition of UGC (“UGC acquisition”) expanded the scale of Arch’s existing mortgage insurance businesses by combining UGC’s position as the market leader in the U.S. private mortgage insurance industry with Arch’s financial strength and history of innovation, further diversifying the Company’s business profile and customer base. The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 Form 10-K”), including the Company’s audited consolidated financial statements and related notes. The Company has reclassified the presentation of certain prior year information to conform to the current presentation, including the presentation of ‘amortization of intangible assets’ on its consolidated statements of income to split out such item (previously reflected in acquisition expenses and/or other operating expenses). Such reclassifications had no effect on the Company’s net income, comprehensive income, shareholders’ equity or cash flows. Tabular amounts are in U.S. Dollars in thousands, except share amounts, unless otherwise noted. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Issued Accounting Standards Adopted The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standard Update (“ASU”) 2016-09, “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting,” effective January 1, 2017 . This ASU was issued in the 2016 first quarter to improve and simplify the accounting for employee share-based payment transactions. This ASU provides simplifications with respect to income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows for these types of transactions. With respect to the forfeiture accounting policy election, the Company has elected to account for forfeitures as they occur, which did not result in a material cumulative effect adjustment. With respect to the change in presentation in the statement of cash flows related to excess tax benefits, the Company has applied the guidance prospectively and prior periods have not been adjusted. Recently Issued Accounting Standards Not Yet Adopted ASU 2016-18, "Statement of Cash Flows (Topic 230) - Restricted Cash " was issued in the 2016 fourth quarter. The ASU requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents in the reconciliation of beginning and ending cash on the statements of cash flows. As a result, transfers between cash and cash equivalents and restricted cash and restricted cash equivalents will no longer be presented on the statement of cash flows. The ASU also requires a reconciliation of the statement of the cash flows to the balance sheet if the balance sheet includes more than one line item of cash, cash equivalents, and restricted cash. The ASU is effective, with retrospective adoption, for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently assessing the impact the implementation of this ASU will have on its consolidated financial statements. ASU 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities,” was issued in the 2017 first quarter. The ASU amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period for the premium to the earliest call date. The ASU will be effective for the Company on January 1, 2019 and is required to be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently assessing the impact the implementation of this ASU will have on its consolidated financial statements. |
Variable Interest Entities and
Variable Interest Entities and Noncontrolling Interests | 3 Months Ended |
Mar. 31, 2017 | |
Noncontrolling Interest [Abstract] | |
Variable Interest Entity and Noncontrolling Interests | Variable Interest Entities and Noncontrolling Interests A variable interest entity (“VIE”) refers to an entity that has characteristics such as (i) insufficient equity at risk to allow the entity to finance its activities without additional financial support or (ii) instances where the equity investors, as a group, do not have characteristics of a controlling financial interest. The primary beneficiary of a VIE is defined as the variable interest holder that is determined to have the controlling financial interest as a result of having both (i) the power to direct the activities of a VIE that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. If a company is determined to be the primary beneficiary, it is required to consolidate the VIE in its financial statements. Watford Holdings Ltd. In March 2014, the Company invested $100.0 million and acquired approximately 11% of Watford Holdings Ltd.’s common equity and a warrant to purchase additional common equity. Watford Holdings Ltd. is the parent of Watford Re Ltd., a multi-line Bermuda reinsurance company (together with Watford Holdings Ltd., “Watford Re”). Watford Re is considered a VIE and the Company concluded that it is the primary beneficiary of Watford Re. As such, the results of Watford Re are included in the Company’s consolidated financial statements. The Company does not guarantee or provide credit support for Watford Re, and the Company’s financial exposure to Watford Re is limited to its investment in Watford Re’s common and preferred shares and counterparty credit risk (mitigated by collateral) arising from reinsurance transactions. The following table provides the carrying amount and balance sheet caption in which the assets and liabilities of Watford Re are reported: March 31, December 31, 2017 2016 Assets Investments accounted for using the fair value option $ 1,976,466 $ 1,857,623 Cash 47,566 74,893 Accrued investment income 14,066 17,017 Premiums receivable 196,866 189,911 Reinsurance recoverable on unpaid and paid losses and LAE 25,673 24,420 Ceded unearned premiums 16,383 12,145 Deferred acquisition costs 93,227 86,379 Receivable for securities sold 19,235 1,326 Goodwill and intangible assets 7,650 7,650 Other assets 116,336 111,386 Total assets of consolidated VIE $ 2,513,468 $ 2,382,750 Liabilities Reserves for losses and loss adjustment expenses $ 566,175 $ 510,809 Unearned premiums 319,677 293,480 Reinsurance balances payable 15,171 12,289 Revolving credit agreement borrowings 234,961 256,650 Payable for securities purchased 81,216 42,922 Other liabilities 100,198 88,976 Total liabilities of consolidated VIE $ 1,317,398 $ 1,205,126 Redeemable noncontrolling interests $ 220,344 $ 220,253 For the three months ended March 31, 2017 , Watford Re generated $62.2 million of cash provided by operating activities, $60.5 million of cash used for investing activities and $29.0 million of cash used for financing activities, compared to $65.3 million of cash provided by operating activities, $43.7 million of cash used for investing activities and $51.3 million of cash used for financing activities for the three months ended March 31, 2016 . Non-redeemable noncontrolling interests The Company accounts for the portion of Watford Re’s common equity attributable to third party investors in the shareholders’ equity section of its consolidated balance sheets. The noncontrolling ownership in Watford Re’s common shares was approximately 89% at March 31, 2017 . The portion of Watford Re’s income or loss attributable to third party investors is recorded in the consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests.’ The following table sets forth activity in the non-redeemable noncontrolling interests: March 31, 2017 2016 Three Months Ended Balance, beginning of period $ 851,854 $ 738,831 Amounts attributable to noncontrolling interests 16,324 16,242 Foreign currency translation adjustments attributable to noncontrolling interests 8 (158 ) Balance, end of period $ 868,186 $ 754,915 Redeemable noncontrolling interests The Company accounts for redeemable noncontrolling interests in the mezzanine section of its consolidated balance sheets in accordance with applicable accounting guidance. Such redeemable noncontrolling interests relate to the 9,065,200 cumulative redeemable preference shares (“Watford Preference Shares”) issued in March 2014 with a par value of $0.01 per share and a liquidation preference of $25.00 per share. Preferred dividends, including the accretion of the discount and issuance costs, are included in ‘net (income) loss attributable to noncontrolling interests’ in the Company’s consolidated statements of income. The following table sets forth activity in the redeemable non-controlling interests: March 31, 2017 2016 Three Months Ended Balance, beginning of period $ 205,553 $ 205,182 Accretion of preference share issuance costs 91 92 Balance, end of period $ 205,644 $ 205,274 The portion of Watford Re’s income or loss attributable to third party investors, recorded in the Company’s consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests,’ are summarized in the table below: March 31, 2017 2016 Three Months Ended Amounts attributable to non-redeemable noncontrolling interests $ (16,324 ) $ (16,242 ) Dividends attributable to redeemable noncontrolling interests (4,584 ) (4,587 ) Net (income) loss attributable to noncontrolling interests $ (20,908 ) $ (20,829 ) Bellemeade Re I and II Upon closing of the UGC acquisition, the Company acquired the rights and obligations related to aggregate excess of loss reinsurance agreements with Bellemeade Re I Ltd. (“Bellemeade I”), entered into in July 2015, and with Bellemeade Re II Ltd. (“Bellemeade II”), entered into in May 2016 (the “Bellemeade Agreements”). Bellemeade I and Bellemeade II are special purpose reinsurance companies domiciled in Bermuda, each of which provided for up to approximately $300 million of aggregate excess of loss reinsurance coverage at inception for new delinquencies on portfolios of in-force policies issued. As a result of the evaluation of the Bellemeade Agreements, the Company concluded that both Bellemeade I and Bellemeade II are VIEs. However, given that the ceding insurers do not have the unilateral power to direct those activities that are significant to the economic performance of Bellemeade I and Bellemeade II, the Company does not consolidate Bellemeade I and Bellemeade II in its consolidated financial statements. The following table presents total assets of Bellemeade I and Bellemeade II as well as the Company’s maximum exposure to loss associated with these VIEs: Maximum Exposure to Loss Total VIE Assets On-Balance Sheet Off-Balance Sheet Total Bellemeade I $ 146,200 $ 351 $ 1,310 $ 1,661 Bellemeade II 283,777 54 1,103 1,157 Total $ 429,977 $ 405 $ 2,413 $ 2,818 Irving Partners Limited Partnership Upon closing of the UGC acquisition, the Company acquired a limited partnership interest in Irving Partners Limited Partnership (“Irving Partners”), which owns and operates an office building in Greensboro, North Carolina in which the Company is the main tenant. The Company concluded that Irving Partners is a VIE but that it is not the primary beneficiary. The Company’s maximum exposure to loss is approximately $14.5 million at March 31, 2017 . |
Earnings Per Common Share
Earnings Per Common Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per common share: Three Months Ended March 31, 2017 2016 Numerator: Net income $ 274,035 $ 175,627 Amounts attributable to noncontrolling interests (20,908 ) (20,829 ) Net income available to Arch 253,127 154,798 Preferred dividends (11,218 ) (5,484 ) Net income available to Arch common shareholders $ 241,909 $ 149,314 Denominator: Weighted average common shares outstanding 121,272,107 120,428,179 Series D preferred shares (1) 12,762,820 — Weighted average common shares and common share equivalents outstanding — basic 134,034,927 120,428,179 Effect of dilutive common share equivalents: Nonvested restricted shares 1,646,555 1,460,654 Stock options (2) 3,366,190 2,607,663 Weighted average common shares and common share equivalents outstanding — diluted 139,047,672 124,496,496 Earnings per common share: Basic $ 1.80 $ 1.24 Diluted $ 1.74 $ 1.20 (1) Such shares are convertible non-voting common equivalent preferred shares issued in connection with the UGC acquisition. (2) Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2017 first quarter and 2016 first quarter , the number of stock options excluded were 263,475 and 607,208 , respectively. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company classifies its businesses into three underwriting segments — insurance, reinsurance and mortgage — and two other operating segments — ‘other’ and corporate (non-underwriting). The Company determined its reportable segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of the Company’s consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results. The Company’s insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company’s chief operating decision makers, the Chairman and Chief Executive Officer, the President and Chief Operating Officer, and the Chief Financial Officer of ACGL. The chief operating decision makers do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for its three underwriting segments based on underwriting income or loss. The Company does not manage its assets by underwriting segment, with the exception of goodwill and intangible assets, and, accordingly, investment income is not allocated to each underwriting segment. The insurance segment consists of the Company’s insurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: construction and national accounts; excess and surplus casualty; lenders products; professional lines; programs; property, energy, marine and aviation; travel, accident and health; and other (consisting of alternative markets, excess workers' compensation and surety business). The reinsurance segment consists of the Company’s reinsurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: casualty; marine and aviation; other specialty; property catastrophe; property excluding property catastrophe (losses on a single risk, both excess of loss and pro rata); and other (consisting of life reinsurance, casualty clash and other). The mortgage segment includes the Company’s U.S. and international mortgage insurance and reinsurance operations as well as government sponsored enterprise (“GSE”) credit-risk sharing transactions. Arch Mortgage Insurance Company, United Guaranty Residential Insurance Company and United Guaranty Mortgage Indemnity Company (combined “Arch MI U.S.”) are approved as eligible mortgage insurers by Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”), each a GSE. The corporate (non-underwriting) segment results include net investment income, other income (loss), corporate expenses, UGC transaction costs and other, interest expense, dividends related to the Company’s non-cumulative preferred shares, net realized gains or losses, net impairment losses included in earnings, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses and income taxes. Such amounts exclude the results of the ‘other’ segment. The ‘other’ segment includes the results of Watford Re (see Note 3 ). Watford Re has its own management and board of directors that is responsible for the overall profitability of the ‘other’ segment. For the ‘other’ segment, performance is measured based on net income or loss. The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to common shareholders: Three Months Ended March 31, 2017 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 782,281 $ 475,782 $ 348,623 $ 1,606,686 $ 154,120 $ 1,657,990 Premiums ceded (234,095 ) (166,092 ) (73,925 ) (474,112 ) (10,434 ) (381,730 ) Net premiums written 548,186 309,690 274,698 1,132,574 143,686 1,276,260 Change in unearned premiums (42,540 ) (64,839 ) (30,175 ) (137,554 ) (21,689 ) (159,243 ) Net premiums earned 505,646 244,851 244,523 995,020 121,997 1,117,017 Other underwriting income — (306 ) 4,123 3,817 816 4,633 Losses and loss adjustment expenses (332,641 ) (105,454 ) (29,065 ) (467,160 ) (85,410 ) (552,570 ) Acquisition expenses, net (74,868 ) (46,147 ) (28,766 ) (149,781 ) (32,508 ) (182,289 ) Other operating expenses (88,126 ) (37,533 ) (41,870 ) (167,529 ) (7,190 ) (174,719 ) Underwriting income (loss) $ 10,011 $ 55,411 $ 148,945 214,367 (2,295 ) 212,072 Net investment income 95,812 22,062 117,874 Net realized gains (losses) 28,512 5,641 34,153 Net impairment losses recognized in earnings (1,807 ) — (1,807 ) Equity in net income (loss) of investment funds accounted for using the equity method 48,088 — 48,088 Other income (loss) (782 ) — (782 ) Corporate expenses (2) (12,208 ) — (12,208 ) UGC transaction costs and other (2) (15,584 ) — (15,584 ) Amortization of intangible assets (31,294 ) — (31,294 ) Interest expense (25,756 ) (2,920 ) (28,676 ) Net foreign exchange gains (losses) (19,845 ) 441 (19,404 ) Income (loss) before income taxes 279,503 22,929 302,432 Income tax expense (28,397 ) — (28,397 ) Net income (loss) 251,106 22,929 274,035 Dividends attributable to redeemable noncontrolling interests — (4,584 ) (4,584 ) Amounts attributable to noncontrolling interests — (16,324 ) (16,324 ) Net income (loss) available to Arch 251,106 2,021 253,127 Preferred dividends (11,218 ) — (11,218 ) Net income (loss) available to Arch common shareholders $ 239,888 $ 2,021 $ 241,909 Underwriting Ratios Loss ratio 65.8 % 43.1 % 11.9 % 46.9 % 70.0 % 49.5 % Acquisition expense ratio 14.8 % 18.8 % 11.8 % 15.1 % 26.6 % 16.3 % Other operating expense ratio 17.4 % 15.3 % 17.1 % 16.8 % 5.9 % 15.6 % Combined ratio 98.0 % 77.2 % 40.8 % 78.8 % 102.5 % 81.4 % Goodwill and intangible assets $ 24,371 $ 773 $ 717,521 $ 742,665 $ 7,650 $ 750,315 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘UGC transaction costs and other.’ Three Months Ended March 31, 2016 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 798,553 $ 481,390 $ 111,280 $ 1,391,061 $ 148,606 $ 1,437,966 Premiums ceded (248,789 ) (160,566 ) (4,767 ) (413,960 ) (4,472 ) (316,731 ) Net premiums written 549,764 320,824 106,513 977,101 144,134 1,121,235 Change in unearned premiums (36,675 ) (59,616 ) (44,748 ) (141,039 ) (28,617 ) (169,656 ) Net premiums earned 513,089 261,208 61,765 836,062 115,517 951,579 Other underwriting income — 325 3,793 4,118 929 5,047 Losses and loss adjustment expenses (323,609 ) (111,598 ) (8,629 ) (443,836 ) (79,113 ) (522,949 ) Acquisition expenses, net (74,348 ) (54,758 ) (5,793 ) (134,899 ) (32,939 ) (167,838 ) Other operating expenses (85,058 ) (36,258 ) (23,494 ) (144,810 ) (5,338 ) (150,148 ) Underwriting income (loss) $ 30,074 $ 58,919 $ 27,642 116,635 (944 ) 115,691 Net investment income 70,409 23,326 93,735 Net realized gains (losses) 31,862 5,462 37,324 Net impairment losses recognized in earnings (7,639 ) — (7,639 ) Equity in net income (loss) of investment funds accounted for using the equity method 6,655 — 6,655 Other income (loss) (25 ) — (25 ) Corporate expenses (9,383 ) — (9,383 ) Amortization of intangible assets (4,748 ) — (4,748 ) Interest expense (12,627 ) (3,480 ) (16,107 ) Net foreign exchange gains (losses) (22,041 ) (1,525 ) (23,566 ) Income (loss) before income taxes 169,098 22,839 191,937 Income tax expense (16,310 ) — (16,310 ) Net income (loss) 152,788 22,839 175,627 Dividends attributable to redeemable noncontrolling interests — (4,587 ) (4,587 ) Amounts attributable to noncontrolling interests — (16,242 ) (16,242 ) Net income (loss) available to Arch 152,788 2,010 154,798 Preferred dividends (5,484 ) — (5,484 ) Net income (loss) available to Arch common shareholders $ 147,304 $ 2,010 $ 149,314 Underwriting Ratios Loss ratio 63.1 % 42.7 % 14.0 % 53.1 % 68.5 % 55.0 % Acquisition expense ratio 14.5 % 21.0 % 9.4 % 16.1 % 28.5 % 17.6 % Other operating expense ratio 16.6 % 13.9 % 38.0 % 17.3 % 4.6 % 15.8 % Combined ratio 94.2 % 77.6 % 61.4 % 86.5 % 101.6 % 88.4 % Goodwill and intangible assets $ 27,825 $ 1,713 $ 63,132 $ 92,670 $ — $ 92,670 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
Reserve for Losses and Loss Adj
Reserve for Losses and Loss Adjustment Expenses | 3 Months Ended |
Mar. 31, 2017 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |
Reserve for Losses and Loss Adjustment Expenses | Reserve for Losses and Loss Adjustment Expenses The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses: Three Months Ended March 31, 2017 2016 Reserve for losses and loss adjustment expenses at beginning of year $ 10,200,960 $ 9,125,250 Unpaid losses and loss adjustment expenses recoverable 2,083,575 1,828,837 Net reserve for losses and loss adjustment expenses at beginning of year 8,117,385 7,296,413 Net incurred losses and loss adjustment expenses relating to losses occurring in: Current year 635,775 578,978 Prior years (83,205 ) (56,029 ) Total net incurred losses and loss adjustment expenses 552,570 522,949 Net foreign exchange losses (gains) 31,278 33,575 Net paid losses and loss adjustment expenses relating to losses occurring in: Current year (34,957 ) (49,079 ) Prior years (464,585 ) (362,595 ) Total net paid losses and loss adjustment expenses (499,542 ) (411,674 ) Net reserve for losses and loss adjustment expenses at end of year 8,201,691 7,441,263 Unpaid losses and loss adjustment expenses recoverable 2,095,130 1,937,724 Reserve for losses and loss adjustment expenses at end of period $ 10,296,821 $ 9,378,987 2017 Prior Year Development During the 2017 first quarter , the Company recorded net favorable development on prior year loss reserves of $83.2 million , which consisted of $57.2 million from the reinsurance segment, $2.1 million from the insurance segment, $23.6 million from the mortgage segment and $0.3 million from the ‘other’ segment. The reinsurance segment’s net favorable development of $57.2 million , or 23.4 points, for the 2017 first quarter consisted of $40.8 million from short-tailed lines and $16.4 million from long-tailed and medium-tailed lines. Favorable development in short-tailed lines included $34.0 million from property catastrophe and property other than property catastrophe reserves, across most underwriting years ( i.e. , all premiums and losses attributable to contracts having an inception or renewal date within the given twelve-month period), reflecting lower levels of reported and paid claims activity than previously anticipated which led to decreases in certain loss ratio selections during the period. Favorable development in long-tailed and medium-tailed lines reflected reductions in casualty reserves of $5.5 million based on varying levels of reported and paid claims activity, primarily from the 2003 to 2013 underwriting years, and favorable development in marine reserves of $9.9 million across most underwriting years. The insurance segment’s net favorable development of $2.1 million , or 0.4 points, for the 2017 first quarter consisted of $7.0 million of net favorable development in long-tailed lines and $1.9 million of net favorable development in short-tailed lines, partially offset by $6.8 million of net adverse development in medium-tailed lines. Net favorable development in long-tailed lines reflected net reductions in executive assurance reserves from the 2008 to 2014 accident years ( i.e. , the year in which a loss occurred). Net favorable development in short-tailed lines primarily resulted from property (including special risk other than marine) reserves from the 2011 to 2016 accident years. Net adverse development in medium-tailed lines primarily resulted from an increase in programs of $14.2 million stemming in part from development on a small number of programs in the 2013 and 2014 accident years, partially offset by net favorable development of $7.5 million in other medium-tailed lines, primarily in professional liability and surety. The mortgage segment’s net favorable development was $23.6 million , or 9.6 points, for the 2017 first quarter . The 2017 first quarter development was primarily driven by continued lower than expected claim emergence across most origination years and also reflected $8.2 million related to subrogation recoveries on second lien and other portfolios. 2016 Prior Year Reserve Development During the 2016 first quarter , the Company recorded net favorable development on prior year loss reserves of $56.0 million , which consisted of $47.4 million from the reinsurance segment, $6.2 million from the insurance segment, $2.7 million from the mortgage segment less adverse development of $0.2 million from the ‘other’ segment. The reinsurance segment’s net favorable development of $47.4 million , or 18.1 points, for the 2016 first quarter consisted of $36.5 million from short-tailed lines and $10.9 million from long-tailed and medium-tailed lines. Favorable development in short-tailed lines included $29.8 million from property catastrophe and property other than property catastrophe reserves, primarily from the 2013 to 2015 underwriting years, reflecting lower levels of reported and paid claims activity than previously anticipated which led to decreases in certain loss ratio selections during the period. Favorable development in long-tailed lines reflected reductions in casualty reserves of $14.2 million based on varying levels of reported and paid claims activity, primarily from the 2002 to 2005 underwriting years and 2009 to 2011 underwriting years. Such amounts were partially offset by net adverse development on marine reserves of $2.0 million , partially offset by favorable development from most other underwriting years. The insurance segment’s net favorable development of $6.2 million , or 1.2 points, for the 2016 first quarter consisted of $9.9 million of net favorable development in long-tailed lines and $3.7 million of net favorable development in short-tailed lines, partially offset by $7.4 million of net adverse development in medium-tailed lines. Net favorable development in long-tailed lines reflected favorable development in casualty reserves of $6.9 million , primarily from the 2008 and 2012 accident years. Net favorable development in short-tailed lines primarily resulted from reductions in property (including special risk other than marine) reserves from the 2012 to 2014 accident years, primarily due to varying levels of reported claims activity. Net adverse development in medium tailed lines primarily resulted from an increase in programs of $6.1 million with approximately 30% stemming from terminated programs. The mortgage segment’s net favorable development was $2.7 million , or 4.4 points, for the 2016 first quarter . The 2016 first quarter development was primarily driven by lower than expected claim rates across most origination years. |
Investment Information
Investment Information | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Investment Information [Abstract] | |
Investment Information | Investment Information At March 31, 2017 , total investable assets of $20.74 billion included $18.83 billion managed by the Company and $1.90 billion attributable to Watford Re. Available For Sale Investments The following table summarizes the fair value and cost or amortized cost of the Company’s investments classified as available for sale: Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost or Amortized Cost OTTI Unrealized Losses (2) March 31, 2017 Fixed maturities (1): Corporate bonds $ 4,546,756 $ 31,033 $ (36,615 ) $ 4,552,338 $ (1,876 ) Mortgage backed securities 412,023 5,210 (2,712 ) 409,525 (3,323 ) Municipal bonds 2,519,112 14,332 (17,411 ) 2,522,191 (201 ) Commercial mortgage backed securities 590,521 3,485 (6,040 ) 593,076 — U.S. government and government agencies 3,266,908 7,940 (11,152 ) 3,270,120 — Non-U.S. government securities 1,295,366 26,017 (39,356 ) 1,308,705 — Asset backed securities 1,638,347 8,984 (4,910 ) 1,634,273 (22 ) Total 14,269,033 97,001 (118,196 ) 14,290,228 (5,422 ) Equity securities 431,062 66,628 (6,660 ) 371,094 — Other investments 228,437 31,844 (838 ) 197,431 — Short-term investments 803,619 120 (125 ) 803,624 — Total $ 15,732,151 $ 195,593 $ (125,819 ) $ 15,662,377 $ (5,422 ) December 31, 2016 Fixed maturities (1): Corporate bonds $ 4,392,373 $ 27,606 $ (46,905 ) $ 4,411,672 $ (2,285 ) Mortgage backed securities 490,093 4,794 (8,357 ) 493,656 (3,323 ) Municipal bonds 3,713,434 8,554 (29,154 ) 3,734,034 (201 ) Commercial mortgage backed securities 536,051 2,876 (6,508 ) 539,683 — U.S. government and government agencies 2,804,540 9,319 (24,437 ) 2,819,658 — Non-U.S. government securities 1,096,440 19,036 (56,872 ) 1,134,276 — Asset backed securities 1,123,987 6,897 (6,526 ) 1,123,616 (22 ) Total 14,156,918 79,082 (178,759 ) 14,256,595 (5,831 ) Equity securities 532,680 62,627 (17,517 ) 487,570 — Other investments 167,970 21,358 (2,465 ) 149,077 — Short-term investments 612,005 272 (145 ) 611,878 — Total $ 15,469,573 $ 163,339 $ (198,886 ) $ 15,505,120 $ (5,831 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” (2) Represents the total other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income (“AOCI”). It does not include the change in fair value subsequent to the impairment measurement date. At March 31, 2017 , the net unrealized gain related to securities for which a non-credit OTTI was recognized in AOCI was $2.0 million , compared to a net unrealized gain of $2.8 million at December 31, 2016 . The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position: Less than 12 Months 12 Months or More Total Estimated Gross Unrealized Losses Estimated Gross Unrealized Losses Estimated Gross Unrealized Losses March 31, 2017 Fixed maturities (1): Corporate bonds $ 1,832,009 $ (34,331 ) $ 26,288 $ (2,284 ) $ 1,858,297 $ (36,615 ) Mortgage backed securities 137,291 (2,652 ) 4,150 (60 ) 141,441 (2,712 ) Municipal bonds 1,043,998 (16,890 ) 25,004 (521 ) 1,069,002 (17,411 ) Commercial mortgage backed securities 304,022 (5,890 ) 3,928 (150 ) 307,950 (6,040 ) U.S. government and government agencies 1,803,247 (11,152 ) — — 1,803,247 (11,152 ) Non-U.S. government securities 914,310 (39,153 ) 13,924 (203 ) 928,234 (39,356 ) Asset backed securities 662,917 (4,257 ) 40,477 (653 ) 703,394 (4,910 ) Total 6,697,794 (114,325 ) 113,771 (3,871 ) 6,811,565 (118,196 ) Equity securities 134,646 (6,660 ) — — 134,646 (6,660 ) Other investments 25,189 (838 ) — — 25,189 (838 ) Short-term investments 43,717 (125 ) — — 43,717 (125 ) Total $ 6,901,346 $ (121,948 ) $ 113,771 $ (3,871 ) $ 7,015,117 $ (125,819 ) December 31, 2016 Fixed maturities (1): Corporate bonds $ 1,700,813 $ (43,011 ) $ 46,902 $ (3,894 ) $ 1,747,715 $ (46,905 ) Mortgage backed securities 402,699 (8,134 ) 6,105 (223 ) 408,804 (8,357 ) Municipal bonds 1,513,308 (28,504 ) 29,636 (650 ) 1,542,944 (29,154 ) Commercial mortgage backed securities 231,374 (6,331 ) 5,635 (177 ) 237,009 (6,508 ) U.S. government and government agencies 1,888,018 (24,437 ) — — 1,888,018 (24,437 ) Non-U.S. government securities 807,598 (56,872 ) — — 807,598 (56,872 ) Asset backed securities 627,557 (5,465 ) 65,723 (1,061 ) 693,280 (6,526 ) Total 7,171,367 (172,754 ) 154,001 (6,005 ) 7,325,368 (178,759 ) Equity securities 269,381 (17,517 ) — — 269,381 (17,517 ) Other investments 39,299 (2,465 ) — — 39,299 (2,465 ) Short-term investments 29,146 (145 ) — — 29,146 (145 ) Total $ 7,509,193 $ (192,881 ) $ 154,001 $ (6,005 ) $ 7,663,194 $ (198,886 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” At March 31, 2017 , on a lot level basis, approximately 3,350 security lots out of a total of approximately 7,720 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $4.4 million . At December 31, 2016 , on a lot level basis, approximately 3,540 security lots out of a total of approximately 7,240 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $4.6 million . The contractual maturities of the Company’s fixed maturities are shown in the following table. Expected maturities, which are management’s best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. March 31, 2017 December 31, 2016 Maturity Estimated Fair Value Amortized Cost Estimated Amortized Cost Due in one year or less $ 633,926 $ 632,468 $ 560,830 $ 557,675 Due after one year through five years 7,197,090 7,217,033 6,158,148 6,211,099 Due after five years through 10 years 3,337,574 3,339,974 4,676,847 4,710,017 Due after 10 years 459,552 463,879 610,962 620,849 11,628,142 11,653,354 12,006,787 12,099,640 Mortgage backed securities 412,023 409,525 490,093 493,656 Commercial mortgage backed securities 590,521 593,076 536,051 539,683 Asset backed securities 1,638,347 1,634,273 1,123,987 1,123,616 Total (1) $ 14,269,033 $ 14,290,228 $ 14,156,918 $ 14,256,595 (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” Securities Lending Agreements The Company enters into securities lending agreements with financial institutions to enhance investment income whereby it loans certain of its securities to third parties, primarily major brokerage firms, for short periods of time through a lending agent. The Company maintains legal control over the securities it lends, retains the earnings and cash flows associated with the loaned securities and receives a fee from the borrower for the temporary use of the securities. An indemnification agreement with the lending agent protects the Company in the event a borrower becomes insolvent or fails to return any of the securities on loan from the Company. The Company receives collateral in the form of cash or securities. Cash collateral primarily consists of short-term investments. At March 31, 2017 , the fair value of the cash collateral received on securities lending was $31.5 million and the fair value of security collateral received was $506.9 million . At December 31, 2016 , the fair value of the cash collateral received on securities lending was $212.5 million , and the fair value of security collateral received was $550.1 million . The Company’s securities lending transactions were accounted for as secured borrowings with significant investment categories as follows: Remaining Contractual Maturity of the Agreements Overnight and Continuous Less than 30 Days 30-90 Days 90 Days or More Total March 31, 2017 U.S. government and government agencies $ 358,293 $ — $ 139,416 $ 8,501 $ 506,210 Corporate bonds 29,624 — — — 29,624 Equity securities 2,519 — — — 2,519 Total $ 390,436 $ — $ 139,416 $ 8,501 $ 538,353 Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 9 $ — Amounts related to securities lending not included in offsetting disclosure in Note 9 $ 538,353 December 31, 2016 U.S. government and government agencies $ 556,015 $ 31,244 $ 126,093 $ 5,140 $ 718,492 Corporate bonds 29,078 — — — 29,078 Equity securities 14,984 — — — 14,984 Total $ 600,077 $ 31,244 $ 126,093 $ 5,140 $ 762,554 Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 9 $ — Amounts related to securities lending not included in offsetting disclosure in Note 9 $ 762,554 Other Investments The following table summarizes the Company’s other investments, including available for sale and fair value option components: March 31, December 31, Available for sale: Asian and emerging markets $ 109,084 $ 84,778 Investment grade fixed income 52,016 33,923 Credit related funds 11,003 7,469 Other 56,334 41,800 Total available for sale 228,437 167,970 Fair value option: Term loan investments (par value: $1,145,832 and $1,208,537) 1,123,568 1,190,799 Mezzanine debt funds 109,334 127,943 Credit related funds 208,707 218,298 Investment grade fixed income 82,718 75,468 Asian and emerging markets 205,150 178,568 Other (1) 165,837 129,717 Total fair value option 1,895,314 1,920,793 Total $ 2,123,751 $ 2,088,763 (1) Includes fund investments with strategies in mortgage servicing rights, transportation, infrastructure and other. Certain of the Company’s other investments are in investment funds for which the Company has the option to redeem at agreed upon values as described in each investment fund’s subscription agreement. Depending on the terms of the various subscription agreements, investments in investment funds may be redeemed daily, monthly, quarterly or on other terms. Two common redemption restrictions which may impact the Company’s ability to redeem these investment funds are gates and lockups. A gate is a suspension of redemptions which may be implemented by the general partner or investment manager of the fund in order to defer, in whole or in part, the redemption request in the event the aggregate amount of redemption requests exceeds a predetermined percentage of the investment fund’s net assets which may otherwise hinder the general partner or investment manager’s ability to liquidate holdings in an orderly fashion in order to generate the cash necessary to fund extraordinarily large redemption payouts. A lockup period is the initial amount of time an investor is contractually required to hold the security before having the ability to redeem. If the investment funds are eligible to be redeemed, the time to redeem such fund can take weeks or months following the notification. Fair Value Option The following table summarizes the Company’s assets and liabilities which are accounted for using the fair value option: March 31, December 31, Fixed maturities $ 1,112,945 $ 1,099,116 Other investments 1,895,314 1,920,793 Short-term investments 581,508 373,669 Equity securities 58,353 27,642 Investments accounted for using the fair value option $ 3,648,120 $ 3,421,220 Limited partnership interests In the normal course of its activities, the Company invests in limited partnerships as part of its overall investment strategy. Such amounts are included in ‘investments accounted for using the equity method’ and ‘investments accounted for using the fair value option.’ The Company has determined that it is not required to consolidate these investments because it is not the primary beneficiary of the funds. The Company’s maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the Company’s consolidated balance sheet and any unfunded commitment. The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item: March 31, December 31, Investments accounted for using the equity method (1) $ 861,607 $ 800,970 Investments accounted for using the fair value option (2) 89,726 90,804 Total $ 951,333 $ 891,774 (1) Aggregate unfunded commitments were $797.6 million at March 31, 2017 , compared to $776.6 million at December 31, 2016 . (2) Aggregate unfunded commitments were $66.7 million at March 31, 2017 , compared to $16.7 million at December 31, 2016 . Net Investment Income The components of net investment income were derived from the following sources: March 31, 2017 2016 Three Months Ended Fixed maturities $ 94,393 $ 73,673 Term loan investments 21,170 20,012 Equity securities (dividends) 2,643 3,435 Short-term investments 1,759 496 Other (1) 18,410 13,743 Gross investment income 138,375 111,359 Investment expenses (20,501 ) (17,624 ) Net investment income $ 117,874 $ 93,735 (1) Includes income distributions from investment funds and other items. Net Realized Gains (Losses) Net realized gains (losses) were as follows, excluding other than-temporary impairment provision. March 31, 2017 2016 Three Months Ended Available for sale securities: Gross gains on investment sales $ 69,175 $ 107,819 Gross losses on investment sales (61,362 ) (63,131 ) Change in fair value of assets and liabilities accounted for using the fair value option: Fixed maturities 20,541 (333 ) Other investments 17,248 (21,548 ) Equity securities 3,545 36 Short-term investments 4 (422 ) Derivative instruments (1) (9,181 ) 20,732 Other (2) (5,817 ) (5,829 ) Net realized gains (losses) $ 34,153 $ 37,324 (1) See Note 9 for information on the Company’s derivative instruments. (2) Includes the re-measurement of contingent consideration liability amounts. Equity in Net Income (Loss) of Investment Funds Accounted for Using the Equity Method The Company recorded $48.1 million of equity in net income related to investment funds accounted for using the equity method in the 2017 first quarter , compared to $6.7 million of loss for the 2016 first quarter . In applying the equity method, investments are initially recorded at cost and are subsequently adjusted based on the Company’s proportionate share of the net income or loss of the funds (which include changes in the market value of the underlying securities in the funds). Such investments are generally recorded on a one to three month lag based on the availability of reports from the investment funds. Other-Than-Temporary Impairments The Company performs quarterly reviews of its available for sale investments in order to determine whether declines in fair value below the amortized cost basis were considered other-than-temporary in accordance with applicable guidance. The following table details the net impairment losses recognized in earnings by asset class: March 31, 2017 2016 Three Months Ended Fixed maturities: Mortgage backed securities $ (1,319 ) $ (473 ) Corporate bonds (1 ) (4,880 ) Non-U.S. government securities (198 ) (181 ) Asset backed securities — (6 ) Total (1,518 ) (5,540 ) Equity securities (186 ) (1,102 ) Other investments (103 ) (997 ) Net impairment losses recognized in earnings $ (1,807 ) $ (7,639 ) Net impairment losses recognized in earnings in the 2017 first quarter were primarily on mortgage backed securities and reflected the Company’s decision to liquidate a portfolio of mortgage backed securities in April 2017. The Company recorded impairment losses on securities in such portfolio that were in an unrealized loss position at March 31, 2017 . The Company believes that the $5.4 million of OTTI included in accumulated other comprehensive income at March 31, 2017 on the securities which were considered by the Company to be impaired was due to market and sector-related factors ( i.e. , not credit losses). At March 31, 2017 , the Company did not intend to sell these securities, or any other securities which were in an unrealized loss position, and determined that it is more likely than not that the Company will not be required to sell such securities before recovery of their cost basis. The following table provides a roll forward of the amount related to credit losses recognized in earnings for which a portion of an OTTI was recognized in accumulated other comprehensive income: March 31, 2017 2016 Three Months Ended Balance at start of period $ 13,138 $ 26,875 Credit loss impairments recognized on securities not previously impaired — 1,063 Credit loss impairments recognized on securities previously impaired 23 522 Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security — — Reductions for securities sold during the period (624 ) (10,169 ) Balance at end of period $ 12,537 $ 18,291 Restricted Assets The Company is required to maintain assets on deposit, which primarily consist of fixed maturities, with various regulatory authorities to support its insurance and reinsurance operations. The Company’s insurance and reinsurance subsidiaries maintain assets in trust accounts as collateral for insurance and reinsurance transactions with affiliated companies and also have investments in segregated portfolios primarily to provide collateral or guarantees for letters of credit to third parties. See Note 10 for further details. The following table details the value of the Company’s restricted assets: March 31, December 31, Assets used for collateral or guarantees: Affiliated transactions $ 3,991,217 $ 3,871,971 Third party agreements 1,545,255 1,513,079 Deposits with U.S. regulatory authorities 528,594 472,890 Deposits with non-U.S. regulatory authorities 45,332 44,399 Total restricted assets $ 6,110,398 $ 5,902,339 |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value Accounting guidance regarding fair value measurements addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP and provides a common definition of fair value to be used throughout GAAP. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. In addition, it establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement (Level 1 being the highest priority and Level 3 being the lowest priority). The levels in the hierarchy are defined as follows: Level 1: Inputs to the valuation methodology are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets Level 2: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement Following is a description of the valuation methodologies used for securities measured at fair value, as well as the general classification of such securities pursuant to the valuation hierarchy. The Company reviews its securities measured at fair value and discusses the proper classification of such investments with investment advisers and others. The Company determines the existence of an active market based on its judgment as to whether transactions for the financial instrument occur in such market with sufficient frequency and volume to provide reliable pricing information. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. The Company uses quoted values and other data provided by nationally recognized independent pricing sources as inputs into its process for determining fair values of its fixed maturity investments. To validate the techniques or models used by pricing sources, the Company's review process includes, but is not limited to: (i) quantitative analysis (e.g., comparing the quarterly return for each managed portfolio to its target benchmark, with significant differences identified and investigated); (ii) a review of the average number of prices obtained in the pricing process and the range of resulting fair values; (iii) initial and ongoing evaluation of methodologies used by outside parties to calculate fair value; (iv) a comparison of the fair value estimates to the Company’s knowledge of the current market; (v) a comparison of the pricing services' fair values to other pricing services' fair values for the same investments; and (vi) periodic back-testing, which includes randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates from the pricing service. A price source hierarchy was maintained in order to determine which price source would be used (i.e. , a price obtained from a pricing service with more seniority in the hierarchy will be used over a less senior one in all cases). The hierarchy prioritizes pricing services based on availability and reliability and assigns the highest priority to index providers. Based on the above review, the Company will challenge any prices for a security or portfolio which are considered not to be representative of fair value. The Company did not adjust any of the prices obtained from the independent pricing sources at March 31, 2017 . In certain circumstances, when fair values are unavailable from these independent pricing sources, quotes are obtained directly from broker-dealers who are active in the corresponding markets. Such quotes are subject to the validation procedures noted above. Of the $19.62 billion of financial assets and liabilities measured at fair value at March 31, 2017 , approximately $177.9 million , or 0.9% , were priced using non-binding broker-dealer quotes. Of the $19.10 billion of financial assets and liabilities measured at fair value at December 31, 2016 , approximately $234.0 million , or 1.2% , were priced using non-binding broker-dealer quotes. Fixed maturities The Company uses the market approach valuation technique to estimate the fair value of its fixed maturity securities, when possible. The market approach includes obtaining prices from independent pricing services, such as index providers and pricing vendors, as well as to a lesser extent quotes from broker-dealers. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. Each source has its own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of “matrix pricing” in which the independent pricing source uses observable market inputs including, but not limited to, investment yields, credit risks and spreads, benchmarking of like securities, broker-dealer quotes, reported trades and sector groupings to determine a reasonable fair value. The following describes the significant inputs generally used to determine the fair value of the Company’s fixed maturity securities by asset class: • U.S. government and government agencies — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The Company determined that all U.S. Treasuries would be classified as Level 1 securities due to observed levels of trading activity, the high number of strongly correlated pricing quotes received on U.S. Treasuries and other factors. The fair values of U.S. government agency securities are generally determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads for these securities are observable market inputs, the fair values of U.S. government agency securities are classified within Level 2. • Corporate bonds — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined using the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. As the significant inputs used in the pricing process for corporate bonds are observable market inputs, the fair value of these securities are classified within Level 2. One security is included in Level 3 due to a low level of transparency on the inputs used in the pricing process. • Mortgage-backed securities — valuations provided by independent pricing services, substantially all through pricing vendors and index providers with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the expected average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. • Municipal bonds — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally determined using spreads obtained from broker-dealers who trade in the relevant security market, trade prices and the new issue market. As the significant inputs used in the pricing process for municipal bonds are observable market inputs, the fair value of these securities are classified within Level 2. • Commercial mortgage-backed securities — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for commercial mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. • Non-U.S. government securities — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally based on international indices or valuation models which include daily observed yield curves, cross-currency basis index spreads and country credit spreads. As the significant inputs used in the pricing process for non-U.S. government securities are observable market inputs, the fair value of these securities are classified within Level 2. • Asset-backed securities — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for asset-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. Equity securities The Company determined that exchange-traded equity securities would be included in Level 1 as their fair values are based on quoted market prices in active markets. Other equity securities are included in Level 2 of the valuation hierarchy. Other investments The Company determined that exchange-traded investments in mutual funds would be included in Level 1 as their fair values are based on quoted market prices in active markets. Other investments also include term loan investments for which fair values are estimated by using quoted prices of term loan investments with similar characteristics, pricing models or matrix pricing. Such investments are generally classified within Level 2. The fair values for certain of the Company’s other investments are determined using net asset values as advised by external fund managers. The net asset value is based on the fund manager’s valuation of the underlying holdings in accordance with the fund’s governing documents. In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. Derivative instruments The Company’s futures contracts, foreign currency forward contracts, interest rate swaps and other derivatives trade in the over-the-counter derivative market. The Company uses the market approach valuation technique to estimate the fair value for these derivatives based on significant observable market inputs from third party pricing vendors, non-binding broker-dealer quotes and/or recent trading activity. As the significant inputs used in the pricing process for these derivative instruments are observable market inputs, the fair value of these securities are classified within Level 2. Short-term investments The Company determined that certain of its short-term investments held in highly liquid money market-type funds, Treasury bills and commercial paper would be included in Level 1 as their fair values are based on quoted market prices in active markets. The fair values of other short-term investments are generally determined using the spread above the risk-free yield curve and are classified within Level 2. Contingent consideration liabilities Contingent consideration liabilities (included in ‘other liabilities’ in the consolidated balance sheets) include amounts related to the acquisition of CMG Mortgage Insurance Company and its affiliated mortgage insurance companies and other acquisitions. Such amounts are remeasured at fair value at each balance sheet date with changes in fair value recognized in ‘net realized gains (losses).’ To determine the fair value of contingent consideration liabilities, the Company estimates future payments using an income approach based on modeled inputs which include a weighted average cost of capital. The Company determined that contingent consideration liabilities would be included within Level 3. The following table presents the Company’s financial assets and liabilities measured at fair value by level at March 31, 2017 : Estimated Fair Value Measurements Using: Estimated Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 4,546,756 $ — $ 4,528,155 $ 18,601 Mortgage backed securities 412,023 — 412,023 — Municipal bonds 2,519,112 — 2,519,112 — Commercial mortgage backed securities 590,521 — 590,521 — U.S. government and government agencies 3,266,908 3,192,592 74,316 — Non-U.S. government securities 1,295,366 — 1,295,366 — Asset backed securities 1,638,347 — 1,627,710 10,637 Total 14,269,033 3,192,592 11,047,203 29,238 Equity securities 431,062 427,762 3,300 — Short-term investments 803,619 796,075 7,544 — Other investments 126,112 122,773 3,339 — Other investments measured at net asset value (2) 102,325 Total other investments 228,437 122,773 3,339 — Derivative instruments (4) 29,059 — 29,059 — Fair value option: Corporate bonds 817,690 — 817,690 — Non-U.S. government bonds 55,504 — 55,504 — Mortgage backed securities 16,489 — 16,489 — Asset backed securities 16,198 — 16,198 — U.S. government and government agencies 207,064 207,064 — — Short-term investments 581,508 580,315 1,193 — Equity securities 58,353 55,311 3,042 — Other investments 1,338,661 90,475 1,223,186 25,000 Other investments measured at net asset value (2) 556,653 Total 3,648,120 933,165 2,133,302 25,000 Total assets measured at fair value $ 19,409,330 $ 5,472,367 $ 13,223,747 $ 54,238 Liabilities measured at fair value: Contingent consideration liabilities $ (125,544 ) $ — $ — $ (125,544 ) Securities sold but not yet purchased (3) (59,430 ) — (59,430 ) — Derivative instruments (4) (22,227 ) — (22,227 ) — Total liabilities measured at fair value $ (207,201 ) $ — $ (81,657 ) $ (125,544 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 7 , “Investment Information—Securities Lending Agreements.” (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See Note 9 , “Derivative Instruments.” The following table presents the Company’s financial assets and liabilities measured at fair value by level at December 31, 2016 : Estimated Fair Value Measurements Using: Estimated Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 4,392,373 $ — $ 4,374,029 $ 18,344 Mortgage backed securities 490,093 — 490,093 — Municipal bonds 3,713,434 — 3,713,434 — Commercial mortgage backed securities 536,051 — 536,051 — U.S. government and government agencies 2,804,540 2,691,575 112,965 — Non-U.S. government securities 1,096,440 — 1,096,440 — Asset backed securities 1,123,987 — 1,112,698 11,289 Total 14,156,918 2,691,575 11,435,710 29,633 Equity securities 532,680 529,695 2,985 — Short-term investments 612,005 608,862 3,143 — Other investments 112,313 112,313 — — Other investments measured at net asset value (2) 55,657 Total other investments 167,970 112,313 — — Derivative instruments (4) 28,410 — 28,410 — Fair value option: Corporate bonds 790,935 — 790,935 — Non-U.S. government bonds 61,747 — 61,747 — Mortgage backed securities 18,624 — 18,624 — Asset backed securities 30,324 — 30,324 — U.S. government and government agencies 197,486 197,486 — — Short-term investments 373,669 309,127 64,542 — Equity securities 27,642 25,328 2,314 — Other investments 1,226,242 80,706 1,120,536 25,000 Other investments measured at net asset value (2) 694,551 Total 3,421,220 612,647 2,089,022 25,000 Total assets measured at fair value $ 18,919,203 $ 4,555,092 $ 13,559,270 $ 54,633 Liabilities measured at fair value: Contingent consideration liabilities $ (122,350 ) $ — $ — $ (122,350 ) Securities sold but not yet purchased (3) (33,157 ) — (33,157 ) — Derivative instruments (4) (26,049 ) — (26,049 ) — Total liabilities measured at fair value $ (181,556 ) $ — $ (59,206 ) $ (122,350 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 7 , “Investment Information—Securities Lending Agreements.” (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See Note 9 , “Derivative Instruments.” The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs: Assets Liabilities s Available For Sale Fair Value Option Asset Backed Securities Corporate Bonds Other Investments Total Contingent Consideration Liabilities Three Months Ended March 31, 2017 Balance at beginning of period $ 11,289 $ 18,344 $ 25,000 $ 54,633 $ (122,350 ) Total gains or (losses) (realized/unrealized) Included in earnings (1) 707 257 — 964 (3,646 ) Included in other comprehensive income — — — — — Purchases, issuances, sales and settlements Purchases — — — — — Issuances — — — — — Sales — — — — — Settlements (1,359 ) — — (1,359 ) 452 Transfers in and/or out of Level 3 — — — — — Balance at end of period $ 10,637 $ 18,601 $ 25,000 $ 54,238 $ (125,544 ) Three Months Ended March 31, 2016 Balance at beginning of period $ 57,500 $ 16,368 $ — $ 73,868 $ (96,048 ) Total gains or (losses) (realized/unrealized) Included in earnings (1) — (1,202 ) — (1,202 ) (5,198 ) Included in other comprehensive income — — — — — Purchases, issuances, sales and settlements Purchases — — — — — Issuances — — — — — Sales — — — — — Settlements — — — — 536 Transfers in and/or out of Level 3 — — — — — Balance at end of period $ 57,500 $ 15,166 $ — $ 72,666 $ (100,710 ) (1) Gains or losses on asset backed securities were included in net impairment losses recognized in earnings while gains or losses on corporate bonds and contingent consideration liabilities were included in net realized gains (losses). Financial Instruments Disclosed, But Not Carried, At Fair Value The Company uses various financial instruments in the normal course of its business. The carrying values of cash, accrued investment income, receivable for securities sold, certain other assets, payable for securities purchased and certain other liabilities approximated their fair values at March 31, 2017 , due to their respective short maturities. As these financial instruments are not actively traded, their respective fair values are classified within Level 2. At March 31, 2017 , the senior notes of ACGL were carried at their cost, net of debt issuance costs, of $297.0 million and had a fair value of $394.7 million , while the senior notes of Arch Capital Group (U.S.) Inc. (“Arch-U.S.”) were carried at their cost, net of debt issuance costs, of $494.5 million and had a fair value of $535.6 million . The senior notes of Arch Capital Finance LLC due in 2026 were carried at their cost, net of debt issuance costs, of $495.8 million and had a fair value of $515.2 million , while the senior notes due in 2046 were carried at their cost, net of debt issuance costs, of $445.1 million and had a fair value of $488.0 million . The fair values of the senior notes were obtained from a third party pricing service and are based on observable market inputs. As such, the fair values of the senior notes are classified within Level 2. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company’s investment strategy allows for the use of derivative instruments. The Company’s derivative instruments are recorded on its consolidated balance sheets at fair value. The Company utilizes exchange traded U.S. Treasury note, Eurodollar and other futures contracts and commodity futures to manage portfolio duration or replicate investment positions in its portfolios and the Company routinely utilizes foreign currency forward contracts, currency options, index futures contracts and other derivatives as part of its total return objective. In addition, certain of the Company’s investments are managed in portfolios which incorporate the use of foreign currency forward contracts which are intended to provide an economic hedge against foreign currency movements. In addition, the Company purchases to-be-announced mortgage backed securities (“TBAs”) as part of its investment strategy. TBAs represent commitments to purchase a future issuance of agency mortgage backed securities. For the period between purchase of a TBA and issuance of the underlying security, the Company’s position is accounted for as a derivative. The Company purchases TBAs in both long and short positions to enhance investment performance and as part of its overall investment strategy. The following table summarizes information on the fair values and notional values of the Company’s derivative instruments: Estimated Fair Value Asset Derivatives Liability Derivatives Notional Value (1) March 31, 2017 Futures contracts (2) $ 3,550 $ (4,489 ) $ 2,276,070 Foreign currency forward contracts (2) 7,363 (11,435 ) 1,264,235 TBAs (3) 32,011 (32,791 ) 63,966 Other (2) 18,146 (6,303 ) 1,552,009 Total $ 61,070 $ (55,018 ) December 31, 2016 Futures contracts (2) $ 360 $ (9,398 ) $ 1,655,530 Foreign currency forward contracts (2) 9,354 (12,941 ) 1,186,386 TBAs (3) — — — Other (2) 20,287 (3,710 ) 1,014,863 Total $ 30,001 $ (26,049 ) (1) Represents the absolute notional value of all outstanding contracts, consisting of long and short positions. (2) The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’ (3) The fair value of TBAs are included in ‘fixed maturities available for sale, at fair value.’ The Company did not hold any derivatives which were designated as hedging instruments at March 31, 2017 or December 31, 2016 . The Company’s derivative instruments can be traded under master netting agreements, which establish terms that apply to all derivative transactions with a counterparty. In the event of a bankruptcy or other stipulated event of default, such agreements provide that the non-defaulting party may elect to terminate all outstanding derivative transactions, in which case all individual derivative positions (loss or gain) with a counterparty are closed out and netted and replaced with a single amount, usually referred to as the termination amount, which is expressed in a single currency. The resulting single net amount, where positive, is payable to the party “in-the-money” regardless of whether or not it is the defaulting party, unless the parties have agreed that only the non-defaulting party is entitled to receive a termination payment where the net amount is positive and is in its favor. Contractual close-out netting reduces derivatives credit exposure from gross to net exposure. At March 31, 2017 , asset derivatives and liability derivatives of $59.3 million and $54.6 million , respectively, were subject to a master netting agreement, compared to $28.4 million and $26.0 million , respectively, at December 31, 2016 . The remaining derivatives included in the preceding table were not subject to a master netting agreement. All realized and unrealized contract gains and losses on the Company’s derivative instruments are reflected in net realized gains (losses) in the consolidated statements of income, as summarized in the following table: Derivatives not designated as March 31, hedging instruments: 2017 2016 Three Months Ended Net realized gains (losses): Futures contracts $ 7,720 $ 26,451 Foreign currency forward contracts (11,766 ) (4,752 ) TBAs (65 ) 297 Other (5,070 ) (1,264 ) Total $ (9,181 ) $ 20,732 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Investment Commitments The Company’s investment commitments, which are primarily related to agreements entered into by the Company to invest in funds and separately managed accounts when called upon, were approximately $1.45 billion at March 31, 2017 . |
Share Transactions
Share Transactions | 3 Months Ended |
Mar. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Share Transactions | Share Transactions Share Repurchases The board of directors of ACGL has authorized the investment in ACGL’s common shares through a share repurchase program. Since the inception of the share repurchase program, ACGL has repurchased approximately 125.2 million common shares for an aggregate purchase price of $3.68 billion . During the 2017 first quarter , the Company did not repurchase any shares under the share repurchase program. During the 2016 first quarter , ACGL repurchased 1.1 million common shares for an aggregate purchase price of $75.3 million . At March 31, 2017 , $446.5 million of share repurchases were available under the program. Repurchases under the program may be effected from time to time in open market or privately negotiated transactions through December 31, 2019. The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions and corporate and regulatory considerations. |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2017 | |
Comprehensive Income Note Disclosure [Abstract] | |
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss): Amounts Reclassified from AOCI Consolidated Statement of Income Three Months Ended Details About Line Item That Includes March 31, AOCI Components Reclassification 2017 2016 Unrealized appreciation on available-for-sale investments Net realized gains (losses) $ 7,813 $ 44,687 Other-than-temporary impairment losses (1,807 ) (7,737 ) Total before tax 6,006 36,950 Income tax (expense) benefit (962 ) (4,727 ) Net of tax $ 5,044 $ 32,223 Before Tax Amount Tax Expense (Benefit) Net of Tax Amount Three Months Ended March 31, 2017 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 111,472 $ 10,680 $ 100,792 Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) — — — Less reclassification of net realized gains (losses) included in net income 6,006 962 5,044 Foreign currency translation adjustments 3,165 41 3,124 Other comprehensive income (loss) $ 108,631 $ 9,759 $ 98,872 Three Months Ended March 31, 2016 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 152,174 $ 19,193 $ 132,981 Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) (98 ) — (98 ) Less reclassification of net realized gains (losses) included in net income 36,950 4,727 32,223 Foreign currency translation adjustments 17,860 547 17,313 Other comprehensive income (loss) $ 132,986 $ 15,013 $ 117,973 |
Guarantor Financial Information
Guarantor Financial Information | 3 Months Ended |
Mar. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Guarantor Financial Information | Guarantor Financial Information The following tables present condensed financial information for ACGL, Arch-U.S., a 100% owned subsidiary of ACGL, and ACGL’s other subsidiaries. March 31, 2017 Condensed Consolidating Balance Sheet ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Assets Total investments $ 256 $ 41,715 $ 20,227,399 $ (14,700 ) $ 20,254,670 Cash 10,177 42,745 650,832 — 703,754 Investments in subsidiaries 8,992,903 3,843,774 — (12,836,677 ) — Due from subsidiaries and affiliates 1,626 52,032 1,868,171 (1,921,829 ) — Premiums receivable — — 1,891,983 (637,935 ) 1,254,048 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses — — 6,209,021 (4,075,873 ) 2,133,148 Contractholder receivables — — 1,766,340 — 1,766,340 Ceded unearned premiums — — 2,201,994 (1,260,071 ) 941,923 Deferred acquisition costs — — 638,415 (150,490 ) 487,925 Goodwill and intangible assets — — 750,315 — 750,315 Other assets 14,730 55,658 1,893,742 (164,027 ) 1,800,103 Total assets $ 9,019,692 $ 4,035,924 $ 38,098,212 $ (21,061,602 ) $ 30,092,226 Liabilities Reserve for losses and loss adjustment expenses $ — $ — $ 14,337,192 $ (4,040,371 ) $ 10,296,821 Unearned premiums — — 4,891,330 (1,260,071 ) 3,631,259 Reinsurance balances payable — — 959,221 (637,936 ) 321,285 Contractholder payables — — 1,766,340 — 1,766,340 Collateral held for insured obligations — — 327,161 327,161 Senior notes 296,979 494,548 940,883 — 1,732,410 Revolving credit agreement borrowings 100,000 — 634,961 — 734,961 Due to subsidiaries and affiliates 2,044 541,400 1,378,384 (1,921,828 ) — Other liabilities 14,825 61,055 1,876,454 (350,019 ) 1,602,315 Total liabilities 413,848 1,097,003 27,111,926 (8,210,225 ) 20,412,552 Redeemable noncontrolling interests — — 220,344 (14,700 ) 205,644 Shareholders’ Equity Total shareholders’ equity available to Arch 8,605,844 2,938,921 9,897,756 (12,836,677 ) 8,605,844 Non-redeemable noncontrolling interests — — 868,186 — 868,186 Total shareholders’ equity 8,605,844 2,938,921 10,765,942 (12,836,677 ) 9,474,030 Total liabilities, noncontrolling interests and shareholders’ equity $ 9,019,692 $ 4,035,924 $ 38,098,212 $ (21,061,602 ) $ 30,092,226 December 31, 2016 Condensed Consolidating Balance Sheet ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Assets Total investments $ 2,612 $ 41,672 $ 19,690,067 $ (14,700 ) $ 19,719,651 Cash 1,687 71,955 769,300 — 842,942 Investments in subsidiaries 8,660,586 3,716,681 — (12,377,267 ) — Due from subsidiaries and affiliates 14,297 51,298 1,866,681 (1,932,276 ) — Premiums receivable — — 1,579,865 (507,430 ) 1,072,435 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses — — 6,114,518 (4,000,380 ) 2,114,138 Contractholder receivables — — 1,717,436 — 1,717,436 Ceded unearned premiums — — 1,985,311 (1,125,744 ) 859,567 Deferred acquisition costs — — 577,461 (129,901 ) 447,560 Goodwill and intangible assets — — 781,553 — 781,553 Other assets 15,725 49,244 1,901,786 (149,928 ) 1,816,827 Total assets $ 8,694,907 $ 3,930,850 $ 36,983,978 $ (20,237,626 ) $ 29,372,109 Liabilities Reserve for losses and loss adjustment expenses $ — $ — $ 14,164,191 $ (3,963,231 ) $ 10,200,960 Unearned premiums — — 4,532,614 (1,125,744 ) 3,406,870 Reinsurance balances payable — — 807,837 (507,430 ) 300,407 Contractholder payables — — 1,717,436 — 1,717,436 Collateral held for insured obligations — — 301,406 — 301,406 Deposit accounting liabilities — — 22,150 — 22,150 Senior notes 296,957 494,525 940,776 — 1,732,258 Revolving credit agreement borrowings 100,000 — 656,650 — 756,650 Due to subsidiaries and affiliates 26,270 535,584 1,370,422 (1,932,276 ) — Other liabilities 17,962 54,823 1,867,040 (316,978 ) 1,622,847 Total liabilities 441,189 1,084,932 26,380,522 (7,845,659 ) 20,060,984 Redeemable noncontrolling interests — — 220,253 (14,700 ) 205,553 Shareholders’ Equity Total shareholders’ equity available to Arch 8,253,718 2,845,918 9,531,349 (12,377,267 ) 8,253,718 Non-redeemable noncontrolling interests — — 851,854 — 851,854 Total shareholders’ equity 8,253,718 2,845,918 10,383,203 (12,377,267 ) 9,105,572 Total liabilities, noncontrolling interests and shareholders’ equity $ 8,694,907 $ 3,930,850 $ 36,983,978 $ (20,237,626 ) $ 29,372,109 Three Months Ended March 31, 2017 Condensed Consolidating Statement of Income and Comprehensive Income ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Revenues Net premiums earned $ — $ — $ 1,117,017 $ — $ 1,117,017 Net investment income 5 816 137,981 (20,928 ) 117,874 Net realized gains (losses) — — 34,153 — 34,153 Net impairment losses recognized in earnings — — (1,807 ) — (1,807 ) Other underwriting income — — 4,633 — 4,633 Equity in net income (loss) of investment funds accounted for using the equity method — — 48,088 — 48,088 Other income (loss) 171 — (953 ) — (782 ) Total revenues 176 816 1,339,112 (20,928 ) 1,319,176 Expenses Losses and loss adjustment expenses — — 552,570 — 552,570 Acquisition expenses — — 182,289 — 182,289 Other operating expenses — — 174,719 — 174,719 Corporate expenses 17,247 2,008 8,537 — 27,792 Amortization of intangible assets — — 31,294 — 31,294 Interest expense 6,015 11,930 31,336 (20,605 ) 28,676 Net foreign exchange (gains) losses — — 15,348 4,056 19,404 Total expenses 23,262 13,938 996,093 (16,549 ) 1,016,744 Income (loss) before income taxes (23,086 ) (13,122 ) 343,019 (4,379 ) 302,432 Income tax (expense) benefit — 4,873 (33,270 ) — (28,397 ) Income (loss) before equity in net income of subsidiaries (23,086 ) (8,249 ) 309,749 (4,379 ) 274,035 Equity in net income of subsidiaries 276,213 77,373 — (353,586 ) — Net income 253,127 69,124 309,749 (357,965 ) 274,035 Net (income) loss attributable to noncontrolling interests — — (21,231 ) 323 (20,908 ) Net income available to Arch 253,127 69,124 288,518 (357,642 ) 253,127 Preferred dividends (11,218 ) — — — (11,218 ) Net income available to Arch common shareholders $ 241,909 $ 69,124 $ 288,518 $ (357,642 ) $ 241,909 Comprehensive income (loss) available to Arch $ 351,991 $ 87,781 $ 224,173 $ (311,954 ) $ 351,991 Three Months Ended March 31, 2016 Condensed Consolidating Statement of Income and Comprehensive Income ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Revenues Net premiums earned $ — $ — $ 951,579 $ — $ 951,579 Net investment income 1 773 100,261 (7,300 ) 93,735 Net realized gains (losses) — — 37,324 — 37,324 Net impairment losses recognized in earnings — — (7,639 ) — (7,639 ) Other underwriting income — — 5,319 (272 ) 5,047 Equity in net income (loss) of investment funds accounted for using the equity method — — 6,655 — 6,655 Other income (loss) 206 — (231 ) — (25 ) Total revenues 207 773 1,093,268 (7,572 ) 1,086,676 Expenses Losses and loss adjustment expenses — — 522,949 — 522,949 Acquisition expenses — — 167,838 — 167,838 Other operating expenses — — 150,148 — 150,148 Corporate expenses 9,355 582 (554 ) — 9,383 Amortization of intangible assets — — 4,748 — 4,748 Interest expense 5,934 6,672 10,752 (7,251 ) 16,107 Net foreign exchange (gains) losses — — 16,495 7,071 23,566 Total expenses 15,289 7,254 872,376 (180 ) 894,739 Income (loss) before income taxes (15,082 ) (6,481 ) 220,892 (7,392 ) 191,937 Income tax (expense) benefit — 2,244 (18,554 ) — (16,310 ) Income (loss) before equity in net income of subsidiaries (15,082 ) (4,237 ) 202,338 (7,392 ) 175,627 Equity in net income of subsidiaries 169,880 22,866 — (192,746 ) — Net income 154,798 18,629 202,338 (200,138 ) 175,627 Net (income) loss attributable to noncontrolling interests — — (21,150 ) 321 (20,829 ) Net income available to Arch 154,798 18,629 181,188 (199,817 ) 154,798 Preferred dividends (5,484 ) — — — (5,484 ) Net income available to Arch common shareholders $ 149,314 $ 18,629 $ 181,188 $ (199,817 ) $ 149,314 Comprehensive income (loss) available to Arch $ 272,929 $ 58,649 $ 292,251 $ (350,900 ) $ 272,929 Three Months Ended March 31, 2017 Condensed Consolidating Statement of Cash Flows ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Operating Activities Net Cash Provided By (Used For) Operating Activities $ 701 $ (3,257 ) $ 264,088 $ (53,414 ) $ 208,118 Investing Activities Purchases of fixed maturity investments — — (10,476,918 ) — (10,476,918 ) Purchases of equity securities — — (143,833 ) — (143,833 ) Purchases of other investments — — (427,039 ) — (427,039 ) Proceeds from the sales of fixed maturity investments — — 10,386,746 — 10,386,746 Proceeds from the sales of equity securities — — 253,347 — 253,347 Proceeds from the sales, redemptions and maturities of other investments — — 317,518 — 317,518 Proceeds from redemptions and maturities of fixed maturity investments — — 174,718 — 174,718 Net settlements of derivative instruments — — (3,921 ) — (3,921 ) Net (purchases) sales of short-term investments 2,356 (43 ) (400,164 ) — (397,851 ) Change in cash collateral related to securities lending — — 180,946 — 180,946 Contributions to subsidiaries — (25,900 ) (60,050 ) 85,950 — Purchases of fixed assets — (10 ) (5,184 ) — (5,194 ) Other 20,641 — 19,603 (20,641 ) 19,603 Net Cash Provided By (Used For) Investing Activities 22,997 (25,953 ) (184,231 ) 65,309 (121,878 ) Financing Activities Proceeds from common shares issued, net (3,990 ) — 85,950 (85,950 ) (3,990 ) Proceeds from borrowings — — — — — Repayments of borrowings — — (22,000 ) — (22,000 ) Change in cash collateral related to securities lending — — (180,946 ) — (180,946 ) Dividends paid to redeemable noncontrolling interests — — (4,816 ) 319 (4,497 ) Dividends paid to parent (1) — — (53,095 ) 53,095 — Other — — (25,659 ) 20,641 (5,018 ) Preferred dividends paid (11,218 ) — — — (11,218 ) Net Cash Provided By (Used For) Financing Activities (15,208 ) — (200,566 ) (11,895 ) (227,669 ) Effects of exchange rates changes on foreign currency cash — — 2,241 — 2,241 Increase (decrease) in cash 8,490 (29,210 ) (118,468 ) — (139,188 ) Cash beginning of year 1,687 71,955 769,300 — 842,942 Cash end of period $ 10,177 $ 42,745 $ 650,832 $ — $ 703,754 (1) Dividends paid are included in net cash provided by (used for) operating activities in the ACGL (Parent Guarantor) and/or Arch-U.S. (Subsidiary Issuer) columns. Three Months Ended March 31, 2016 Condensed Consolidating Statement of Cash Flows ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Operating Activities Net Cash Provided By (Used For) Operating Activities $ 83,892 $ (4,740 ) $ 340,558 $ (97,167 ) $ 322,543 Investing Activities Purchases of fixed maturity investments — — (8,133,537 ) — (8,133,537 ) Purchases of equity securities — — (128,263 ) — (128,263 ) Purchases of other investments — — (305,198 ) — (305,198 ) Proceeds from the sales of fixed maturity investments — — 7,827,536 — 7,827,536 Proceeds from the sales of equity securities — — 216,012 — 216,012 Proceeds from the sales, redemptions and maturities of other investments — — 211,125 — 211,125 Proceeds from redemptions and maturities of fixed maturity investments — — 163,894 — 163,894 Net settlements of derivative instruments — — 21,091 — 21,091 Net (purchases) sales of short-term investments (60 ) (30 ) (65,504 ) — (65,594 ) Change in cash collateral related to securities lending — — (43,118 ) — (43,118 ) Contributions to subsidiaries (3,300 ) — (2,779 ) 6,079 — Purchases of fixed assets (8 ) — (3,944 ) — (3,952 ) Other — — 6,737 — 6,737 Net Cash Provided By (Used For) Investing Activities (3,368 ) (30 ) (235,948 ) 6,079 (233,267 ) Financing Activities Purchases of common shares under share repurchase program (75,256 ) — — — (75,256 ) Proceeds from common shares issued, net 202 — 6,079 (6,079 ) 202 Repayments of borrowings — — (74,171 ) — (74,171 ) Change in cash collateral related to securities lending — — 43,118 — 43,118 Dividends paid to redeemable noncontrolling interests — — (4,816 ) 319 (4,497 ) Dividends paid to parent (1) — — (96,848 ) 96,848 — Other — 184 28,931 — 29,115 Preferred dividends paid (5,484 ) — — — (5,484 ) Net Cash Provided By (Used For) Financing Activities (80,538 ) 184 (97,707 ) 91,088 (86,973 ) Effects of exchange rates changes on foreign currency cash — — 2,332 — 2,332 Increase (decrease) in cash (14 ) (4,586 ) 9,235 — 4,635 Cash beginning of year 6,809 17,023 529,494 — 553,326 Cash end of period $ 6,795 $ 12,437 $ 538,729 $ — $ 557,961 (1) Dividends paid are included in net cash provided by (used for) operating activities in the ACGL (Parent Guarantor) and/or Arch-U.S. (Subsidiary Issuer) columns. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s income tax provision on income before income taxes resulted in an expense of 9.4% for the three months ended March 31, 2017 , compared to an expense of 8.5% for the 2016 period. The Company’s effective tax rate, which is based upon the expected annual effective tax rate, may fluctuate from period to period based on the relative mix of income or loss reported by jurisdiction and the varying tax rates in each jurisdiction. For interim reporting purposes, the Company has calculated its effective tax rate for the full year of 2017 by treating any excess tax benefits that arise from the accounting for stock based compensation as a discrete item. As such, this amount is not included when projecting the Company’s full year effective tax rate but rather is accounted for at the U.S. Federal statutory rate of 35% after applying the projected full year effective tax rate to actual three-month results before the discrete item. The impact of the discrete item resulted in a benefit of 0.8% for the three months ended March 31, 2017. The Company had a net deferred tax asset of $227.5 million at March 31, 2017 , compared to $221.2 million at December 31, 2016 . In addition, the Company paid $0.7 million and $2.5 million of income taxes for the three months ended March 31, 2017 and 2016 , respectively. |
Legal Proceedings
Legal Proceedings | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Legal Proceedings [Abstract] | |
Legal Proceedings | Legal Proceedings The Company, in common with the insurance industry in general, is subject to litigation and arbitration in the normal course of its business. As of March 31, 2017 , the Company was not a party to any litigation or arbitration which is expected by management to have a material adverse effect on the Company’s results of operations and financial condition and liquidity. |
Transactions with Related Parti
Transactions with Related Parties | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Transactions with Related Parties Kewsong Lee, a director of ACGL, is a Managing Director and Deputy Chief Investment Officer for Corporate Private Equity of The Carlyle Group (“Carlyle”). As part of its investment philosophy, the Company invests a portion of its investment portfolio in alternative investment funds. As of March 31, 2017 , the total value of the Company’s investments in funds or other investments managed by Carlyle was approximately $200.5 million , and the Company had aggregate unfunded commitments to funds managed by Carlyle of $510.0 million . The Company may make additional commitments to funds managed by Carlyle from time to time. During the three months ended March 31, 2017 and 2016 , the Company made aggregate capital contributions to funds managed by Carlyle of $7.9 million and $40.1 million , respectively, and received aggregate cash distributions from funds managed by Carlyle of $23.3 million and $8.8 million , respectively. |
General (Policies)
General (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. |
Variable Interest Entities an25
Variable Interest Entities and Noncontrolling Interests (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Noncontrolling Interest [Abstract] | |
Carrying value of assets and liabilities of variable interest entity | The following table provides the carrying amount and balance sheet caption in which the assets and liabilities of Watford Re are reported: March 31, December 31, 2017 2016 Assets Investments accounted for using the fair value option $ 1,976,466 $ 1,857,623 Cash 47,566 74,893 Accrued investment income 14,066 17,017 Premiums receivable 196,866 189,911 Reinsurance recoverable on unpaid and paid losses and LAE 25,673 24,420 Ceded unearned premiums 16,383 12,145 Deferred acquisition costs 93,227 86,379 Receivable for securities sold 19,235 1,326 Goodwill and intangible assets 7,650 7,650 Other assets 116,336 111,386 Total assets of consolidated VIE $ 2,513,468 $ 2,382,750 Liabilities Reserves for losses and loss adjustment expenses $ 566,175 $ 510,809 Unearned premiums 319,677 293,480 Reinsurance balances payable 15,171 12,289 Revolving credit agreement borrowings 234,961 256,650 Payable for securities purchased 81,216 42,922 Other liabilities 100,198 88,976 Total liabilities of consolidated VIE $ 1,317,398 $ 1,205,126 Redeemable noncontrolling interests $ 220,344 $ 220,253 |
Activity in non-redeemable noncontrolling interests | The following table sets forth activity in the non-redeemable noncontrolling interests: March 31, 2017 2016 Three Months Ended Balance, beginning of period $ 851,854 $ 738,831 Amounts attributable to noncontrolling interests 16,324 16,242 Foreign currency translation adjustments attributable to noncontrolling interests 8 (158 ) Balance, end of period $ 868,186 $ 754,915 |
Activity in redeemable noncontrolling interests | The following table sets forth activity in the redeemable non-controlling interests: March 31, 2017 2016 Three Months Ended Balance, beginning of period $ 205,553 $ 205,182 Accretion of preference share issuance costs 91 92 Balance, end of period $ 205,644 $ 205,274 |
Portion of income or loss attributable to third party investors | The portion of Watford Re’s income or loss attributable to third party investors, recorded in the Company’s consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests,’ are summarized in the table below: March 31, 2017 2016 Three Months Ended Amounts attributable to non-redeemable noncontrolling interests $ (16,324 ) $ (16,242 ) Dividends attributable to redeemable noncontrolling interests (4,584 ) (4,587 ) Net (income) loss attributable to noncontrolling interests $ (20,908 ) $ (20,829 ) |
Total assets and maximum exposure to loss associated with VIEs | The following table presents total assets of Bellemeade I and Bellemeade II as well as the Company’s maximum exposure to loss associated with these VIEs: Maximum Exposure to Loss Total VIE Assets On-Balance Sheet Off-Balance Sheet Total Bellemeade I $ 146,200 $ 351 $ 1,310 $ 1,661 Bellemeade II 283,777 54 1,103 1,157 Total $ 429,977 $ 405 $ 2,413 $ 2,818 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted earnings per common share | The following table sets forth the computation of basic and diluted earnings per common share: Three Months Ended March 31, 2017 2016 Numerator: Net income $ 274,035 $ 175,627 Amounts attributable to noncontrolling interests (20,908 ) (20,829 ) Net income available to Arch 253,127 154,798 Preferred dividends (11,218 ) (5,484 ) Net income available to Arch common shareholders $ 241,909 $ 149,314 Denominator: Weighted average common shares outstanding 121,272,107 120,428,179 Series D preferred shares (1) 12,762,820 — Weighted average common shares and common share equivalents outstanding — basic 134,034,927 120,428,179 Effect of dilutive common share equivalents: Nonvested restricted shares 1,646,555 1,460,654 Stock options (2) 3,366,190 2,607,663 Weighted average common shares and common share equivalents outstanding — diluted 139,047,672 124,496,496 Earnings per common share: Basic $ 1.80 $ 1.24 Diluted $ 1.74 $ 1.20 (1) Such shares are convertible non-voting common equivalent preferred shares issued in connection with the UGC acquisition. (2) Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2017 first quarter and 2016 first quarter , the number of stock options excluded were 263,475 and 607,208 , respectively. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Analysis of underwriting income or loss by segment and reconciliation to net income available to common shareholders | The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to common shareholders: Three Months Ended March 31, 2017 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 782,281 $ 475,782 $ 348,623 $ 1,606,686 $ 154,120 $ 1,657,990 Premiums ceded (234,095 ) (166,092 ) (73,925 ) (474,112 ) (10,434 ) (381,730 ) Net premiums written 548,186 309,690 274,698 1,132,574 143,686 1,276,260 Change in unearned premiums (42,540 ) (64,839 ) (30,175 ) (137,554 ) (21,689 ) (159,243 ) Net premiums earned 505,646 244,851 244,523 995,020 121,997 1,117,017 Other underwriting income — (306 ) 4,123 3,817 816 4,633 Losses and loss adjustment expenses (332,641 ) (105,454 ) (29,065 ) (467,160 ) (85,410 ) (552,570 ) Acquisition expenses, net (74,868 ) (46,147 ) (28,766 ) (149,781 ) (32,508 ) (182,289 ) Other operating expenses (88,126 ) (37,533 ) (41,870 ) (167,529 ) (7,190 ) (174,719 ) Underwriting income (loss) $ 10,011 $ 55,411 $ 148,945 214,367 (2,295 ) 212,072 Net investment income 95,812 22,062 117,874 Net realized gains (losses) 28,512 5,641 34,153 Net impairment losses recognized in earnings (1,807 ) — (1,807 ) Equity in net income (loss) of investment funds accounted for using the equity method 48,088 — 48,088 Other income (loss) (782 ) — (782 ) Corporate expenses (2) (12,208 ) — (12,208 ) UGC transaction costs and other (2) (15,584 ) — (15,584 ) Amortization of intangible assets (31,294 ) — (31,294 ) Interest expense (25,756 ) (2,920 ) (28,676 ) Net foreign exchange gains (losses) (19,845 ) 441 (19,404 ) Income (loss) before income taxes 279,503 22,929 302,432 Income tax expense (28,397 ) — (28,397 ) Net income (loss) 251,106 22,929 274,035 Dividends attributable to redeemable noncontrolling interests — (4,584 ) (4,584 ) Amounts attributable to noncontrolling interests — (16,324 ) (16,324 ) Net income (loss) available to Arch 251,106 2,021 253,127 Preferred dividends (11,218 ) — (11,218 ) Net income (loss) available to Arch common shareholders $ 239,888 $ 2,021 $ 241,909 Underwriting Ratios Loss ratio 65.8 % 43.1 % 11.9 % 46.9 % 70.0 % 49.5 % Acquisition expense ratio 14.8 % 18.8 % 11.8 % 15.1 % 26.6 % 16.3 % Other operating expense ratio 17.4 % 15.3 % 17.1 % 16.8 % 5.9 % 15.6 % Combined ratio 98.0 % 77.2 % 40.8 % 78.8 % 102.5 % 81.4 % Goodwill and intangible assets $ 24,371 $ 773 $ 717,521 $ 742,665 $ 7,650 $ 750,315 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘UGC transaction costs and other.’ Three Months Ended March 31, 2016 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 798,553 $ 481,390 $ 111,280 $ 1,391,061 $ 148,606 $ 1,437,966 Premiums ceded (248,789 ) (160,566 ) (4,767 ) (413,960 ) (4,472 ) (316,731 ) Net premiums written 549,764 320,824 106,513 977,101 144,134 1,121,235 Change in unearned premiums (36,675 ) (59,616 ) (44,748 ) (141,039 ) (28,617 ) (169,656 ) Net premiums earned 513,089 261,208 61,765 836,062 115,517 951,579 Other underwriting income — 325 3,793 4,118 929 5,047 Losses and loss adjustment expenses (323,609 ) (111,598 ) (8,629 ) (443,836 ) (79,113 ) (522,949 ) Acquisition expenses, net (74,348 ) (54,758 ) (5,793 ) (134,899 ) (32,939 ) (167,838 ) Other operating expenses (85,058 ) (36,258 ) (23,494 ) (144,810 ) (5,338 ) (150,148 ) Underwriting income (loss) $ 30,074 $ 58,919 $ 27,642 116,635 (944 ) 115,691 Net investment income 70,409 23,326 93,735 Net realized gains (losses) 31,862 5,462 37,324 Net impairment losses recognized in earnings (7,639 ) — (7,639 ) Equity in net income (loss) of investment funds accounted for using the equity method 6,655 — 6,655 Other income (loss) (25 ) — (25 ) Corporate expenses (9,383 ) — (9,383 ) Amortization of intangible assets (4,748 ) — (4,748 ) Interest expense (12,627 ) (3,480 ) (16,107 ) Net foreign exchange gains (losses) (22,041 ) (1,525 ) (23,566 ) Income (loss) before income taxes 169,098 22,839 191,937 Income tax expense (16,310 ) — (16,310 ) Net income (loss) 152,788 22,839 175,627 Dividends attributable to redeemable noncontrolling interests — (4,587 ) (4,587 ) Amounts attributable to noncontrolling interests — (16,242 ) (16,242 ) Net income (loss) available to Arch 152,788 2,010 154,798 Preferred dividends (5,484 ) — (5,484 ) Net income (loss) available to Arch common shareholders $ 147,304 $ 2,010 $ 149,314 Underwriting Ratios Loss ratio 63.1 % 42.7 % 14.0 % 53.1 % 68.5 % 55.0 % Acquisition expense ratio 14.5 % 21.0 % 9.4 % 16.1 % 28.5 % 17.6 % Other operating expense ratio 16.6 % 13.9 % 38.0 % 17.3 % 4.6 % 15.8 % Combined ratio 94.2 % 77.6 % 61.4 % 86.5 % 101.6 % 88.4 % Goodwill and intangible assets $ 27,825 $ 1,713 $ 63,132 $ 92,670 $ — $ 92,670 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
Reserve for Losses and Loss A28
Reserve for Losses and Loss Adjustment Expenses (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |
Analysis of losses and loss adjustment expenses and reconciliation of beginning and ending reserve balances | The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses: Three Months Ended March 31, 2017 2016 Reserve for losses and loss adjustment expenses at beginning of year $ 10,200,960 $ 9,125,250 Unpaid losses and loss adjustment expenses recoverable 2,083,575 1,828,837 Net reserve for losses and loss adjustment expenses at beginning of year 8,117,385 7,296,413 Net incurred losses and loss adjustment expenses relating to losses occurring in: Current year 635,775 578,978 Prior years (83,205 ) (56,029 ) Total net incurred losses and loss adjustment expenses 552,570 522,949 Net foreign exchange losses (gains) 31,278 33,575 Net paid losses and loss adjustment expenses relating to losses occurring in: Current year (34,957 ) (49,079 ) Prior years (464,585 ) (362,595 ) Total net paid losses and loss adjustment expenses (499,542 ) (411,674 ) Net reserve for losses and loss adjustment expenses at end of year 8,201,691 7,441,263 Unpaid losses and loss adjustment expenses recoverable 2,095,130 1,937,724 Reserve for losses and loss adjustment expenses at end of period $ 10,296,821 $ 9,378,987 |
Investment Information (Tables)
Investment Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Investment Information [Abstract] | |
Summary of fair value and cost or amortized cost of available for sale securities | The following table summarizes the fair value and cost or amortized cost of the Company’s investments classified as available for sale: Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost or Amortized Cost OTTI Unrealized Losses (2) March 31, 2017 Fixed maturities (1): Corporate bonds $ 4,546,756 $ 31,033 $ (36,615 ) $ 4,552,338 $ (1,876 ) Mortgage backed securities 412,023 5,210 (2,712 ) 409,525 (3,323 ) Municipal bonds 2,519,112 14,332 (17,411 ) 2,522,191 (201 ) Commercial mortgage backed securities 590,521 3,485 (6,040 ) 593,076 — U.S. government and government agencies 3,266,908 7,940 (11,152 ) 3,270,120 — Non-U.S. government securities 1,295,366 26,017 (39,356 ) 1,308,705 — Asset backed securities 1,638,347 8,984 (4,910 ) 1,634,273 (22 ) Total 14,269,033 97,001 (118,196 ) 14,290,228 (5,422 ) Equity securities 431,062 66,628 (6,660 ) 371,094 — Other investments 228,437 31,844 (838 ) 197,431 — Short-term investments 803,619 120 (125 ) 803,624 — Total $ 15,732,151 $ 195,593 $ (125,819 ) $ 15,662,377 $ (5,422 ) December 31, 2016 Fixed maturities (1): Corporate bonds $ 4,392,373 $ 27,606 $ (46,905 ) $ 4,411,672 $ (2,285 ) Mortgage backed securities 490,093 4,794 (8,357 ) 493,656 (3,323 ) Municipal bonds 3,713,434 8,554 (29,154 ) 3,734,034 (201 ) Commercial mortgage backed securities 536,051 2,876 (6,508 ) 539,683 — U.S. government and government agencies 2,804,540 9,319 (24,437 ) 2,819,658 — Non-U.S. government securities 1,096,440 19,036 (56,872 ) 1,134,276 — Asset backed securities 1,123,987 6,897 (6,526 ) 1,123,616 (22 ) Total 14,156,918 79,082 (178,759 ) 14,256,595 (5,831 ) Equity securities 532,680 62,627 (17,517 ) 487,570 — Other investments 167,970 21,358 (2,465 ) 149,077 — Short-term investments 612,005 272 (145 ) 611,878 — Total $ 15,469,573 $ 163,339 $ (198,886 ) $ 15,505,120 $ (5,831 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” (2) Represents the total other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income (“AOCI”). It does not include the change in fair value subsequent to the impairment measurement date. At March 31, 2017 , the net unrealized gain related to securities for which a non-credit OTTI was recognized in AOCI was $2.0 million , compared to a net unrealized gain of $2.8 million at December 31, 2016 . |
Summary of available for sale securities in a continual unrealized loss position | The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position: Less than 12 Months 12 Months or More Total Estimated Gross Unrealized Losses Estimated Gross Unrealized Losses Estimated Gross Unrealized Losses March 31, 2017 Fixed maturities (1): Corporate bonds $ 1,832,009 $ (34,331 ) $ 26,288 $ (2,284 ) $ 1,858,297 $ (36,615 ) Mortgage backed securities 137,291 (2,652 ) 4,150 (60 ) 141,441 (2,712 ) Municipal bonds 1,043,998 (16,890 ) 25,004 (521 ) 1,069,002 (17,411 ) Commercial mortgage backed securities 304,022 (5,890 ) 3,928 (150 ) 307,950 (6,040 ) U.S. government and government agencies 1,803,247 (11,152 ) — — 1,803,247 (11,152 ) Non-U.S. government securities 914,310 (39,153 ) 13,924 (203 ) 928,234 (39,356 ) Asset backed securities 662,917 (4,257 ) 40,477 (653 ) 703,394 (4,910 ) Total 6,697,794 (114,325 ) 113,771 (3,871 ) 6,811,565 (118,196 ) Equity securities 134,646 (6,660 ) — — 134,646 (6,660 ) Other investments 25,189 (838 ) — — 25,189 (838 ) Short-term investments 43,717 (125 ) — — 43,717 (125 ) Total $ 6,901,346 $ (121,948 ) $ 113,771 $ (3,871 ) $ 7,015,117 $ (125,819 ) December 31, 2016 Fixed maturities (1): Corporate bonds $ 1,700,813 $ (43,011 ) $ 46,902 $ (3,894 ) $ 1,747,715 $ (46,905 ) Mortgage backed securities 402,699 (8,134 ) 6,105 (223 ) 408,804 (8,357 ) Municipal bonds 1,513,308 (28,504 ) 29,636 (650 ) 1,542,944 (29,154 ) Commercial mortgage backed securities 231,374 (6,331 ) 5,635 (177 ) 237,009 (6,508 ) U.S. government and government agencies 1,888,018 (24,437 ) — — 1,888,018 (24,437 ) Non-U.S. government securities 807,598 (56,872 ) — — 807,598 (56,872 ) Asset backed securities 627,557 (5,465 ) 65,723 (1,061 ) 693,280 (6,526 ) Total 7,171,367 (172,754 ) 154,001 (6,005 ) 7,325,368 (178,759 ) Equity securities 269,381 (17,517 ) — — 269,381 (17,517 ) Other investments 39,299 (2,465 ) — — 39,299 (2,465 ) Short-term investments 29,146 (145 ) — — 29,146 (145 ) Total $ 7,509,193 $ (192,881 ) $ 154,001 $ (6,005 ) $ 7,663,194 $ (198,886 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
Contractual maturities of the Company's fixed maturities and fixed maturities pledged under securities lending arrangements | The contractual maturities of the Company’s fixed maturities are shown in the following table. Expected maturities, which are management’s best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. March 31, 2017 December 31, 2016 Maturity Estimated Fair Value Amortized Cost Estimated Amortized Cost Due in one year or less $ 633,926 $ 632,468 $ 560,830 $ 557,675 Due after one year through five years 7,197,090 7,217,033 6,158,148 6,211,099 Due after five years through 10 years 3,337,574 3,339,974 4,676,847 4,710,017 Due after 10 years 459,552 463,879 610,962 620,849 11,628,142 11,653,354 12,006,787 12,099,640 Mortgage backed securities 412,023 409,525 490,093 493,656 Commercial mortgage backed securities 590,521 593,076 536,051 539,683 Asset backed securities 1,638,347 1,634,273 1,123,987 1,123,616 Total (1) $ 14,269,033 $ 14,290,228 $ 14,156,918 $ 14,256,595 (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
Securities lending transactions accounted for as secured borrowings, by significant investment category | The Company’s securities lending transactions were accounted for as secured borrowings with significant investment categories as follows: Remaining Contractual Maturity of the Agreements Overnight and Continuous Less than 30 Days 30-90 Days 90 Days or More Total March 31, 2017 U.S. government and government agencies $ 358,293 $ — $ 139,416 $ 8,501 $ 506,210 Corporate bonds 29,624 — — — 29,624 Equity securities 2,519 — — — 2,519 Total $ 390,436 $ — $ 139,416 $ 8,501 $ 538,353 Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 9 $ — Amounts related to securities lending not included in offsetting disclosure in Note 9 $ 538,353 December 31, 2016 U.S. government and government agencies $ 556,015 $ 31,244 $ 126,093 $ 5,140 $ 718,492 Corporate bonds 29,078 — — — 29,078 Equity securities 14,984 — — — 14,984 Total $ 600,077 $ 31,244 $ 126,093 $ 5,140 $ 762,554 Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 9 $ — Amounts related to securities lending not included in offsetting disclosure in Note 9 $ 762,554 |
Summary of other investments, including available for sale and fair value option components | The following table summarizes the Company’s other investments, including available for sale and fair value option components: March 31, December 31, Available for sale: Asian and emerging markets $ 109,084 $ 84,778 Investment grade fixed income 52,016 33,923 Credit related funds 11,003 7,469 Other 56,334 41,800 Total available for sale 228,437 167,970 Fair value option: Term loan investments (par value: $1,145,832 and $1,208,537) 1,123,568 1,190,799 Mezzanine debt funds 109,334 127,943 Credit related funds 208,707 218,298 Investment grade fixed income 82,718 75,468 Asian and emerging markets 205,150 178,568 Other (1) 165,837 129,717 Total fair value option 1,895,314 1,920,793 Total $ 2,123,751 $ 2,088,763 (1) Includes fund investments with strategies in mortgage servicing rights, transportation, infrastructure and other. |
Summary of assets and liabilities accounted for using the fair value option | The following table summarizes the Company’s assets and liabilities which are accounted for using the fair value option: March 31, December 31, Fixed maturities $ 1,112,945 $ 1,099,116 Other investments 1,895,314 1,920,793 Short-term investments 581,508 373,669 Equity securities 58,353 27,642 Investments accounted for using the fair value option $ 3,648,120 $ 3,421,220 |
Summary of investments in limited partnership interests where the Company has a variable interest | The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item: March 31, December 31, Investments accounted for using the equity method (1) $ 861,607 $ 800,970 Investments accounted for using the fair value option (2) 89,726 90,804 Total $ 951,333 $ 891,774 (1) Aggregate unfunded commitments were $797.6 million at March 31, 2017 , compared to $776.6 million at December 31, 2016 . (2) Aggregate unfunded commitments were $66.7 million at March 31, 2017 , compared to $16.7 million at December 31, 2016 . |
Components of net investment income | The components of net investment income were derived from the following sources: March 31, 2017 2016 Three Months Ended Fixed maturities $ 94,393 $ 73,673 Term loan investments 21,170 20,012 Equity securities (dividends) 2,643 3,435 Short-term investments 1,759 496 Other (1) 18,410 13,743 Gross investment income 138,375 111,359 Investment expenses (20,501 ) (17,624 ) Net investment income $ 117,874 $ 93,735 (1) Includes income distributions from investment funds and other items. |
Summary of net realized gains (losses), excluding other-than-temporary impairment provisions | Net realized gains (losses) were as follows, excluding other than-temporary impairment provision. March 31, 2017 2016 Three Months Ended Available for sale securities: Gross gains on investment sales $ 69,175 $ 107,819 Gross losses on investment sales (61,362 ) (63,131 ) Change in fair value of assets and liabilities accounted for using the fair value option: Fixed maturities 20,541 (333 ) Other investments 17,248 (21,548 ) Equity securities 3,545 36 Short-term investments 4 (422 ) Derivative instruments (1) (9,181 ) 20,732 Other (2) (5,817 ) (5,829 ) Net realized gains (losses) $ 34,153 $ 37,324 (1) See Note 9 for information on the Company’s derivative instruments. (2) Includes the re-measurement of contingent consideration liability amounts. |
Summary of OTTI recognized in earnings by asset class | The following table details the net impairment losses recognized in earnings by asset class: March 31, 2017 2016 Three Months Ended Fixed maturities: Mortgage backed securities $ (1,319 ) $ (473 ) Corporate bonds (1 ) (4,880 ) Non-U.S. government securities (198 ) (181 ) Asset backed securities — (6 ) Total (1,518 ) (5,540 ) Equity securities (186 ) (1,102 ) Other investments (103 ) (997 ) Net impairment losses recognized in earnings $ (1,807 ) $ (7,639 ) |
Rollforward of the amount related to credit losses recognized in earnings for which a portion was recognized in AOCI | The following table provides a roll forward of the amount related to credit losses recognized in earnings for which a portion of an OTTI was recognized in accumulated other comprehensive income: March 31, 2017 2016 Three Months Ended Balance at start of period $ 13,138 $ 26,875 Credit loss impairments recognized on securities not previously impaired — 1,063 Credit loss impairments recognized on securities previously impaired 23 522 Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security — — Reductions for securities sold during the period (624 ) (10,169 ) Balance at end of period $ 12,537 $ 18,291 |
Summary of restricted assets | The following table details the value of the Company’s restricted assets: March 31, December 31, Assets used for collateral or guarantees: Affiliated transactions $ 3,991,217 $ 3,871,971 Third party agreements 1,545,255 1,513,079 Deposits with U.S. regulatory authorities 528,594 472,890 Deposits with non-U.S. regulatory authorities 45,332 44,399 Total restricted assets $ 6,110,398 $ 5,902,339 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value hierarchy | The following table presents the Company’s financial assets and liabilities measured at fair value by level at March 31, 2017 : Estimated Fair Value Measurements Using: Estimated Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 4,546,756 $ — $ 4,528,155 $ 18,601 Mortgage backed securities 412,023 — 412,023 — Municipal bonds 2,519,112 — 2,519,112 — Commercial mortgage backed securities 590,521 — 590,521 — U.S. government and government agencies 3,266,908 3,192,592 74,316 — Non-U.S. government securities 1,295,366 — 1,295,366 — Asset backed securities 1,638,347 — 1,627,710 10,637 Total 14,269,033 3,192,592 11,047,203 29,238 Equity securities 431,062 427,762 3,300 — Short-term investments 803,619 796,075 7,544 — Other investments 126,112 122,773 3,339 — Other investments measured at net asset value (2) 102,325 Total other investments 228,437 122,773 3,339 — Derivative instruments (4) 29,059 — 29,059 — Fair value option: Corporate bonds 817,690 — 817,690 — Non-U.S. government bonds 55,504 — 55,504 — Mortgage backed securities 16,489 — 16,489 — Asset backed securities 16,198 — 16,198 — U.S. government and government agencies 207,064 207,064 — — Short-term investments 581,508 580,315 1,193 — Equity securities 58,353 55,311 3,042 — Other investments 1,338,661 90,475 1,223,186 25,000 Other investments measured at net asset value (2) 556,653 Total 3,648,120 933,165 2,133,302 25,000 Total assets measured at fair value $ 19,409,330 $ 5,472,367 $ 13,223,747 $ 54,238 Liabilities measured at fair value: Contingent consideration liabilities $ (125,544 ) $ — $ — $ (125,544 ) Securities sold but not yet purchased (3) (59,430 ) — (59,430 ) — Derivative instruments (4) (22,227 ) — (22,227 ) — Total liabilities measured at fair value $ (207,201 ) $ — $ (81,657 ) $ (125,544 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 7 , “Investment Information—Securities Lending Agreements.” (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See Note 9 , “Derivative Instruments.” The following table presents the Company’s financial assets and liabilities measured at fair value by level at December 31, 2016 : Estimated Fair Value Measurements Using: Estimated Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 4,392,373 $ — $ 4,374,029 $ 18,344 Mortgage backed securities 490,093 — 490,093 — Municipal bonds 3,713,434 — 3,713,434 — Commercial mortgage backed securities 536,051 — 536,051 — U.S. government and government agencies 2,804,540 2,691,575 112,965 — Non-U.S. government securities 1,096,440 — 1,096,440 — Asset backed securities 1,123,987 — 1,112,698 11,289 Total 14,156,918 2,691,575 11,435,710 29,633 Equity securities 532,680 529,695 2,985 — Short-term investments 612,005 608,862 3,143 — Other investments 112,313 112,313 — — Other investments measured at net asset value (2) 55,657 Total other investments 167,970 112,313 — — Derivative instruments (4) 28,410 — 28,410 — Fair value option: Corporate bonds 790,935 — 790,935 — Non-U.S. government bonds 61,747 — 61,747 — Mortgage backed securities 18,624 — 18,624 — Asset backed securities 30,324 — 30,324 — U.S. government and government agencies 197,486 197,486 — — Short-term investments 373,669 309,127 64,542 — Equity securities 27,642 25,328 2,314 — Other investments 1,226,242 80,706 1,120,536 25,000 Other investments measured at net asset value (2) 694,551 Total 3,421,220 612,647 2,089,022 25,000 Total assets measured at fair value $ 18,919,203 $ 4,555,092 $ 13,559,270 $ 54,633 Liabilities measured at fair value: Contingent consideration liabilities $ (122,350 ) $ — $ — $ (122,350 ) Securities sold but not yet purchased (3) (33,157 ) — (33,157 ) — Derivative instruments (4) (26,049 ) — (26,049 ) — Total liabilities measured at fair value $ (181,556 ) $ — $ (59,206 ) $ (122,350 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 7 , “Investment Information—Securities Lending Agreements.” (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See Note 9 , “Derivative Instruments.” |
Rollforward of Level 3 investments | The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs: Assets Liabilities s Available For Sale Fair Value Option Asset Backed Securities Corporate Bonds Other Investments Total Contingent Consideration Liabilities Three Months Ended March 31, 2017 Balance at beginning of period $ 11,289 $ 18,344 $ 25,000 $ 54,633 $ (122,350 ) Total gains or (losses) (realized/unrealized) Included in earnings (1) 707 257 — 964 (3,646 ) Included in other comprehensive income — — — — — Purchases, issuances, sales and settlements Purchases — — — — — Issuances — — — — — Sales — — — — — Settlements (1,359 ) — — (1,359 ) 452 Transfers in and/or out of Level 3 — — — — — Balance at end of period $ 10,637 $ 18,601 $ 25,000 $ 54,238 $ (125,544 ) Three Months Ended March 31, 2016 Balance at beginning of period $ 57,500 $ 16,368 $ — $ 73,868 $ (96,048 ) Total gains or (losses) (realized/unrealized) Included in earnings (1) — (1,202 ) — (1,202 ) (5,198 ) Included in other comprehensive income — — — — — Purchases, issuances, sales and settlements Purchases — — — — — Issuances — — — — — Sales — — — — — Settlements — — — — 536 Transfers in and/or out of Level 3 — — — — — Balance at end of period $ 57,500 $ 15,166 $ — $ 72,666 $ (100,710 ) (1) Gains or losses on asset backed securities were included in net impairment losses recognized in earnings while gains or losses on corporate bonds and contingent consideration liabilities were included in net realized gains (losses). |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value and notional amount of derivatives | The following table summarizes information on the fair values and notional values of the Company’s derivative instruments: Estimated Fair Value Asset Derivatives Liability Derivatives Notional Value (1) March 31, 2017 Futures contracts (2) $ 3,550 $ (4,489 ) $ 2,276,070 Foreign currency forward contracts (2) 7,363 (11,435 ) 1,264,235 TBAs (3) 32,011 (32,791 ) 63,966 Other (2) 18,146 (6,303 ) 1,552,009 Total $ 61,070 $ (55,018 ) December 31, 2016 Futures contracts (2) $ 360 $ (9,398 ) $ 1,655,530 Foreign currency forward contracts (2) 9,354 (12,941 ) 1,186,386 TBAs (3) — — — Other (2) 20,287 (3,710 ) 1,014,863 Total $ 30,001 $ (26,049 ) (1) Represents the absolute notional value of all outstanding contracts, consisting of long and short positions. (2) The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’ (3) The fair value of TBAs are included in ‘fixed maturities available for sale, at fair value.’ |
Summary of net realized gains (losses) recorded in the consolidated statements of income | All realized and unrealized contract gains and losses on the Company’s derivative instruments are reflected in net realized gains (losses) in the consolidated statements of income, as summarized in the following table: Derivatives not designated as March 31, hedging instruments: 2017 2016 Three Months Ended Net realized gains (losses): Futures contracts $ 7,720 $ 26,451 Foreign currency forward contracts (11,766 ) (4,752 ) TBAs (65 ) 297 Other (5,070 ) (1,264 ) Total $ (9,181 ) $ 20,732 |
Other Comprehensive Income (L32
Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Comprehensive Income Note Disclosure [Abstract] | |
Details about amounts reclassified from AOCI | The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss): Amounts Reclassified from AOCI Consolidated Statement of Income Three Months Ended Details About Line Item That Includes March 31, AOCI Components Reclassification 2017 2016 Unrealized appreciation on available-for-sale investments Net realized gains (losses) $ 7,813 $ 44,687 Other-than-temporary impairment losses (1,807 ) (7,737 ) Total before tax 6,006 36,950 Income tax (expense) benefit (962 ) (4,727 ) Net of tax $ 5,044 $ 32,223 |
Schedule of comprehensive income (loss) | Before Tax Amount Tax Expense (Benefit) Net of Tax Amount Three Months Ended March 31, 2017 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 111,472 $ 10,680 $ 100,792 Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) — — — Less reclassification of net realized gains (losses) included in net income 6,006 962 5,044 Foreign currency translation adjustments 3,165 41 3,124 Other comprehensive income (loss) $ 108,631 $ 9,759 $ 98,872 Three Months Ended March 31, 2016 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 152,174 $ 19,193 $ 132,981 Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) (98 ) — (98 ) Less reclassification of net realized gains (losses) included in net income 36,950 4,727 32,223 Foreign currency translation adjustments 17,860 547 17,313 Other comprehensive income (loss) $ 132,986 $ 15,013 $ 117,973 |
Guarantor Financial Informati33
Guarantor Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed consolidating balance sheet | March 31, 2017 Condensed Consolidating Balance Sheet ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Assets Total investments $ 256 $ 41,715 $ 20,227,399 $ (14,700 ) $ 20,254,670 Cash 10,177 42,745 650,832 — 703,754 Investments in subsidiaries 8,992,903 3,843,774 — (12,836,677 ) — Due from subsidiaries and affiliates 1,626 52,032 1,868,171 (1,921,829 ) — Premiums receivable — — 1,891,983 (637,935 ) 1,254,048 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses — — 6,209,021 (4,075,873 ) 2,133,148 Contractholder receivables — — 1,766,340 — 1,766,340 Ceded unearned premiums — — 2,201,994 (1,260,071 ) 941,923 Deferred acquisition costs — — 638,415 (150,490 ) 487,925 Goodwill and intangible assets — — 750,315 — 750,315 Other assets 14,730 55,658 1,893,742 (164,027 ) 1,800,103 Total assets $ 9,019,692 $ 4,035,924 $ 38,098,212 $ (21,061,602 ) $ 30,092,226 Liabilities Reserve for losses and loss adjustment expenses $ — $ — $ 14,337,192 $ (4,040,371 ) $ 10,296,821 Unearned premiums — — 4,891,330 (1,260,071 ) 3,631,259 Reinsurance balances payable — — 959,221 (637,936 ) 321,285 Contractholder payables — — 1,766,340 — 1,766,340 Collateral held for insured obligations — — 327,161 327,161 Senior notes 296,979 494,548 940,883 — 1,732,410 Revolving credit agreement borrowings 100,000 — 634,961 — 734,961 Due to subsidiaries and affiliates 2,044 541,400 1,378,384 (1,921,828 ) — Other liabilities 14,825 61,055 1,876,454 (350,019 ) 1,602,315 Total liabilities 413,848 1,097,003 27,111,926 (8,210,225 ) 20,412,552 Redeemable noncontrolling interests — — 220,344 (14,700 ) 205,644 Shareholders’ Equity Total shareholders’ equity available to Arch 8,605,844 2,938,921 9,897,756 (12,836,677 ) 8,605,844 Non-redeemable noncontrolling interests — — 868,186 — 868,186 Total shareholders’ equity 8,605,844 2,938,921 10,765,942 (12,836,677 ) 9,474,030 Total liabilities, noncontrolling interests and shareholders’ equity $ 9,019,692 $ 4,035,924 $ 38,098,212 $ (21,061,602 ) $ 30,092,226 December 31, 2016 Condensed Consolidating Balance Sheet ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Assets Total investments $ 2,612 $ 41,672 $ 19,690,067 $ (14,700 ) $ 19,719,651 Cash 1,687 71,955 769,300 — 842,942 Investments in subsidiaries 8,660,586 3,716,681 — (12,377,267 ) — Due from subsidiaries and affiliates 14,297 51,298 1,866,681 (1,932,276 ) — Premiums receivable — — 1,579,865 (507,430 ) 1,072,435 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses — — 6,114,518 (4,000,380 ) 2,114,138 Contractholder receivables — — 1,717,436 — 1,717,436 Ceded unearned premiums — — 1,985,311 (1,125,744 ) 859,567 Deferred acquisition costs — — 577,461 (129,901 ) 447,560 Goodwill and intangible assets — — 781,553 — 781,553 Other assets 15,725 49,244 1,901,786 (149,928 ) 1,816,827 Total assets $ 8,694,907 $ 3,930,850 $ 36,983,978 $ (20,237,626 ) $ 29,372,109 Liabilities Reserve for losses and loss adjustment expenses $ — $ — $ 14,164,191 $ (3,963,231 ) $ 10,200,960 Unearned premiums — — 4,532,614 (1,125,744 ) 3,406,870 Reinsurance balances payable — — 807,837 (507,430 ) 300,407 Contractholder payables — — 1,717,436 — 1,717,436 Collateral held for insured obligations — — 301,406 — 301,406 Deposit accounting liabilities — — 22,150 — 22,150 Senior notes 296,957 494,525 940,776 — 1,732,258 Revolving credit agreement borrowings 100,000 — 656,650 — 756,650 Due to subsidiaries and affiliates 26,270 535,584 1,370,422 (1,932,276 ) — Other liabilities 17,962 54,823 1,867,040 (316,978 ) 1,622,847 Total liabilities 441,189 1,084,932 26,380,522 (7,845,659 ) 20,060,984 Redeemable noncontrolling interests — — 220,253 (14,700 ) 205,553 Shareholders’ Equity Total shareholders’ equity available to Arch 8,253,718 2,845,918 9,531,349 (12,377,267 ) 8,253,718 Non-redeemable noncontrolling interests — — 851,854 — 851,854 Total shareholders’ equity 8,253,718 2,845,918 10,383,203 (12,377,267 ) 9,105,572 Total liabilities, noncontrolling interests and shareholders’ equity $ 8,694,907 $ 3,930,850 $ 36,983,978 $ (20,237,626 ) $ 29,372,109 |
Condensed consolidating statement of income and comprehensive income | Three Months Ended March 31, 2017 Condensed Consolidating Statement of Income and Comprehensive Income ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Revenues Net premiums earned $ — $ — $ 1,117,017 $ — $ 1,117,017 Net investment income 5 816 137,981 (20,928 ) 117,874 Net realized gains (losses) — — 34,153 — 34,153 Net impairment losses recognized in earnings — — (1,807 ) — (1,807 ) Other underwriting income — — 4,633 — 4,633 Equity in net income (loss) of investment funds accounted for using the equity method — — 48,088 — 48,088 Other income (loss) 171 — (953 ) — (782 ) Total revenues 176 816 1,339,112 (20,928 ) 1,319,176 Expenses Losses and loss adjustment expenses — — 552,570 — 552,570 Acquisition expenses — — 182,289 — 182,289 Other operating expenses — — 174,719 — 174,719 Corporate expenses 17,247 2,008 8,537 — 27,792 Amortization of intangible assets — — 31,294 — 31,294 Interest expense 6,015 11,930 31,336 (20,605 ) 28,676 Net foreign exchange (gains) losses — — 15,348 4,056 19,404 Total expenses 23,262 13,938 996,093 (16,549 ) 1,016,744 Income (loss) before income taxes (23,086 ) (13,122 ) 343,019 (4,379 ) 302,432 Income tax (expense) benefit — 4,873 (33,270 ) — (28,397 ) Income (loss) before equity in net income of subsidiaries (23,086 ) (8,249 ) 309,749 (4,379 ) 274,035 Equity in net income of subsidiaries 276,213 77,373 — (353,586 ) — Net income 253,127 69,124 309,749 (357,965 ) 274,035 Net (income) loss attributable to noncontrolling interests — — (21,231 ) 323 (20,908 ) Net income available to Arch 253,127 69,124 288,518 (357,642 ) 253,127 Preferred dividends (11,218 ) — — — (11,218 ) Net income available to Arch common shareholders $ 241,909 $ 69,124 $ 288,518 $ (357,642 ) $ 241,909 Comprehensive income (loss) available to Arch $ 351,991 $ 87,781 $ 224,173 $ (311,954 ) $ 351,991 Three Months Ended March 31, 2016 Condensed Consolidating Statement of Income and Comprehensive Income ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Revenues Net premiums earned $ — $ — $ 951,579 $ — $ 951,579 Net investment income 1 773 100,261 (7,300 ) 93,735 Net realized gains (losses) — — 37,324 — 37,324 Net impairment losses recognized in earnings — — (7,639 ) — (7,639 ) Other underwriting income — — 5,319 (272 ) 5,047 Equity in net income (loss) of investment funds accounted for using the equity method — — 6,655 — 6,655 Other income (loss) 206 — (231 ) — (25 ) Total revenues 207 773 1,093,268 (7,572 ) 1,086,676 Expenses Losses and loss adjustment expenses — — 522,949 — 522,949 Acquisition expenses — — 167,838 — 167,838 Other operating expenses — — 150,148 — 150,148 Corporate expenses 9,355 582 (554 ) — 9,383 Amortization of intangible assets — — 4,748 — 4,748 Interest expense 5,934 6,672 10,752 (7,251 ) 16,107 Net foreign exchange (gains) losses — — 16,495 7,071 23,566 Total expenses 15,289 7,254 872,376 (180 ) 894,739 Income (loss) before income taxes (15,082 ) (6,481 ) 220,892 (7,392 ) 191,937 Income tax (expense) benefit — 2,244 (18,554 ) — (16,310 ) Income (loss) before equity in net income of subsidiaries (15,082 ) (4,237 ) 202,338 (7,392 ) 175,627 Equity in net income of subsidiaries 169,880 22,866 — (192,746 ) — Net income 154,798 18,629 202,338 (200,138 ) 175,627 Net (income) loss attributable to noncontrolling interests — — (21,150 ) 321 (20,829 ) Net income available to Arch 154,798 18,629 181,188 (199,817 ) 154,798 Preferred dividends (5,484 ) — — — (5,484 ) Net income available to Arch common shareholders $ 149,314 $ 18,629 $ 181,188 $ (199,817 ) $ 149,314 Comprehensive income (loss) available to Arch $ 272,929 $ 58,649 $ 292,251 $ (350,900 ) $ 272,929 |
Condensed consolidating statement of cash flows | Three Months Ended March 31, 2017 Condensed Consolidating Statement of Cash Flows ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Operating Activities Net Cash Provided By (Used For) Operating Activities $ 701 $ (3,257 ) $ 264,088 $ (53,414 ) $ 208,118 Investing Activities Purchases of fixed maturity investments — — (10,476,918 ) — (10,476,918 ) Purchases of equity securities — — (143,833 ) — (143,833 ) Purchases of other investments — — (427,039 ) — (427,039 ) Proceeds from the sales of fixed maturity investments — — 10,386,746 — 10,386,746 Proceeds from the sales of equity securities — — 253,347 — 253,347 Proceeds from the sales, redemptions and maturities of other investments — — 317,518 — 317,518 Proceeds from redemptions and maturities of fixed maturity investments — — 174,718 — 174,718 Net settlements of derivative instruments — — (3,921 ) — (3,921 ) Net (purchases) sales of short-term investments 2,356 (43 ) (400,164 ) — (397,851 ) Change in cash collateral related to securities lending — — 180,946 — 180,946 Contributions to subsidiaries — (25,900 ) (60,050 ) 85,950 — Purchases of fixed assets — (10 ) (5,184 ) — (5,194 ) Other 20,641 — 19,603 (20,641 ) 19,603 Net Cash Provided By (Used For) Investing Activities 22,997 (25,953 ) (184,231 ) 65,309 (121,878 ) Financing Activities Proceeds from common shares issued, net (3,990 ) — 85,950 (85,950 ) (3,990 ) Proceeds from borrowings — — — — — Repayments of borrowings — — (22,000 ) — (22,000 ) Change in cash collateral related to securities lending — — (180,946 ) — (180,946 ) Dividends paid to redeemable noncontrolling interests — — (4,816 ) 319 (4,497 ) Dividends paid to parent (1) — — (53,095 ) 53,095 — Other — — (25,659 ) 20,641 (5,018 ) Preferred dividends paid (11,218 ) — — — (11,218 ) Net Cash Provided By (Used For) Financing Activities (15,208 ) — (200,566 ) (11,895 ) (227,669 ) Effects of exchange rates changes on foreign currency cash — — 2,241 — 2,241 Increase (decrease) in cash 8,490 (29,210 ) (118,468 ) — (139,188 ) Cash beginning of year 1,687 71,955 769,300 — 842,942 Cash end of period $ 10,177 $ 42,745 $ 650,832 $ — $ 703,754 (1) Dividends paid are included in net cash provided by (used for) operating activities in the ACGL (Parent Guarantor) and/or Arch-U.S. (Subsidiary Issuer) columns. Three Months Ended March 31, 2016 Condensed Consolidating Statement of Cash Flows ACGL (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other ACGL Subsidiaries Consolidating Adjustments and Eliminations ACGL Consolidated Operating Activities Net Cash Provided By (Used For) Operating Activities $ 83,892 $ (4,740 ) $ 340,558 $ (97,167 ) $ 322,543 Investing Activities Purchases of fixed maturity investments — — (8,133,537 ) — (8,133,537 ) Purchases of equity securities — — (128,263 ) — (128,263 ) Purchases of other investments — — (305,198 ) — (305,198 ) Proceeds from the sales of fixed maturity investments — — 7,827,536 — 7,827,536 Proceeds from the sales of equity securities — — 216,012 — 216,012 Proceeds from the sales, redemptions and maturities of other investments — — 211,125 — 211,125 Proceeds from redemptions and maturities of fixed maturity investments — — 163,894 — 163,894 Net settlements of derivative instruments — — 21,091 — 21,091 Net (purchases) sales of short-term investments (60 ) (30 ) (65,504 ) — (65,594 ) Change in cash collateral related to securities lending — — (43,118 ) — (43,118 ) Contributions to subsidiaries (3,300 ) — (2,779 ) 6,079 — Purchases of fixed assets (8 ) — (3,944 ) — (3,952 ) Other — — 6,737 — 6,737 Net Cash Provided By (Used For) Investing Activities (3,368 ) (30 ) (235,948 ) 6,079 (233,267 ) Financing Activities Purchases of common shares under share repurchase program (75,256 ) — — — (75,256 ) Proceeds from common shares issued, net 202 — 6,079 (6,079 ) 202 Repayments of borrowings — — (74,171 ) — (74,171 ) Change in cash collateral related to securities lending — — 43,118 — 43,118 Dividends paid to redeemable noncontrolling interests — — (4,816 ) 319 (4,497 ) Dividends paid to parent (1) — — (96,848 ) 96,848 — Other — 184 28,931 — 29,115 Preferred dividends paid (5,484 ) — — — (5,484 ) Net Cash Provided By (Used For) Financing Activities (80,538 ) 184 (97,707 ) 91,088 (86,973 ) Effects of exchange rates changes on foreign currency cash — — 2,332 — 2,332 Increase (decrease) in cash (14 ) (4,586 ) 9,235 — 4,635 Cash beginning of year 6,809 17,023 529,494 — 553,326 Cash end of period $ 6,795 $ 12,437 $ 538,729 $ — $ 557,961 (1) Dividends paid are included in net cash provided by (used for) operating activities in the ACGL (Parent Guarantor) and/or Arch-U.S. (Subsidiary Issuer) columns. |
Variable Interest Entities an34
Variable Interest Entities and Noncontrolling Interests - Carrying amount of assets and liabilities of variable interest entity (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Variable Interest Entity [Line Items] | ||||
Investments accounted for using the fair value option | $ 3,648,120 | $ 3,421,220 | ||
Cash | 703,754 | 842,942 | $ 557,961 | $ 553,326 |
Accrued investment income | 104,168 | 124,483 | ||
Premiums receivable | 1,254,048 | 1,072,435 | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 2,133,148 | 2,114,138 | ||
Ceded unearned premiums | 941,923 | 859,567 | ||
Deferred acquisition costs | 487,925 | 447,560 | ||
Receivable for securities sold | 239,678 | 58,284 | ||
Goodwill and intangible assets | 750,315 | 781,553 | 92,670 | |
Other assets | 930,688 | 889,080 | ||
Total assets of consolidated VIE | 30,092,226 | 29,372,109 | ||
Reserve for losses and loss adjustment expenses | 10,296,821 | 10,200,960 | 9,378,987 | 9,125,250 |
Unearned premiums | 3,631,259 | 3,406,870 | ||
Reinsurance balances payable | 321,285 | 300,407 | ||
Revolving credit agreement borrowings | 734,961 | 756,650 | ||
Payable for securities purchased | 389,649 | 76,183 | ||
Other liabilities | 674,313 | 806,260 | ||
Total liabilities of consolidated VIE | 20,412,552 | 20,060,984 | ||
Redeemable noncontrolling interests | 205,644 | 205,553 | ||
Watford Re | ||||
Variable Interest Entity [Line Items] | ||||
Redeemable noncontrolling interests | 205,644 | 205,553 | $ 205,274 | $ 205,182 |
Variable Interest Entity, Primary Beneficiary | Watford Re | ||||
Variable Interest Entity [Line Items] | ||||
Investments accounted for using the fair value option | 1,976,466 | 1,857,623 | ||
Cash | 47,566 | 74,893 | ||
Accrued investment income | 14,066 | 17,017 | ||
Premiums receivable | 196,866 | 189,911 | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 25,673 | 24,420 | ||
Ceded unearned premiums | 16,383 | 12,145 | ||
Deferred acquisition costs | 93,227 | 86,379 | ||
Receivable for securities sold | 19,235 | 1,326 | ||
Goodwill and intangible assets | 7,650 | 7,650 | ||
Other assets | 116,336 | 111,386 | ||
Total assets of consolidated VIE | 2,513,468 | 2,382,750 | ||
Reserve for losses and loss adjustment expenses | 566,175 | 510,809 | ||
Unearned premiums | 319,677 | 293,480 | ||
Reinsurance balances payable | 15,171 | 12,289 | ||
Revolving credit agreement borrowings | 234,961 | 256,650 | ||
Payable for securities purchased | 81,216 | 42,922 | ||
Other liabilities | 100,198 | 88,976 | ||
Total liabilities of consolidated VIE | 1,317,398 | 1,205,126 | ||
Redeemable noncontrolling interests | $ 220,344 | $ 220,253 |
Variable Interest Entities an35
Variable Interest Entities and Noncontrolling Interests - Variable interest entity (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2017 | Mar. 31, 2016 | |
Variable Interest Entity [Line Items] | |||
Net cash provided by operating activities | $ 208,118 | $ 322,543 | |
Net cash used for investing activities | (121,878) | (233,267) | |
Net cash used for financing activities | (227,669) | (86,973) | |
Variable Interest Entity, Primary Beneficiary | Watford Holdings Ltd | |||
Variable Interest Entity [Line Items] | |||
Initial investment contribution amount | $ 100,000 | ||
Ownership percentage | 11.00% | ||
Variable Interest Entity, Primary Beneficiary | Watford Re | |||
Variable Interest Entity [Line Items] | |||
Net cash provided by operating activities | 62,200 | 65,300 | |
Net cash used for investing activities | (60,500) | (43,700) | |
Net cash used for financing activities | $ (29,000) | $ (51,300) |
Variable Interest Entities an36
Variable Interest Entities and Noncontrolling Interests - Non-redeemable noncontrolling interests (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Noncontrolling Interest [Line Items] | ||
Non-redeemable noncontrolling interests, beginning of period | $ 851,854 | |
Amounts attributable to noncontrolling interests | 16,324 | $ 16,242 |
Non-redeemable noncontrolling interests, end of period | 868,186 | 754,915 |
Watford Re | ||
Noncontrolling Interest [Line Items] | ||
Non-redeemable noncontrolling interests, beginning of period | 851,854 | 738,831 |
Amounts attributable to noncontrolling interests | 16,324 | 16,242 |
Foreign currency translation adjustments attributable to noncontrolling interests | 8 | (158) |
Non-redeemable noncontrolling interests, end of period | $ 868,186 | $ 754,915 |
Common shares | Watford Re | ||
Noncontrolling Interest [Line Items] | ||
Noncontrolling interest, ownership percentage by noncontrolling owners | 89.00% |
Variable Interest Entities an37
Variable Interest Entities and Noncontrolling Interests - Redeemable noncontrolling interests (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Redeemable Noncontrolling Interest [Line Items] | ||
Redeemable noncontrolling interests, beginning of period | $ 205,553 | |
Redeemable noncontrolling interests, end of period | 205,644 | |
Watford Re | ||
Redeemable Noncontrolling Interest [Line Items] | ||
Redeemable noncontrolling interests, beginning of period | 205,553 | $ 205,182 |
Shares acquired by the Company | 0 | 0 |
Accretion of preference share issuance costs | 91 | 92 |
Redeemable noncontrolling interests, end of period | $ 205,644 | $ 205,274 |
Cumulative redeemable preference shares | Watford Re | ||
Redeemable Noncontrolling Interest [Line Items] | ||
Preference shares, number of shares issued | 9,065,200 | |
Par value per share | $ 0.01 | |
Liquidation preference per share | $ 25 |
Variable Interest Entities an38
Variable Interest Entities and Noncontrolling Interests - Income or loss attributable to third party investors (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Noncontrolling Interest [Abstract] | ||
Amounts attributable to non-redeemable noncontrolling interests | $ (16,324) | $ (16,242) |
Dividends attributable to redeemable noncontrolling interests | (4,584) | (4,587) |
Net (income) loss attributable to noncontrolling interests | $ (20,908) | $ (20,829) |
Variable Interest Entities an39
Variable Interest Entities and Noncontrolling Interests - Other variable interest entity disclosures (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | $ 951,333 | $ 891,774 |
Variable Interest Entity, Not Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Total VIE Assets | 429,977 | |
Maximum Exposure to Loss | 2,818 | |
Variable Interest Entity, Not Primary Beneficiary | On-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 405 | |
Variable Interest Entity, Not Primary Beneficiary | Off-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 2,413 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade I | ||
Variable Interest Entity [Line Items] | ||
Total VIE Assets | 146,200 | |
Maximum Exposure to Loss | 1,661 | |
Aggregate Excess Of Loss Reinsurance Agreement | 300,000 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade I | On-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 351 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade I | Off-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 1,310 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade II | ||
Variable Interest Entity [Line Items] | ||
Total VIE Assets | 283,777 | |
Maximum Exposure to Loss | 1,157 | |
Aggregate Excess Of Loss Reinsurance Agreement | 300,000 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade II | On-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 54 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade II | Off-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 1,103 | |
Variable Interest Entity, Not Primary Beneficiary | Irving Partners | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | $ 14,500 |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Numerator: | |||
Net income | $ 274,035 | $ 175,627 | |
Net (income) loss attributable to noncontrolling interests | (20,908) | (20,829) | |
Net income available to Arch | 253,127 | 154,798 | |
Preferred dividends | (11,218) | (5,484) | |
Net income (loss) available to Arch common shareholders | $ 241,909 | $ 149,314 | |
Denominator: | |||
Weighted average common shares outstanding | 121,272,107 | 120,428,179 | |
Series D preferred shares | [1] | 12,762,820 | 0 |
Weighted average common shares outstanding — basic | 134,034,927 | 120,428,179 | |
Effect of dilutive common share equivalents: | |||
Nonvested restricted shares | 1,646,555 | 1,460,654 | |
Stock options | [2] | 3,366,190 | 2,607,663 |
Weighted average common shares and common share equivalents outstanding — diluted | 139,047,672 | 124,496,496 | |
Earnings per common share: | |||
Basic (per share) | $ 1.80 | $ 1.24 | |
Diluted (per share) | $ 1.74 | $ 1.20 | |
Stock Options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per common share (shares) | 263,475 | 607,208 | |
[1] | non-voting common equivalent preferred shares issued in connection with the UGC acquisition. | ||
[2] | Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2017 first quarter and 2016 first quarter, the number of stock options excluded were 263,475 and 607,208, respectively. |
Segment Information - Summary o
Segment Information - Summary of underwriting income or loss by segment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |||
Segment Reporting Information [Line Items] | |||||
Gross premiums written | $ 1,657,990 | $ 1,437,966 | |||
Premiums ceded | (381,730) | (316,731) | |||
Net premiums written | 1,276,260 | 1,121,235 | |||
Change in unearned premiums | (159,243) | (169,656) | |||
Net premiums earned | 1,117,017 | 951,579 | |||
Other underwriting income | 4,633 | 5,047 | |||
Losses and loss adjustment expenses | (552,570) | (522,949) | |||
Acquisition expenses, net | (182,289) | (167,838) | |||
Other operating expenses | (174,719) | (150,148) | |||
Underwriting income (loss) | 212,072 | 115,691 | |||
Net investment income | 117,874 | 93,735 | |||
Net realized gains (losses) | 34,153 | 37,324 | |||
Net impairment losses recognized in earnings | (1,807) | (7,639) | |||
Equity in net income (loss) of investment funds accounted for using the equity method | 48,088 | 6,655 | |||
Other income (loss) | (782) | (25) | |||
Corporate expenses | (12,208) | [1] | (9,383) | ||
UGC transaction costs and other | [1] | (15,584) | |||
Amortization of intangible assets | (31,294) | (4,748) | |||
Corporate expenses | (27,792) | (9,383) | |||
Interest expense | (28,676) | (16,107) | |||
Net foreign exchange gains (losses) | (19,404) | (23,566) | |||
Income before income taxes | 302,432 | 191,937 | |||
Income tax expense | (28,397) | (16,310) | |||
Net income (loss) | 274,035 | 175,627 | |||
Dividends attributable to redeemable noncontrolling interests | (4,584) | (4,587) | |||
Amounts attributable to non-redeemable noncontrolling interests | (16,324) | (16,242) | |||
Net income available to Arch | 253,127 | 154,798 | |||
Preferred dividends | (11,218) | (5,484) | |||
Net income (loss) available to Arch common shareholders | $ 241,909 | $ 149,314 | |||
Underwriting Ratios | |||||
Loss ratio | 49.50% | 55.00% | |||
Acquisition expense ratio | 16.30% | 17.60% | |||
Other operating expense ratio | 15.60% | 15.80% | |||
Combined ratio | 81.40% | 88.40% | |||
Goodwill and intangible assets | $ 750,315 | $ 92,670 | $ 781,553 | ||
Other | |||||
Segment Reporting Information [Line Items] | |||||
Gross premiums written | [2] | 154,120 | 148,606 | ||
Premiums ceded | (10,434) | (4,472) | |||
Net premiums written | 143,686 | 144,134 | |||
Change in unearned premiums | (21,689) | (28,617) | |||
Net premiums earned | 121,997 | 115,517 | |||
Other underwriting income | 816 | 929 | |||
Losses and loss adjustment expenses | (85,410) | (79,113) | |||
Acquisition expenses, net | (32,508) | (32,939) | |||
Other operating expenses | (7,190) | (5,338) | |||
Underwriting income (loss) | (2,295) | (944) | |||
Net investment income | 22,062 | 23,326 | |||
Net realized gains (losses) | 5,641 | 5,462 | |||
Net impairment losses recognized in earnings | 0 | 0 | |||
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | |||
Other income (loss) | 0 | 0 | |||
Corporate expenses | 0 | [1] | 0 | ||
UGC transaction costs and other | [1] | 0 | |||
Amortization of intangible assets | 0 | 0 | |||
Interest expense | (2,920) | (3,480) | |||
Net foreign exchange gains (losses) | 441 | (1,525) | |||
Income before income taxes | 22,929 | 22,839 | |||
Income tax expense | 0 | 0 | |||
Net income (loss) | 22,929 | 22,839 | |||
Dividends attributable to redeemable noncontrolling interests | (4,584) | (4,587) | |||
Amounts attributable to non-redeemable noncontrolling interests | (16,324) | (16,242) | |||
Net income available to Arch | 2,021 | 2,010 | |||
Preferred dividends | 0 | 0 | |||
Net income (loss) available to Arch common shareholders | $ 2,021 | $ 2,010 | |||
Underwriting Ratios | |||||
Loss ratio | 70.00% | 68.50% | |||
Acquisition expense ratio | 26.60% | 28.50% | |||
Other operating expense ratio | 5.90% | 4.60% | |||
Combined ratio | 102.50% | 101.60% | |||
Goodwill and intangible assets | $ 7,650 | $ 0 | |||
Sub-Total | |||||
Segment Reporting Information [Line Items] | |||||
Gross premiums written | [2] | 1,606,686 | 1,391,061 | ||
Premiums ceded | (474,112) | (413,960) | |||
Net premiums written | 1,132,574 | 977,101 | |||
Change in unearned premiums | (137,554) | (141,039) | |||
Net premiums earned | 995,020 | 836,062 | |||
Other underwriting income | 3,817 | 4,118 | |||
Losses and loss adjustment expenses | (467,160) | (443,836) | |||
Acquisition expenses, net | (149,781) | (134,899) | |||
Other operating expenses | (167,529) | (144,810) | |||
Underwriting income (loss) | 214,367 | 116,635 | |||
Net investment income | 95,812 | 70,409 | |||
Net realized gains (losses) | 28,512 | 31,862 | |||
Net impairment losses recognized in earnings | (1,807) | (7,639) | |||
Equity in net income (loss) of investment funds accounted for using the equity method | 48,088 | 6,655 | |||
Other income (loss) | (782) | (25) | |||
Corporate expenses | (12,208) | [1] | (9,383) | ||
UGC transaction costs and other | [1] | (15,584) | |||
Amortization of intangible assets | (31,294) | (4,748) | |||
Interest expense | (25,756) | (12,627) | |||
Net foreign exchange gains (losses) | (19,845) | (22,041) | |||
Income before income taxes | 279,503 | 169,098 | |||
Income tax expense | (28,397) | (16,310) | |||
Net income (loss) | 251,106 | 152,788 | |||
Dividends attributable to redeemable noncontrolling interests | 0 | 0 | |||
Amounts attributable to non-redeemable noncontrolling interests | 0 | 0 | |||
Net income available to Arch | 251,106 | 152,788 | |||
Preferred dividends | (11,218) | (5,484) | |||
Net income (loss) available to Arch common shareholders | $ 239,888 | $ 147,304 | |||
Underwriting Ratios | |||||
Loss ratio | 46.90% | 53.10% | |||
Acquisition expense ratio | 15.10% | 16.10% | |||
Other operating expense ratio | 16.80% | 17.30% | |||
Combined ratio | 78.80% | 86.50% | |||
Goodwill and intangible assets | $ 742,665 | $ 92,670 | |||
Sub-Total | Insurance | |||||
Segment Reporting Information [Line Items] | |||||
Gross premiums written | [2] | 782,281 | 798,553 | ||
Premiums ceded | (234,095) | (248,789) | |||
Net premiums written | 548,186 | 549,764 | |||
Change in unearned premiums | (42,540) | (36,675) | |||
Net premiums earned | 505,646 | 513,089 | |||
Other underwriting income | 0 | 0 | |||
Losses and loss adjustment expenses | (332,641) | (323,609) | |||
Acquisition expenses, net | (74,868) | (74,348) | |||
Other operating expenses | (88,126) | (85,058) | |||
Underwriting income (loss) | $ 10,011 | $ 30,074 | |||
Underwriting Ratios | |||||
Loss ratio | 65.80% | 63.10% | |||
Acquisition expense ratio | 14.80% | 14.50% | |||
Other operating expense ratio | 17.40% | 16.60% | |||
Combined ratio | 98.00% | 94.20% | |||
Goodwill and intangible assets | $ 24,371 | $ 27,825 | |||
Sub-Total | Reinsurance | |||||
Segment Reporting Information [Line Items] | |||||
Gross premiums written | [2] | 475,782 | 481,390 | ||
Premiums ceded | (166,092) | (160,566) | |||
Net premiums written | 309,690 | 320,824 | |||
Change in unearned premiums | (64,839) | (59,616) | |||
Net premiums earned | 244,851 | 261,208 | |||
Other underwriting income | (306) | 325 | |||
Losses and loss adjustment expenses | (105,454) | (111,598) | |||
Acquisition expenses, net | (46,147) | (54,758) | |||
Other operating expenses | (37,533) | (36,258) | |||
Underwriting income (loss) | $ 55,411 | $ 58,919 | |||
Underwriting Ratios | |||||
Loss ratio | 43.10% | 42.70% | |||
Acquisition expense ratio | 18.80% | 21.00% | |||
Other operating expense ratio | 15.30% | 13.90% | |||
Combined ratio | 77.20% | 77.60% | |||
Goodwill and intangible assets | $ 773 | $ 1,713 | |||
Sub-Total | Mortgage | |||||
Segment Reporting Information [Line Items] | |||||
Gross premiums written | [2] | 348,623 | 111,280 | ||
Premiums ceded | (73,925) | (4,767) | |||
Net premiums written | 274,698 | 106,513 | |||
Change in unearned premiums | (30,175) | (44,748) | |||
Net premiums earned | 244,523 | 61,765 | |||
Other underwriting income | 4,123 | 3,793 | |||
Losses and loss adjustment expenses | (29,065) | (8,629) | |||
Acquisition expenses, net | (28,766) | (5,793) | |||
Other operating expenses | (41,870) | (23,494) | |||
Underwriting income (loss) | $ 148,945 | $ 27,642 | |||
Underwriting Ratios | |||||
Loss ratio | 11.90% | 14.00% | |||
Acquisition expense ratio | 11.80% | 9.40% | |||
Other operating expense ratio | 17.10% | 38.00% | |||
Combined ratio | 40.80% | 61.40% | |||
Goodwill and intangible assets | $ 717,521 | $ 63,132 | |||
[1] | Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘UGC transaction costs and other.’ | ||||
[2] | Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
Segment Information - Narrative
Segment Information - Narrative (Details) | 3 Months Ended |
Mar. 31, 2017segment | |
Underwriting segments | |
Segment Reporting Information [Line Items] | |
Number of segments | 3 |
Other | |
Segment Reporting Information [Line Items] | |
Number of segments | 2 |
Reserve for Losses and Loss A43
Reserve for Losses and Loss Adjustment Expenses - Reconciliation of beginning and ending balances of losses and loss adjustment reserves(Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | ||
Reserve for losses and loss adjustment expenses at beginning of year | $ 10,200,960 | $ 9,125,250 |
Unpaid losses and loss adjustment expenses recoverable | 2,083,575 | 1,828,837 |
Net reserve for losses and loss adjustment expenses at beginning of year | 8,117,385 | 7,296,413 |
Net incurred losses and loss adjustment expenses relating to losses occurring in: | ||
Current year | 635,775 | 578,978 |
Prior years | (83,205) | (56,029) |
Total net incurred losses and loss adjustment expenses | 552,570 | 522,949 |
Net foreign exchange losses (gains) | 31,278 | 33,575 |
Net paid losses and loss adjustment expenses relating to losses occurring in: | ||
Current year | (34,957) | (49,079) |
Prior years | (464,585) | (362,595) |
Total net paid losses and loss adjustment expenses | (499,542) | (411,674) |
Net reserve for losses and loss adjustment expenses at end of year | 8,201,691 | 7,441,263 |
Unpaid losses and loss adjustment expenses recoverable | 2,095,130 | 1,937,724 |
Reserve for losses and loss adjustment expenses at end of period | $ 10,296,821 | $ 9,378,987 |
Reserve for Losses and Loss A44
Reserve for Losses and Loss Adjustment Expenses - Prior year development (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | $ (83,205) | $ (56,029) |
Underwriting segments | Reinsurance | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | $ (57,200) | $ (47,400) |
Liability For Unpaid Claims And Claims Adjustment Expense Incurred Claims Prior Years Percentage | (23.40%) | (18.10%) |
Underwriting segments | Reinsurance | Short Tailed Lines | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | $ (40,800) | $ (36,500) |
Underwriting segments | Reinsurance | Short Tailed Lines | Property Catastrophe And Property Other Than Property Catastrophe | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | (34,000) | (29,800) |
Underwriting segments | Reinsurance | Medium Tailed And Long Tailed Lines | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | (16,400) | (10,900) |
Underwriting segments | Reinsurance | Medium Tailed And Long Tailed Lines | Casualty | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | (14,200) | |
Underwriting segments | Reinsurance | Medium Tailed And Long Tailed Lines | Casualty | 2003-2013 | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | (5,500) | |
Underwriting segments | Reinsurance | Medium Tailed And Long Tailed Lines | Marine And Aviation | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | 2,000 | |
Underwriting segments | Reinsurance | Medium Tailed And Long Tailed Lines | Marine And Aviation | 2014-2016 | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | (9,900) | |
Underwriting segments | Insurance | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | $ (2,100) | $ (6,200) |
Liability For Unpaid Claims And Claims Adjustment Expense Incurred Claims Prior Years Percentage | (0.40%) | (1.20%) |
Underwriting segments | Insurance | Programs | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | $ 6,100 | |
Percentage of Prior Year Development | 30.00% | |
Underwriting segments | Insurance | Short Tailed Lines | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | $ (1,900) | $ (3,700) |
Underwriting segments | Insurance | Medium Tailed Lines | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | 6,800 | 7,400 |
Underwriting segments | Insurance | Medium Tailed Lines | 2013 and 2014 | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | 14,200 | |
Underwriting segments | Insurance | Medium Tailed Lines | Professional Liability | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | (7,500) | |
Underwriting segments | Insurance | Long Tailed Lines | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | (7,000) | (9,900) |
Underwriting segments | Insurance | Long Tailed Lines | 2008 and 2012 | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | (6,900) | |
Underwriting segments | Mortgage | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | $ (23,600) | $ (2,700) |
Liability For Unpaid Claims And Claims Adjustment Expense Incurred Claims Prior Years Percentage | (9.60%) | (4.40%) |
Underwriting segments | Mortgage | Most origination years | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | $ (8,200) | |
Underwriting segments | Other | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Prior years | $ (300) | $ 200 |
Investment Information - Summar
Investment Information - Summary of available for sale securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | ||
Available for sale securities: | |||
Estimated Fair Value | $ 15,732,151 | $ 15,469,573 | |
Gross Unrealized Gains | 195,593 | 163,339 | |
Gross Unrealized Losses | (125,819) | (198,886) | |
Cost or Amortized Cost | 15,662,377 | 15,505,120 | |
OTTI Unrealized Losses | [1] | (5,422) | (5,831) |
Fixed maturities | |||
Available for sale securities: | |||
Estimated Fair Value | 14,269,033 | 14,156,918 | |
Gross Unrealized Gains | [2] | 97,001 | 79,082 |
Gross Unrealized Losses | [2] | (118,196) | (178,759) |
Cost or Amortized Cost | [2] | 14,290,228 | 14,256,595 |
OTTI Unrealized Losses | [1],[2] | (5,422) | (5,831) |
Fixed maturities | Corporate bonds | |||
Available for sale securities: | |||
Estimated Fair Value | 4,546,756 | 4,392,373 | |
Gross Unrealized Gains | [2] | 31,033 | 27,606 |
Gross Unrealized Losses | [2] | (36,615) | (46,905) |
Cost or Amortized Cost | [2] | 4,552,338 | 4,411,672 |
OTTI Unrealized Losses | [1],[2] | (1,876) | (2,285) |
Fixed maturities | Mortgage backed securities | |||
Available for sale securities: | |||
Estimated Fair Value | 412,023 | 490,093 | |
Gross Unrealized Gains | [2] | 5,210 | 4,794 |
Gross Unrealized Losses | [2] | (2,712) | (8,357) |
Cost or Amortized Cost | [2] | 409,525 | 493,656 |
OTTI Unrealized Losses | [1],[2] | (3,323) | (3,323) |
Fixed maturities | Municipal bonds | |||
Available for sale securities: | |||
Estimated Fair Value | 2,519,112 | 3,713,434 | |
Gross Unrealized Gains | [2] | 14,332 | 8,554 |
Gross Unrealized Losses | [2] | (17,411) | (29,154) |
Cost or Amortized Cost | [2] | 2,522,191 | 3,734,034 |
OTTI Unrealized Losses | [1],[2] | (201) | (201) |
Fixed maturities | Commercial mortgage backed securities | |||
Available for sale securities: | |||
Estimated Fair Value | 590,521 | 536,051 | |
Gross Unrealized Gains | [2] | 3,485 | 2,876 |
Gross Unrealized Losses | [2] | (6,040) | (6,508) |
Cost or Amortized Cost | [2] | 593,076 | 539,683 |
OTTI Unrealized Losses | [1],[2] | 0 | 0 |
Fixed maturities | US government and government agencies | |||
Available for sale securities: | |||
Estimated Fair Value | 3,266,908 | 2,804,540 | |
Gross Unrealized Gains | [2] | 7,940 | 9,319 |
Gross Unrealized Losses | [2] | (11,152) | (24,437) |
Cost or Amortized Cost | [2] | 3,270,120 | 2,819,658 |
OTTI Unrealized Losses | [1],[2] | 0 | 0 |
Fixed maturities | Non-US government securities | |||
Available for sale securities: | |||
Estimated Fair Value | 1,295,366 | 1,096,440 | |
Gross Unrealized Gains | [2] | 26,017 | 19,036 |
Gross Unrealized Losses | [2] | (39,356) | (56,872) |
Cost or Amortized Cost | [2] | 1,308,705 | 1,134,276 |
OTTI Unrealized Losses | [1],[2] | 0 | 0 |
Fixed maturities | Asset backed securities | |||
Available for sale securities: | |||
Estimated Fair Value | 1,638,347 | 1,123,987 | |
Gross Unrealized Gains | [2] | 8,984 | 6,897 |
Gross Unrealized Losses | [2] | (4,910) | (6,526) |
Cost or Amortized Cost | [2] | 1,634,273 | 1,123,616 |
OTTI Unrealized Losses | [1],[2] | (22) | (22) |
Equity securities | |||
Available for sale securities: | |||
Estimated Fair Value | 431,062 | 532,680 | |
Gross Unrealized Gains | 66,628 | 62,627 | |
Gross Unrealized Losses | (6,660) | (17,517) | |
Cost or Amortized Cost | 371,094 | 487,570 | |
OTTI Unrealized Losses | [1] | 0 | 0 |
Other investments | |||
Available for sale securities: | |||
Estimated Fair Value | 228,437 | 167,970 | |
Gross Unrealized Gains | 31,844 | 21,358 | |
Gross Unrealized Losses | (838) | (2,465) | |
Cost or Amortized Cost | 197,431 | 149,077 | |
OTTI Unrealized Losses | [1] | 0 | 0 |
Short-term investments | |||
Available for sale securities: | |||
Estimated Fair Value | 803,619 | 612,005 | |
Gross Unrealized Gains | 120 | 272 | |
Gross Unrealized Losses | (125) | (145) | |
Cost or Amortized Cost | 803,624 | 611,878 | |
OTTI Unrealized Losses | [1] | $ 0 | $ 0 |
[1] | Represents the total other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income (“AOCI”). It does not include the change in fair value subsequent to the impairment measurement date. At March 31, 2017, the net unrealized gain related to securities for which a non-credit OTTI was recognized in AOCI was $2.0 million, compared to a net unrealized gain of $2.8 million at December 31, 2016. | ||
[2] | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
Investment Information - Aging
Investment Information - Aging of available for sale securities in an unrealized loss position (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | $ 6,901,346 | $ 7,509,193 | |
Gross Unrealized Losses - Less than 12 Months | (121,948) | (192,881) | |
Estimated Fair Value - 12 Months or More | 113,771 | 154,001 | |
Gross Unrealized Losses - 12 Months or More | (3,871) | (6,005) | |
Estimated Fair Value - Total | 7,015,117 | 7,663,194 | |
Gross Unrealized Losses - Total | (125,819) | (198,886) | |
Fixed maturities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 6,697,794 | 7,171,367 |
Gross Unrealized Losses - Less than 12 Months | [1] | (114,325) | (172,754) |
Estimated Fair Value - 12 Months or More | [1] | 113,771 | 154,001 |
Gross Unrealized Losses - 12 Months or More | [1] | (3,871) | (6,005) |
Estimated Fair Value - Total | [1] | 6,811,565 | 7,325,368 |
Gross Unrealized Losses - Total | [1] | (118,196) | (178,759) |
Fixed maturities | Corporate bonds | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 1,832,009 | 1,700,813 |
Gross Unrealized Losses - Less than 12 Months | [1] | (34,331) | (43,011) |
Estimated Fair Value - 12 Months or More | [1] | 26,288 | 46,902 |
Gross Unrealized Losses - 12 Months or More | [1] | (2,284) | (3,894) |
Estimated Fair Value - Total | [1] | 1,858,297 | 1,747,715 |
Gross Unrealized Losses - Total | [1] | (36,615) | (46,905) |
Fixed maturities | Mortgage backed securities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 137,291 | 402,699 |
Gross Unrealized Losses - Less than 12 Months | [1] | (2,652) | (8,134) |
Estimated Fair Value - 12 Months or More | [1] | 4,150 | 6,105 |
Gross Unrealized Losses - 12 Months or More | [1] | (60) | (223) |
Estimated Fair Value - Total | [1] | 141,441 | 408,804 |
Gross Unrealized Losses - Total | [1] | (2,712) | (8,357) |
Fixed maturities | Municipal bonds | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 1,043,998 | 1,513,308 |
Gross Unrealized Losses - Less than 12 Months | [1] | (16,890) | (28,504) |
Estimated Fair Value - 12 Months or More | [1] | 25,004 | 29,636 |
Gross Unrealized Losses - 12 Months or More | [1] | (521) | (650) |
Estimated Fair Value - Total | [1] | 1,069,002 | 1,542,944 |
Gross Unrealized Losses - Total | [1] | (17,411) | (29,154) |
Fixed maturities | Commercial mortgage backed securities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 304,022 | 231,374 |
Gross Unrealized Losses - Less than 12 Months | [1] | (5,890) | (6,331) |
Estimated Fair Value - 12 Months or More | [1] | 3,928 | 5,635 |
Gross Unrealized Losses - 12 Months or More | [1] | (150) | (177) |
Estimated Fair Value - Total | [1] | 307,950 | 237,009 |
Gross Unrealized Losses - Total | [1] | (6,040) | (6,508) |
Fixed maturities | US government and government agencies | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 1,803,247 | 1,888,018 |
Gross Unrealized Losses - Less than 12 Months | [1] | (11,152) | (24,437) |
Estimated Fair Value - 12 Months or More | [1] | 0 | 0 |
Gross Unrealized Losses - 12 Months or More | [1] | 0 | 0 |
Estimated Fair Value - Total | [1] | 1,803,247 | 1,888,018 |
Gross Unrealized Losses - Total | [1] | (11,152) | (24,437) |
Fixed maturities | Non-US government securities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 914,310 | 807,598 |
Gross Unrealized Losses - Less than 12 Months | [1] | (39,153) | (56,872) |
Estimated Fair Value - 12 Months or More | [1] | 13,924 | 0 |
Gross Unrealized Losses - 12 Months or More | [1] | (203) | 0 |
Estimated Fair Value - Total | [1] | 928,234 | 807,598 |
Gross Unrealized Losses - Total | [1] | (39,356) | (56,872) |
Fixed maturities | Asset backed securities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 662,917 | 627,557 |
Gross Unrealized Losses - Less than 12 Months | [1] | (4,257) | (5,465) |
Estimated Fair Value - 12 Months or More | [1] | 40,477 | 65,723 |
Gross Unrealized Losses - 12 Months or More | [1] | (653) | (1,061) |
Estimated Fair Value - Total | [1] | 703,394 | 693,280 |
Gross Unrealized Losses - Total | [1] | (4,910) | (6,526) |
Equity securities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | 134,646 | 269,381 | |
Gross Unrealized Losses - Less than 12 Months | (6,660) | (17,517) | |
Estimated Fair Value - 12 Months or More | 0 | 0 | |
Gross Unrealized Losses - 12 Months or More | 0 | 0 | |
Estimated Fair Value - Total | 134,646 | 269,381 | |
Gross Unrealized Losses - Total | (6,660) | (17,517) | |
Other investments | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | 25,189 | 39,299 | |
Gross Unrealized Losses - Less than 12 Months | (838) | (2,465) | |
Estimated Fair Value - 12 Months or More | 0 | 0 | |
Gross Unrealized Losses - 12 Months or More | 0 | 0 | |
Estimated Fair Value - Total | 25,189 | 39,299 | |
Gross Unrealized Losses - Total | (838) | (2,465) | |
Short-term investments | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | 43,717 | 29,146 | |
Gross Unrealized Losses - Less than 12 Months | (125) | (145) | |
Estimated Fair Value - 12 Months or More | 0 | 0 | |
Gross Unrealized Losses - 12 Months or More | 0 | 0 | |
Estimated Fair Value - Total | 43,717 | 29,146 | |
Gross Unrealized Losses - Total | $ (125) | $ (145) | |
[1] | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
Investment Information - Maturi
Investment Information - Maturity profile of available for sale securities) (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Estimated Fair Value: | |||
Estimated fair value | $ 13,745,932 | $ 13,426,577 | |
Amortized Cost: | |||
Amortized cost | 13,767,375 | 13,522,671 | |
Fixed maturities | |||
Estimated Fair Value: | |||
Due in one year or less | 633,926 | 560,830 | |
Due after one year through five years | 7,197,090 | 6,158,148 | |
Due after five years through 10 years | 3,337,574 | 4,676,847 | |
Due after 10 years | 459,552 | 610,962 | |
Single maturity date | 11,628,142 | 12,006,787 | |
Estimated fair value | [1] | 14,269,033 | 14,156,918 |
Amortized Cost: | |||
Due in one year or less | 632,468 | 557,675 | |
Due after one year through five years | 7,217,033 | 6,211,099 | |
Due after five years through 10 years | 3,339,974 | 4,710,017 | |
Due after 10 years | 463,879 | 620,849 | |
Single maturity date | 11,653,354 | 12,099,640 | |
Amortized cost | [1] | 14,290,228 | 14,256,595 |
Fixed maturities | Mortgage backed securities | |||
Estimated Fair Value: | |||
Securities without single maturity date | 412,023 | 490,093 | |
Amortized Cost: | |||
Securities without single maturity date | 409,525 | 493,656 | |
Fixed maturities | Commercial mortgage backed securities | |||
Estimated Fair Value: | |||
Securities without single maturity date | 590,521 | 536,051 | |
Amortized Cost: | |||
Securities without single maturity date | 593,076 | 539,683 | |
Fixed maturities | Asset backed securities | |||
Estimated Fair Value: | |||
Securities without single maturity date | 1,638,347 | 1,123,987 | |
Amortized Cost: | |||
Securities without single maturity date | $ 1,634,273 | $ 1,123,616 | |
[1] | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
Investment Information - Securi
Investment Information - Securities lending agreements (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Disclosure Investment Information [Abstract] | ||
Fair value of cash collateral received on securities lending | $ 31,500 | $ 212,500 |
Fair value of non-cash collateral received on securities lending | 506,900 | 550,100 |
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 538,353 | 762,554 |
Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 9 | 0 | 0 |
Amounts related to securities lending not included in offsetting disclosure in Note 9 | 538,353 | 762,554 |
US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 506,210 | 718,492 |
Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 29,624 | 29,078 |
Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 2,519 | 14,984 |
Overnight and continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 390,436 | 600,077 |
Overnight and continuous | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 358,293 | 556,015 |
Overnight and continuous | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 29,624 | 29,078 |
Overnight and continuous | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 2,519 | 14,984 |
Less than 30 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 31,244 |
Less than 30 days | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 31,244 |
Less than 30 days | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
Less than 30 days | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
30 - 90 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 139,416 | 126,093 |
30 - 90 days | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 139,416 | 126,093 |
30 - 90 days | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
30 - 90 days | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
90 days or more | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 8,501 | 5,140 |
90 days or more | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 8,501 | 5,140 |
90 days or more | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
90 days or more | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | $ 0 | $ 0 |
Investment Information - Other
Investment Information - Other investments (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | $ 2,123,751 | $ 2,088,763 | |
Available for sale | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 228,437 | 167,970 | |
Available for sale | Asian and emerging markets | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 109,084 | 84,778 | |
Available for sale | Investment grade fixed income | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 52,016 | 33,923 | |
Available for sale | Credit related funds | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 11,003 | 7,469 | |
Available for sale | Other | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 56,334 | 41,800 | |
Fair value option | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 1,895,314 | 1,920,793 | |
Fair value option | Term loan investments | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 1,123,568 | 1,190,799 | |
Other investments par | 1,145,832 | 1,208,537 | |
Fair value option | Mezzanine debt funds | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 109,334 | 127,943 | |
Fair value option | Asian and emerging markets | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 205,150 | 178,568 | |
Fair value option | Investment grade fixed income | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 82,718 | 75,468 | |
Fair value option | Credit related funds | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 208,707 | 218,298 | |
Fair value option | Other | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | [1] | $ 165,837 | $ 129,717 |
[1] | Includes fund investments with strategies in mortgage servicing rights, transportation, infrastructure and other. |
Investment Information - Fair v
Investment Information - Fair value option (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | $ 3,648,120 | $ 3,421,220 |
Fixed maturities | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 1,112,945 | 1,099,116 |
Other investments | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 1,895,314 | 1,920,793 |
Short-term investments | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 581,508 | 373,669 |
Equity securities | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | $ 58,353 | $ 27,642 |
Investment Information - Limite
Investment Information - Limited partnership interests (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Schedule of Equity Method Investments [Line Items] | |||
Maximum Exposure to Loss | $ 951,333 | $ 891,774 | |
Aggregate unfunded commitments | 1,450,000 | ||
Equity method investments | |||
Schedule of Equity Method Investments [Line Items] | |||
Maximum Exposure to Loss | [1] | 861,607 | 800,970 |
Aggregate unfunded commitments | 797,600 | 776,600 | |
Fair value option | |||
Schedule of Equity Method Investments [Line Items] | |||
Maximum Exposure to Loss | [2] | 89,726 | 90,804 |
Aggregate unfunded commitments | $ 66,700 | $ 16,700 | |
[1] | Aggregate unfunded commitments were $797.6 million at March 31, 2017, compared to $776.6 million at December 31, 2016. | ||
[2] | Aggregate unfunded commitments were $66.7 million at March 31, 2017, compared to $16.7 million at December 31, 2016. |
Investment Information - Net in
Investment Information - Net investment income (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Net investment income: | |||
Gross investment income | $ 138,375 | $ 111,359 | |
Investment expenses | (20,501) | (17,624) | |
Net investment income | 117,874 | 93,735 | |
Fixed maturities | |||
Net investment income: | |||
Gross investment income | 94,393 | 73,673 | |
Term loan investments | |||
Net investment income: | |||
Gross investment income | 21,170 | 20,012 | |
Equity securities (dividends) | |||
Net investment income: | |||
Gross investment income | 2,643 | 3,435 | |
Short-term investments | |||
Net investment income: | |||
Gross investment income | 1,759 | 496 | |
Other | |||
Net investment income: | |||
Gross investment income | [1] | $ 18,410 | $ 13,743 |
[1] | Includes income distributions from investment funds and other items. |
Investment Information - Net re
Investment Information - Net realized gains and losses (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Net realized gains and losses: | |||
Available for sale securities, gross gains on investment sales | $ 69,175 | $ 107,819 | |
Available for sale securities, gross losses on investment sales | (61,362) | (63,131) | |
Derivative instruments | [1] | (9,181) | 20,732 |
Other | [2] | (5,817) | (5,829) |
Net realized gains (losses) | 34,153 | 37,324 | |
Fixed maturities | |||
Net realized gains and losses: | |||
Change in fair value of assets and liabilities accounted for using the fair value option | 20,541 | (333) | |
Other investments | |||
Net realized gains and losses: | |||
Change in fair value of assets and liabilities accounted for using the fair value option | 17,248 | (21,548) | |
Equity securities | |||
Net realized gains and losses: | |||
Change in fair value of assets and liabilities accounted for using the fair value option | 3,545 | 36 | |
Short-term investments | |||
Net realized gains and losses: | |||
Change in fair value of assets and liabilities accounted for using the fair value option | $ 4 | $ (422) | |
[1] | See Note 9 for information on the Company’s derivative instruments. | ||
[2] | Includes the re-measurement of contingent consideration liability amounts. |
Investment Information - Othe54
Investment Information - Other than temporary impairments recognized in earnings (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Net impairment losses recognized in earnings | $ (1,807) | $ (7,639) |
Fixed maturities | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Net impairment losses recognized in earnings | (1,518) | (5,540) |
Fixed maturities | Mortgage backed securities | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Net impairment losses recognized in earnings | (1,319) | (473) |
Fixed maturities | Corporate bonds | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Net impairment losses recognized in earnings | (1) | (4,880) |
Fixed maturities | Non-US government securities | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Net impairment losses recognized in earnings | (198) | (181) |
Fixed maturities | Asset backed securities | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Net impairment losses recognized in earnings | 0 | (6) |
Equity securities | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Net impairment losses recognized in earnings | (186) | (1,102) |
Other investments | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Net impairment losses recognized in earnings | $ (103) | $ (997) |
Investment Information - Othe55
Investment Information - Other than temporary impairments rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Rollforward: | ||
Balance at start of period | $ 13,138 | $ 26,875 |
Credit loss impairments recognized on securities not previously impaired | 0 | 1,063 |
Credit loss impairments recognized on securities previously impaired | 23 | 522 |
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | 0 | 0 |
Reductions for securities sold during the period | (624) | (10,169) |
Balance at end of period | $ 12,537 | $ 18,291 |
Investment Information - Restri
Investment Information - Restricted assets (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Restricted Assets [Line Items] | ||
Restricted assets | $ 6,110,398 | $ 5,902,339 |
Collateral or guarantees - affiliated transactions | ||
Restricted Assets [Line Items] | ||
Restricted assets | 3,991,217 | 3,871,971 |
Collateral or guarantees - third party agreements | ||
Restricted Assets [Line Items] | ||
Restricted assets | 1,545,255 | 1,513,079 |
Deposits with US regulatory authorities | ||
Restricted Assets [Line Items] | ||
Restricted assets | 528,594 | 472,890 |
Deposits with non-US regulatory authorities | ||
Restricted Assets [Line Items] | ||
Restricted assets | $ 45,332 | $ 44,399 |
Investment Information - Narrat
Investment Information - Narrative (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017USD ($)lots | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)lots | ||
Narrative items: | ||||
Investable assets | $ 20,740,000 | |||
Income (Loss) from Equity Method Investments | 48,088 | $ 6,655 | ||
OTTI unrealized (losses) gains at current fair value | $ 2,000 | $ 2,800 | ||
Continuous unrealized loss, qualitative disclosures: | ||||
Number of positions in an unrealized loss position (lots) | lots | 3,350 | 3,540 | ||
Total number of positions (lots) | lots | 7,720 | 7,240 | ||
Largest single loss | $ 4,400 | $ 4,600 | ||
OTTI unrealized losses (gains) | [1] | 5,422 | $ 5,831 | |
Underwriting segments | ||||
Narrative items: | ||||
Investable assets | 18,830,000 | |||
Income (Loss) from Equity Method Investments | 48,088 | 6,655 | ||
Other | ||||
Narrative items: | ||||
Investable assets | 1,900,000 | |||
Income (Loss) from Equity Method Investments | $ 0 | $ 0 | ||
[1] | Represents the total other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income (“AOCI”). It does not include the change in fair value subsequent to the impairment measurement date. At March 31, 2017, the net unrealized gain related to securities for which a non-credit OTTI was recognized in AOCI was $2.0 million, compared to a net unrealized gain of $2.8 million at December 31, 2016. |
Fair Value - Fair Value Hierarc
Fair Value - Fair Value Hierarchy (Details) - Recurring - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | $ 5,472,367 | $ 4,555,092 | |
Liabilities measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 3,192,592 | 2,691,575 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 3,192,592 | 2,691,575 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 427,762 | 529,695 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 796,075 | 608,862 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 122,773 | 112,313 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other investments at fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 122,773 | 112,313 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 933,165 | 612,647 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 207,064 | 197,486 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 580,315 | 309,127 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 55,311 | 25,328 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 90,475 | 80,706 | |
Significant Other Observable Inputs (Level 2) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 13,223,747 | 13,559,270 | |
Liabilities measured at fair value | (81,657) | (59,206) | |
Significant Other Observable Inputs (Level 2) | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | (59,430) | (33,157) |
Significant Other Observable Inputs (Level 2) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (22,227) | (26,049) | |
Significant Other Observable Inputs (Level 2) | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 11,047,203 | 11,435,710 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 4,528,155 | 4,374,029 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 412,023 | 490,093 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 2,519,112 | 3,713,434 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 590,521 | 536,051 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 74,316 | 112,965 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 1,295,366 | 1,096,440 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 1,627,710 | 1,112,698 |
Significant Other Observable Inputs (Level 2) | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 3,300 | 2,985 | |
Significant Other Observable Inputs (Level 2) | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 7,544 | 3,143 | |
Significant Other Observable Inputs (Level 2) | Other investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 3,339 | 0 | |
Significant Other Observable Inputs (Level 2) | Other investments at fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 3,339 | 0 | |
Significant Other Observable Inputs (Level 2) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 29,059 | 28,410 | |
Significant Other Observable Inputs (Level 2) | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 2,133,302 | 2,089,022 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 817,690 | 790,935 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 16,489 | 18,624 | |
Significant Other Observable Inputs (Level 2) | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 55,504 | 61,747 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 16,198 | 30,324 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,193 | 64,542 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 3,042 | 2,314 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,223,186 | 1,120,536 | |
Significant Unobservable Inputs (Level 3) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 54,238 | 54,633 | |
Liabilities measured at fair value | (125,544) | (122,350) | |
Significant Unobservable Inputs (Level 3) | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (125,544) | (122,350) | |
Significant Unobservable Inputs (Level 3) | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 29,238 | 29,633 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 18,601 | 18,344 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 10,637 | 11,289 |
Significant Unobservable Inputs (Level 3) | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Other investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Other investments at fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 25,000 | 25,000 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 25,000 | 25,000 | |
Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 19,409,330 | 18,919,203 | |
Liabilities measured at fair value | (207,201) | (181,556) | |
Estimated Fair Value | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (125,544) | (122,350) | |
Estimated Fair Value | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | (59,430) | (33,157) |
Estimated Fair Value | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (22,227) | (26,049) | |
Estimated Fair Value | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 14,269,033 | 14,156,918 | |
Estimated Fair Value | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 4,546,756 | 4,392,373 | |
Estimated Fair Value | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 412,023 | 490,093 | |
Estimated Fair Value | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 2,519,112 | 3,713,434 | |
Estimated Fair Value | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 590,521 | 536,051 | |
Estimated Fair Value | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 3,266,908 | 2,804,540 | |
Estimated Fair Value | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,295,366 | 1,096,440 | |
Estimated Fair Value | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,638,347 | 1,123,987 | |
Estimated Fair Value | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 431,062 | 532,680 | |
Estimated Fair Value | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 803,619 | 612,005 | |
Estimated Fair Value | Other investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 228,437 | 167,970 | |
Estimated Fair Value | Other investments at fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 126,112 | 112,313 | |
Estimated Fair Value | Other investments measured at net asset value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [3] | 102,325 | 55,657 |
Estimated Fair Value | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 29,059 | 28,410 | |
Estimated Fair Value | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 3,648,120 | 3,421,220 | |
Estimated Fair Value | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 817,690 | 790,935 | |
Estimated Fair Value | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 16,489 | 18,624 | |
Estimated Fair Value | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 207,064 | 197,486 | |
Estimated Fair Value | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 55,504 | 61,747 | |
Estimated Fair Value | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 16,198 | 30,324 | |
Estimated Fair Value | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 581,508 | 373,669 | |
Estimated Fair Value | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 58,353 | 27,642 | |
Estimated Fair Value | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,338,661 | 1,226,242 | |
Estimated Fair Value | Fair value option | Other investments measured at net asset value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [3] | $ 556,653 | $ 694,551 |
[1] | Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. | ||
[2] | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. | ||
[3] | In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. |
Fair Value - Rollforward of Lev
Fair Value - Rollforward of Level 3 assets and liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | $ 54,633 | $ 73,868 | |
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 964 | (1,202) |
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | |
Purchases, issuances, sales and settlements | |||
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | (1,359) | 0 | |
Transfers in and/or out of Level 3 | 0 | 0 | |
Balance at end of period | 54,238 | 72,666 | |
Contingent consideration liability | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | (122,350) | (96,048) | |
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | (3,646) | (5,198) |
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | |
Purchases, issuances, sales and settlements | |||
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | 452 | 536 | |
Transfers in and/or out of Level 3 | 0 | 0 | |
Balance at end of period | (125,544) | (100,710) | |
Available for sale | Asset backed securities | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | 11,289 | 57,500 | |
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 707 | 0 |
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | |
Purchases, issuances, sales and settlements | |||
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | (1,359) | 0 | |
Transfers in and/or out of Level 3 | 0 | 0 | |
Balance at end of period | 10,637 | 57,500 | |
Fair value option | Corporate bonds | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | 18,344 | 16,368 | |
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 257 | (1,202) |
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | |
Purchases, issuances, sales and settlements | |||
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | 0 | 0 | |
Transfers in and/or out of Level 3 | 0 | 0 | |
Balance at end of period | 18,601 | 15,166 | |
Fair value option | Other investments | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | 25,000 | 0 | |
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 0 | 0 |
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | |
Purchases, issuances, sales and settlements | |||
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | 0 | 0 | |
Transfers in and/or out of Level 3 | 0 | 0 | |
Balance at end of period | $ 25,000 | $ 0 | |
[1] | Gains or losses on asset backed securities were included in net impairment losses recognized in earnings while gains or losses on corporate bonds and contingent consideration liabilities were included in net realized gains (losses). |
Fair Value - Narrative (Details
Fair Value - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Fair Value Disclosures [Abstract] | ||
Total assets and liabilities measured at fair value | $ 19,620,000 | $ 19,100,000 |
Total assets and liabilities measured at fair value priced using non-binding broker quotes | $ 177,900 | $ 234,000 |
Total assets and liabilities measured at fair value priced using non-binding broker quotes (percentage) | 0.90% | 1.20% |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | $ 1,732,410 | $ 1,732,258 |
Reportable Legal Entities | ACGL (Parent Guarantor) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | 296,979 | 296,957 |
Estimated fair value of senior notes | 394,700 | |
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | 494,548 | $ 494,525 |
Estimated fair value of senior notes | 535,600 | |
Unsecured debt | Notes due 2026 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | 495,800 | |
Estimated fair value of senior notes | 515,200 | |
Unsecured debt | Notes due 2046 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Senior notes | 445,100 | |
Estimated fair value of senior notes | $ 488,000 |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |||
Derivative offsetting [Abstract] | |||||
Derivative assets subject to master netting agreements | $ 59,300 | $ 28,400 | |||
Derivative liabilities subject to master netting agreements | (54,600) | (26,000) | |||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | [1] | (9,181) | $ 20,732 | ||
Not Designated as Hedging Instrument [Member] | |||||
Derivative [Line Items] | |||||
Asset derivatives - fair value | 61,070 | 30,001 | |||
Liability derivatives - fair value | (55,018) | (26,049) | |||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | (9,181) | 20,732 | |||
Not Designated as Hedging Instrument [Member] | Futures contracts | |||||
Derivative [Line Items] | |||||
Net derivatives - notional value | [2],[3] | 2,276,070 | 1,655,530 | ||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | 7,720 | 26,451 | |||
Not Designated as Hedging Instrument [Member] | Futures contracts | Other assets | |||||
Derivative [Line Items] | |||||
Asset derivatives - fair value | 3,550 | [3] | 360 | ||
Not Designated as Hedging Instrument [Member] | Futures contracts | Other liabilities | |||||
Derivative [Line Items] | |||||
Liability derivatives - fair value | [3] | (4,489) | (9,398) | ||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | |||||
Derivative [Line Items] | |||||
Net derivatives - notional value | [2],[3] | 1,264,235 | 1,186,386 | ||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | (11,766) | (4,752) | |||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | Other assets | |||||
Derivative [Line Items] | |||||
Asset derivatives - fair value | [3] | 7,363 | 9,354 | ||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | Other liabilities | |||||
Derivative [Line Items] | |||||
Liability derivatives - fair value | [3] | (11,435) | (12,941) | ||
Not Designated as Hedging Instrument [Member] | TBAs | |||||
Derivative [Line Items] | |||||
Net derivatives - notional value | [2],[4] | 63,966 | 0 | ||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | (65) | 297 | |||
Not Designated as Hedging Instrument [Member] | TBAs | Fixed maturities available for sale | |||||
Derivative [Line Items] | |||||
Asset derivatives - fair value | 32,011 | [4] | 0 | ||
Liability derivatives - fair value | [4] | (32,791) | 0 | ||
Not Designated as Hedging Instrument [Member] | Other | |||||
Derivative [Line Items] | |||||
Net derivatives - notional value | [2],[3] | 1,552,009 | 1,014,863 | ||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | (5,070) | $ (1,264) | |||
Not Designated as Hedging Instrument [Member] | Other | Other assets | |||||
Derivative [Line Items] | |||||
Asset derivatives - fair value | [3] | 18,146 | 20,287 | ||
Not Designated as Hedging Instrument [Member] | Other | Other liabilities | |||||
Derivative [Line Items] | |||||
Liability derivatives - fair value | [3] | $ (6,303) | $ (3,710) | ||
[1] | See Note 9 for information on the Company’s derivative instruments. | ||||
[2] | Represents the absolute notional value of all outstanding contracts, consisting of long and short positions. | ||||
[3] | The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’ | ||||
[4] | The fair value of TBAs are included in ‘fixed maturities available for sale, at fair value.’ |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Mar. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Investment commitments | $ 1,450 |
Share Transactions - Share repu
Share Transactions - Share repurchases (Details) - Common shares - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Class of Stock [Line Items] | ||
Cumulative number of shares acquired since inception of share repurchase program | 125.2 | |
Aggregate purchase price of shares acquired since inception of share repurchase program | $ 3,680 | |
Treasury stock, shares acquired (shares) | 1.1 | |
Treasury stock, value of shares acquired | $ 75.3 | |
Remaining authorized repurchase amount | $ 446.5 |
Other Comprehensive Income (L64
Other Comprehensive Income (Loss) - Amounts reclassified from accumulated other comprehensive income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Other-than-temporary impairment losses | $ (1,807) | $ (7,737) |
Income before income taxes | 302,432 | 191,937 |
Income tax expense | (28,397) | (16,310) |
Net of tax | 253,127 | 154,798 |
Reclassification out of accumulated other comprehensive income | Unrealized appreciation on available-for-sale investments | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Net realized gains (losses) | 7,813 | 44,687 |
Other-than-temporary impairment losses | (1,807) | (7,737) |
Income before income taxes | 6,006 | 36,950 |
Income tax expense | (962) | (4,727) |
Net of tax | $ 5,044 | $ 32,223 |
Other Comprehensive Income (L65
Other Comprehensive Income (Loss) - Components of other comprehensive income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Before tax amount: | ||
Unrealized holding gains (losses) arising during period, before tax | $ 111,472 | $ 152,174 |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), before tax | 0 | (98) |
Less reclassification of net realized gains included in net income, before tax | 6,006 | 36,950 |
Foreign currency translation adjustments, before tax | 3,165 | 17,860 |
Other comprehensive income (loss), before tax | 108,631 | 132,986 |
Tax expense (benefit): | ||
Unrealized holding gains (losses) arising during period, tax | 10,680 | 19,193 |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), tax | 0 | 0 |
Less reclassification of net realized gains included in net income, tax | 962 | 4,727 |
Foreign currency translation adjustments, tax | 41 | 547 |
Other comprehensive income (loss), tax | 9,759 | 15,013 |
Net of tax amount: | ||
Unrealized holding gains (losses) arising during period, net of tax | 100,792 | 132,981 |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), net of tax | 0 | (98) |
Less reclassification of net realized gains included in net income, net of tax | 5,044 | 32,223 |
Foreign currency translation adjustments, net of tax | 3,124 | 17,313 |
Net current period other comprehensive income (loss) | $ 98,872 | $ 117,973 |
Guarantor Financial Informati66
Guarantor Financial Information - Condensed consolidating balance sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Assets | ||||
Total investments | $ 20,254,670 | $ 19,719,651 | ||
Cash | 703,754 | 842,942 | $ 557,961 | $ 553,326 |
Investments in subsidiaries | 0 | 0 | ||
Due from subsidiaries and affiliates | 0 | 0 | ||
Premiums receivable | 1,254,048 | 1,072,435 | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 2,133,148 | 2,114,138 | ||
Contractholder receivables | 1,766,340 | 1,717,436 | ||
Ceded unearned premiums | 941,923 | 859,567 | ||
Deferred acquisition costs | 487,925 | 447,560 | ||
Goodwill and intangible assets | 750,315 | 781,553 | 92,670 | |
Other assets | 1,800,103 | 1,816,827 | ||
Total assets | 30,092,226 | 29,372,109 | ||
Liabilities | ||||
Reserve for losses and loss adjustment expenses | 10,296,821 | 10,200,960 | 9,378,987 | 9,125,250 |
Unearned premiums | 3,631,259 | 3,406,870 | ||
Reinsurance balances payable | 321,285 | 300,407 | ||
Contractholder payables | 1,766,340 | 1,717,436 | ||
Collateral held for insured obligations | 327,161 | 301,406 | ||
Deposit accounting liabilities | 22,150 | |||
Senior notes | 1,732,410 | 1,732,258 | ||
Revolving credit agreement borrowings | 734,961 | 756,650 | ||
Due to subsidiaries and affiliates | 0 | 0 | ||
Other liabilities | 1,602,315 | 1,622,847 | ||
Total liabilities | 20,412,552 | 20,060,984 | ||
Redeemable noncontrolling interests | 205,644 | 205,553 | ||
Shareholders' Equity | ||||
Total shareholders’ equity available to Arch | 8,605,844 | 8,253,718 | 6,375,248 | |
Non-redeemable noncontrolling interests | 868,186 | 851,854 | 754,915 | |
Total shareholders’ equity | 9,474,030 | 9,105,572 | 7,130,163 | |
Total liabilities, noncontrolling interests and shareholders’ equity | 30,092,226 | 29,372,109 | ||
Reportable Legal Entities | ACGL (Parent Guarantor) | ||||
Assets | ||||
Total investments | 256 | 2,612 | ||
Cash | 10,177 | 1,687 | 6,795 | 6,809 |
Investments in subsidiaries | 8,992,903 | 8,660,586 | ||
Due from subsidiaries and affiliates | 1,626 | 14,297 | ||
Premiums receivable | 0 | 0 | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 0 | 0 | ||
Contractholder receivables | 0 | 0 | ||
Ceded unearned premiums | 0 | 0 | ||
Deferred acquisition costs | 0 | 0 | ||
Goodwill and intangible assets | 0 | 0 | ||
Other assets | 14,730 | 15,725 | ||
Total assets | 9,019,692 | 8,694,907 | ||
Liabilities | ||||
Reserve for losses and loss adjustment expenses | 0 | 0 | ||
Unearned premiums | 0 | 0 | ||
Reinsurance balances payable | 0 | 0 | ||
Contractholder payables | 0 | 0 | ||
Collateral held for insured obligations | 0 | 0 | ||
Deposit accounting liabilities | 0 | |||
Senior notes | 296,979 | 296,957 | ||
Revolving credit agreement borrowings | 100,000 | 100,000 | ||
Due to subsidiaries and affiliates | 2,044 | 26,270 | ||
Other liabilities | 14,825 | 17,962 | ||
Total liabilities | 413,848 | 441,189 | ||
Redeemable noncontrolling interests | 0 | 0 | ||
Shareholders' Equity | ||||
Total shareholders’ equity available to Arch | 8,605,844 | 8,253,718 | ||
Non-redeemable noncontrolling interests | 0 | 0 | ||
Total shareholders’ equity | 8,605,844 | 8,253,718 | ||
Total liabilities, noncontrolling interests and shareholders’ equity | 9,019,692 | 8,694,907 | ||
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||||
Assets | ||||
Total investments | 41,715 | 41,672 | ||
Cash | 42,745 | 71,955 | 12,437 | 17,023 |
Investments in subsidiaries | 3,843,774 | 3,716,681 | ||
Due from subsidiaries and affiliates | 52,032 | 51,298 | ||
Premiums receivable | 0 | 0 | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 0 | 0 | ||
Contractholder receivables | 0 | 0 | ||
Ceded unearned premiums | 0 | 0 | ||
Deferred acquisition costs | 0 | 0 | ||
Goodwill and intangible assets | 0 | 0 | ||
Other assets | 55,658 | 49,244 | ||
Total assets | 4,035,924 | 3,930,850 | ||
Liabilities | ||||
Reserve for losses and loss adjustment expenses | 0 | 0 | ||
Unearned premiums | 0 | 0 | ||
Reinsurance balances payable | 0 | 0 | ||
Contractholder payables | 0 | 0 | ||
Collateral held for insured obligations | 0 | 0 | ||
Deposit accounting liabilities | 0 | |||
Senior notes | 494,548 | 494,525 | ||
Revolving credit agreement borrowings | 0 | 0 | ||
Due to subsidiaries and affiliates | 541,400 | 535,584 | ||
Other liabilities | 61,055 | 54,823 | ||
Total liabilities | 1,097,003 | 1,084,932 | ||
Redeemable noncontrolling interests | 0 | 0 | ||
Shareholders' Equity | ||||
Total shareholders’ equity available to Arch | 2,938,921 | 2,845,918 | ||
Non-redeemable noncontrolling interests | 0 | 0 | ||
Total shareholders’ equity | 2,938,921 | 2,845,918 | ||
Total liabilities, noncontrolling interests and shareholders’ equity | $ 4,035,924 | 3,930,850 | ||
Percentage Ownership of Subsidiary | 100.00% | |||
Reportable Legal Entities | Other ACGL Subsidiaries | ||||
Assets | ||||
Total investments | $ 20,227,399 | 19,690,067 | ||
Cash | 650,832 | 769,300 | 538,729 | 529,494 |
Investments in subsidiaries | 0 | 0 | ||
Due from subsidiaries and affiliates | 1,868,171 | 1,866,681 | ||
Premiums receivable | 1,891,983 | 1,579,865 | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 6,209,021 | 6,114,518 | ||
Contractholder receivables | 1,766,340 | 1,717,436 | ||
Ceded unearned premiums | 2,201,994 | 1,985,311 | ||
Deferred acquisition costs | 638,415 | 577,461 | ||
Goodwill and intangible assets | 750,315 | 781,553 | ||
Other assets | 1,893,742 | 1,901,786 | ||
Total assets | 38,098,212 | 36,983,978 | ||
Liabilities | ||||
Reserve for losses and loss adjustment expenses | 14,337,192 | 14,164,191 | ||
Unearned premiums | 4,891,330 | 4,532,614 | ||
Reinsurance balances payable | 959,221 | 807,837 | ||
Contractholder payables | 1,766,340 | 1,717,436 | ||
Collateral held for insured obligations | 327,161 | 301,406 | ||
Deposit accounting liabilities | 22,150 | |||
Senior notes | 940,883 | 940,776 | ||
Revolving credit agreement borrowings | 634,961 | 656,650 | ||
Due to subsidiaries and affiliates | 1,378,384 | 1,370,422 | ||
Other liabilities | 1,876,454 | 1,867,040 | ||
Total liabilities | 27,111,926 | 26,380,522 | ||
Redeemable noncontrolling interests | 220,344 | 220,253 | ||
Shareholders' Equity | ||||
Total shareholders’ equity available to Arch | 9,897,756 | 9,531,349 | ||
Non-redeemable noncontrolling interests | 868,186 | 851,854 | ||
Total shareholders’ equity | 10,765,942 | 10,383,203 | ||
Total liabilities, noncontrolling interests and shareholders’ equity | 38,098,212 | 36,983,978 | ||
Consolidating Adjustments and Eliminations | ||||
Assets | ||||
Total investments | (14,700) | (14,700) | ||
Cash | 0 | 0 | $ 0 | $ 0 |
Investments in subsidiaries | (12,836,677) | (12,377,267) | ||
Due from subsidiaries and affiliates | (1,921,829) | (1,932,276) | ||
Premiums receivable | (637,935) | (507,430) | ||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | (4,075,873) | (4,000,380) | ||
Contractholder receivables | 0 | 0 | ||
Ceded unearned premiums | (1,260,071) | (1,125,744) | ||
Deferred acquisition costs | (150,490) | (129,901) | ||
Goodwill and intangible assets | 0 | 0 | ||
Other assets | (164,027) | (149,928) | ||
Total assets | (21,061,602) | (20,237,626) | ||
Liabilities | ||||
Reserve for losses and loss adjustment expenses | (4,040,371) | (3,963,231) | ||
Unearned premiums | (1,260,071) | (1,125,744) | ||
Reinsurance balances payable | (637,936) | (507,430) | ||
Contractholder payables | 0 | 0 | ||
Collateral held for insured obligations | 0 | |||
Deposit accounting liabilities | 0 | |||
Senior notes | 0 | 0 | ||
Revolving credit agreement borrowings | 0 | 0 | ||
Due to subsidiaries and affiliates | (1,921,828) | (1,932,276) | ||
Other liabilities | (350,019) | (316,978) | ||
Total liabilities | (8,210,225) | (7,845,659) | ||
Redeemable noncontrolling interests | (14,700) | (14,700) | ||
Shareholders' Equity | ||||
Total shareholders’ equity available to Arch | (12,836,677) | (12,377,267) | ||
Non-redeemable noncontrolling interests | 0 | 0 | ||
Total shareholders’ equity | (12,836,677) | (12,377,267) | ||
Total liabilities, noncontrolling interests and shareholders’ equity | $ (21,061,602) | $ (20,237,626) |
Guarantor Financial Informati67
Guarantor Financial Information - Condensed consolidating statement of income and comprehensive income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues | ||
Net premiums earned | $ 1,117,017 | $ 951,579 |
Net investment income | 117,874 | 93,735 |
Net realized gains (losses) | 34,153 | 37,324 |
Net impairment losses recognized in earnings | (1,807) | (7,639) |
Other underwriting income | 4,633 | 5,047 |
Equity in net income (loss) of investment funds accounted for using the equity method | 48,088 | 6,655 |
Other income (loss) | (782) | (25) |
Total revenues | 1,319,176 | 1,086,676 |
Expenses | ||
Losses and loss adjustment expenses | 552,570 | 522,949 |
Acquisition expenses | 182,289 | 167,838 |
Other operating expenses | 174,719 | 150,148 |
Corporate expenses | 27,792 | 9,383 |
Amortization of intangible assets | 31,294 | 4,748 |
Interest expense | 28,676 | 16,107 |
Net foreign exchange (gains) losses | 19,404 | 23,566 |
Total expenses | 1,016,744 | 894,739 |
Income (loss) before income taxes | 302,432 | 191,937 |
Income tax (expense) benefit | (28,397) | (16,310) |
Income (loss) before equity in net income of subsidiaries | 274,035 | 175,627 |
Equity in net income of subsidiaries | 0 | 0 |
Net income | 274,035 | 175,627 |
Net (income) loss attributable to noncontrolling interests | (20,908) | (20,829) |
Net income available to Arch | 253,127 | 154,798 |
Preferred dividends | (11,218) | (5,484) |
Net income (loss) available to Arch common shareholders | 241,909 | 149,314 |
Comprehensive income (loss) available to Arch | 351,991 | 272,929 |
Reportable Legal Entities | ACGL (Parent Guarantor) | ||
Revenues | ||
Net premiums earned | 0 | 0 |
Net investment income | 5 | 1 |
Net realized gains (losses) | 0 | 0 |
Net impairment losses recognized in earnings | 0 | 0 |
Other underwriting income | 0 | 0 |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 |
Other income (loss) | 171 | 206 |
Total revenues | 176 | 207 |
Expenses | ||
Losses and loss adjustment expenses | 0 | 0 |
Acquisition expenses | 0 | 0 |
Other operating expenses | 0 | 0 |
Corporate expenses | 17,247 | 9,355 |
Amortization of intangible assets | 0 | 0 |
Interest expense | 6,015 | 5,934 |
Net foreign exchange (gains) losses | 0 | 0 |
Total expenses | 23,262 | 15,289 |
Income (loss) before income taxes | (23,086) | (15,082) |
Income tax (expense) benefit | 0 | 0 |
Income (loss) before equity in net income of subsidiaries | (23,086) | (15,082) |
Equity in net income of subsidiaries | 276,213 | 169,880 |
Net income | 253,127 | 154,798 |
Net (income) loss attributable to noncontrolling interests | 0 | 0 |
Net income available to Arch | 253,127 | 154,798 |
Preferred dividends | (11,218) | (5,484) |
Net income (loss) available to Arch common shareholders | 241,909 | 149,314 |
Comprehensive income (loss) available to Arch | 351,991 | 272,929 |
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||
Revenues | ||
Net premiums earned | 0 | 0 |
Net investment income | 816 | 773 |
Net realized gains (losses) | 0 | 0 |
Net impairment losses recognized in earnings | 0 | 0 |
Other underwriting income | 0 | 0 |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 |
Other income (loss) | 0 | 0 |
Total revenues | 816 | 773 |
Expenses | ||
Losses and loss adjustment expenses | 0 | 0 |
Acquisition expenses | 0 | 0 |
Other operating expenses | 0 | 0 |
Corporate expenses | 2,008 | 582 |
Amortization of intangible assets | 0 | 0 |
Interest expense | 11,930 | 6,672 |
Net foreign exchange (gains) losses | 0 | 0 |
Total expenses | 13,938 | 7,254 |
Income (loss) before income taxes | (13,122) | (6,481) |
Income tax (expense) benefit | 4,873 | 2,244 |
Income (loss) before equity in net income of subsidiaries | (8,249) | (4,237) |
Equity in net income of subsidiaries | 77,373 | 22,866 |
Net income | 69,124 | 18,629 |
Net (income) loss attributable to noncontrolling interests | 0 | 0 |
Net income available to Arch | 69,124 | 18,629 |
Preferred dividends | 0 | 0 |
Net income (loss) available to Arch common shareholders | 69,124 | 18,629 |
Comprehensive income (loss) available to Arch | 87,781 | 58,649 |
Reportable Legal Entities | Other ACGL Subsidiaries | ||
Revenues | ||
Net premiums earned | 1,117,017 | 951,579 |
Net investment income | 137,981 | 100,261 |
Net realized gains (losses) | 34,153 | 37,324 |
Net impairment losses recognized in earnings | (1,807) | (7,639) |
Other underwriting income | 4,633 | 5,319 |
Equity in net income (loss) of investment funds accounted for using the equity method | 48,088 | 6,655 |
Other income (loss) | (953) | (231) |
Total revenues | 1,339,112 | 1,093,268 |
Expenses | ||
Losses and loss adjustment expenses | 552,570 | 522,949 |
Acquisition expenses | 182,289 | 167,838 |
Other operating expenses | 174,719 | 150,148 |
Corporate expenses | 8,537 | (554) |
Amortization of intangible assets | 31,294 | 4,748 |
Interest expense | 31,336 | 10,752 |
Net foreign exchange (gains) losses | 15,348 | 16,495 |
Total expenses | 996,093 | 872,376 |
Income (loss) before income taxes | 343,019 | 220,892 |
Income tax (expense) benefit | (33,270) | (18,554) |
Income (loss) before equity in net income of subsidiaries | 309,749 | 202,338 |
Equity in net income of subsidiaries | 0 | 0 |
Net income | 309,749 | 202,338 |
Net (income) loss attributable to noncontrolling interests | (21,231) | (21,150) |
Net income available to Arch | 288,518 | 181,188 |
Preferred dividends | 0 | 0 |
Net income (loss) available to Arch common shareholders | 288,518 | 181,188 |
Comprehensive income (loss) available to Arch | 224,173 | 292,251 |
Consolidating Adjustments and Eliminations | ||
Revenues | ||
Net premiums earned | 0 | 0 |
Net investment income | (20,928) | (7,300) |
Net realized gains (losses) | 0 | 0 |
Net impairment losses recognized in earnings | 0 | 0 |
Other underwriting income | 0 | (272) |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 |
Other income (loss) | 0 | 0 |
Total revenues | (20,928) | (7,572) |
Expenses | ||
Losses and loss adjustment expenses | 0 | 0 |
Acquisition expenses | 0 | 0 |
Other operating expenses | 0 | 0 |
Corporate expenses | 0 | 0 |
Amortization of intangible assets | 0 | 0 |
Interest expense | (20,605) | (7,251) |
Net foreign exchange (gains) losses | 4,056 | 7,071 |
Total expenses | (16,549) | (180) |
Income (loss) before income taxes | (4,379) | (7,392) |
Income tax (expense) benefit | 0 | 0 |
Income (loss) before equity in net income of subsidiaries | (4,379) | (7,392) |
Equity in net income of subsidiaries | (353,586) | (192,746) |
Net income | (357,965) | (200,138) |
Net (income) loss attributable to noncontrolling interests | 323 | 321 |
Net income available to Arch | (357,642) | (199,817) |
Preferred dividends | 0 | 0 |
Net income (loss) available to Arch common shareholders | (357,642) | (199,817) |
Comprehensive income (loss) available to Arch | $ (311,954) | $ (350,900) |
Guarantor Financial Informati68
Guarantor Financial Information - Condensed consolidating statement of cash flows (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Operating Activities | |||
Net Cash Provided by (Used in) Operating Activities | $ 208,118 | $ 322,543 | |
Investing Activities | |||
Purchases of fixed maturity investments | (10,476,918) | (8,133,537) | |
Purchases of equity securities | (143,833) | (128,263) | |
Purchases of other investments | (427,039) | (305,198) | |
Proceeds from sales of fixed maturity investments | 10,386,746 | 7,827,536 | |
Proceeds from sales of equity securities | 253,347 | 216,012 | |
Proceeds from sales, redemptions and maturities of other investments | 317,518 | 211,125 | |
Proceeds from redemptions and maturities of fixed maturity investments | 174,718 | 163,894 | |
Net settlements of derivative instruments | (3,921) | 21,091 | |
Net (purchases) sales of short-term investments | (397,851) | (65,594) | |
Change in cash collateral related to securities lending | 180,946 | (43,118) | |
Contributions to subsidiaries | 0 | 0 | |
Purchases of fixed assets | (5,194) | (3,952) | |
Change in other assets | 19,603 | 6,737 | |
Net Cash Provided By (Used For) Investing Activities | (121,878) | (233,267) | |
Financing Activities | |||
Purchases of common shares under share repurchase program | 0 | (75,256) | |
Proceeds from common shares issued, net | (3,990) | 202 | |
Proceeds from borrowings | 0 | ||
Repayments of borrowings | (22,000) | (74,171) | |
Change in cash collateral related to securities lending | (180,946) | 43,118 | |
Dividends paid to redeemable noncontrolling interests | (4,497) | (4,497) | |
Dividends paid to parent | [1] | 0 | 0 |
Other | (5,018) | 29,115 | |
Preferred dividends paid | (11,218) | (5,484) | |
Net Cash Provided By (Used For) Financing Activities | (227,669) | (86,973) | |
Effects of exchange rate changes on foreign currency cash | 2,241 | 2,332 | |
Increase (decrease) in cash | (139,188) | 4,635 | |
Cash beginning of year | 842,942 | 553,326 | |
Cash end of period | 703,754 | 557,961 | |
Reportable Legal Entities | ACGL (Parent Guarantor) | |||
Operating Activities | |||
Net Cash Provided by (Used in) Operating Activities | 701 | 83,892 | |
Investing Activities | |||
Purchases of fixed maturity investments | 0 | 0 | |
Purchases of equity securities | 0 | 0 | |
Purchases of other investments | 0 | 0 | |
Proceeds from sales of fixed maturity investments | 0 | 0 | |
Proceeds from sales of equity securities | 0 | 0 | |
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | |
Proceeds from redemptions and maturities of fixed maturity investments | 0 | 0 | |
Net settlements of derivative instruments | 0 | 0 | |
Net (purchases) sales of short-term investments | 2,356 | (60) | |
Change in cash collateral related to securities lending | 0 | 0 | |
Contributions to subsidiaries | 0 | (3,300) | |
Purchases of fixed assets | 0 | (8) | |
Change in other assets | 20,641 | 0 | |
Net Cash Provided By (Used For) Investing Activities | 22,997 | (3,368) | |
Financing Activities | |||
Purchases of common shares under share repurchase program | (75,256) | ||
Proceeds from common shares issued, net | (3,990) | 202 | |
Proceeds from borrowings | 0 | ||
Repayments of borrowings | 0 | 0 | |
Change in cash collateral related to securities lending | 0 | 0 | |
Dividends paid to redeemable noncontrolling interests | 0 | 0 | |
Dividends paid to parent | [1] | 0 | 0 |
Other | 0 | 0 | |
Preferred dividends paid | (11,218) | (5,484) | |
Net Cash Provided By (Used For) Financing Activities | (15,208) | (80,538) | |
Effects of exchange rate changes on foreign currency cash | 0 | 0 | |
Increase (decrease) in cash | 8,490 | (14) | |
Cash beginning of year | 1,687 | 6,809 | |
Cash end of period | 10,177 | 6,795 | |
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | |||
Operating Activities | |||
Net Cash Provided by (Used in) Operating Activities | (3,257) | (4,740) | |
Investing Activities | |||
Purchases of fixed maturity investments | 0 | 0 | |
Purchases of equity securities | 0 | 0 | |
Purchases of other investments | 0 | 0 | |
Proceeds from sales of fixed maturity investments | 0 | 0 | |
Proceeds from sales of equity securities | 0 | 0 | |
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | |
Proceeds from redemptions and maturities of fixed maturity investments | 0 | 0 | |
Net settlements of derivative instruments | 0 | 0 | |
Net (purchases) sales of short-term investments | (43) | (30) | |
Change in cash collateral related to securities lending | 0 | 0 | |
Contributions to subsidiaries | (25,900) | 0 | |
Purchases of fixed assets | (10) | 0 | |
Change in other assets | 0 | 0 | |
Net Cash Provided By (Used For) Investing Activities | (25,953) | (30) | |
Financing Activities | |||
Purchases of common shares under share repurchase program | 0 | ||
Proceeds from common shares issued, net | 0 | 0 | |
Proceeds from borrowings | 0 | ||
Repayments of borrowings | 0 | 0 | |
Change in cash collateral related to securities lending | 0 | 0 | |
Dividends paid to redeemable noncontrolling interests | 0 | 0 | |
Dividends paid to parent | [1] | 0 | 0 |
Other | 0 | 184 | |
Preferred dividends paid | 0 | 0 | |
Net Cash Provided By (Used For) Financing Activities | 0 | 184 | |
Effects of exchange rate changes on foreign currency cash | 0 | 0 | |
Increase (decrease) in cash | (29,210) | (4,586) | |
Cash beginning of year | 71,955 | 17,023 | |
Cash end of period | 42,745 | 12,437 | |
Reportable Legal Entities | Other ACGL Subsidiaries | |||
Operating Activities | |||
Net Cash Provided by (Used in) Operating Activities | 264,088 | 340,558 | |
Investing Activities | |||
Purchases of fixed maturity investments | (10,476,918) | (8,133,537) | |
Purchases of equity securities | (143,833) | (128,263) | |
Purchases of other investments | (427,039) | (305,198) | |
Proceeds from sales of fixed maturity investments | 10,386,746 | 7,827,536 | |
Proceeds from sales of equity securities | 253,347 | 216,012 | |
Proceeds from sales, redemptions and maturities of other investments | 317,518 | 211,125 | |
Proceeds from redemptions and maturities of fixed maturity investments | 174,718 | 163,894 | |
Net settlements of derivative instruments | (3,921) | 21,091 | |
Net (purchases) sales of short-term investments | (400,164) | (65,504) | |
Change in cash collateral related to securities lending | 180,946 | (43,118) | |
Contributions to subsidiaries | (60,050) | (2,779) | |
Purchases of fixed assets | (5,184) | (3,944) | |
Change in other assets | 19,603 | 6,737 | |
Net Cash Provided By (Used For) Investing Activities | (184,231) | (235,948) | |
Financing Activities | |||
Purchases of common shares under share repurchase program | 0 | ||
Proceeds from common shares issued, net | 85,950 | 6,079 | |
Proceeds from borrowings | 0 | ||
Repayments of borrowings | (22,000) | (74,171) | |
Change in cash collateral related to securities lending | (180,946) | 43,118 | |
Dividends paid to redeemable noncontrolling interests | (4,816) | (4,816) | |
Dividends paid to parent | [1] | (53,095) | (96,848) |
Other | (25,659) | 28,931 | |
Preferred dividends paid | 0 | 0 | |
Net Cash Provided By (Used For) Financing Activities | (200,566) | (97,707) | |
Effects of exchange rate changes on foreign currency cash | 2,241 | 2,332 | |
Increase (decrease) in cash | (118,468) | 9,235 | |
Cash beginning of year | 769,300 | 529,494 | |
Cash end of period | 650,832 | 538,729 | |
Consolidating Adjustments and Eliminations | |||
Operating Activities | |||
Net Cash Provided by (Used in) Operating Activities | (53,414) | (97,167) | |
Investing Activities | |||
Purchases of fixed maturity investments | 0 | 0 | |
Purchases of equity securities | 0 | 0 | |
Purchases of other investments | 0 | 0 | |
Proceeds from sales of fixed maturity investments | 0 | 0 | |
Proceeds from sales of equity securities | 0 | 0 | |
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | |
Proceeds from redemptions and maturities of fixed maturity investments | 0 | 0 | |
Net settlements of derivative instruments | 0 | 0 | |
Net (purchases) sales of short-term investments | 0 | 0 | |
Change in cash collateral related to securities lending | 0 | 0 | |
Contributions to subsidiaries | 85,950 | 6,079 | |
Purchases of fixed assets | 0 | 0 | |
Change in other assets | (20,641) | 0 | |
Net Cash Provided By (Used For) Investing Activities | 65,309 | 6,079 | |
Financing Activities | |||
Purchases of common shares under share repurchase program | 0 | ||
Proceeds from common shares issued, net | (85,950) | (6,079) | |
Proceeds from borrowings | 0 | ||
Repayments of borrowings | 0 | 0 | |
Change in cash collateral related to securities lending | 0 | 0 | |
Dividends paid to redeemable noncontrolling interests | 319 | 319 | |
Dividends paid to parent | [1] | 53,095 | 96,848 |
Other | 20,641 | 0 | |
Preferred dividends paid | 0 | 0 | |
Net Cash Provided By (Used For) Financing Activities | (11,895) | 91,088 | |
Effects of exchange rate changes on foreign currency cash | 0 | 0 | |
Increase (decrease) in cash | 0 | 0 | |
Cash beginning of year | 0 | 0 | |
Cash end of period | $ 0 | $ 0 | |
[1] | Dividends paid are included in net cash provided by (used for) operating activities in the ACGL (Parent Guarantor) and/or Arch-U.S. (Subsidiary Issuer) columns. |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate on income before income taxes (percentage) | 9.40% | 8.50% | |
Statutory federal tax rate | 35.00% | ||
Tax benefit on share-based compensation | 0.80% | ||
Net deferred tax assets | $ 227.5 | $ 221.2 | |
Income taxes paid | $ 0.7 | $ 2.5 |
Transactions with Related Par70
Transactions with Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Related Party Transaction [Line Items] | ||
Investment commitments | $ 1,450,000 | |
Purchases of other investments | 427,039 | $ 305,198 |
Common director | The Carlyle Group | ||
Related Party Transaction [Line Items] | ||
Investments, value | 200,500 | |
Unfunded commitments | 510,000 | |
Purchases of other investments | 7,900 | 40,100 |
Aggregate cash distributions received | $ 23,300 | $ 8,800 |