---

---

---

---

---

---

---

---

---

---

---

(1)	Corporate and Other includes other items of our revenue and expenditures that are not evaluated at the segment level for reporting purposes. The underwriting profit (loss) and its components within this section are predominantly driven from the Company's run-off life operations.

(2)	The Company has reflected the amortization of certain fair value adjustments recorded in conjunction with the Company's acquisition of Catlin Group Ltd in 2015 ("Catlin Acquisition") within the respective segments.

(3)	Operating expenses of the segments exclude Corporate operating expenses, shown separately.

(4)	Net investment income - excluding Life Funds Withheld Assets does not include net investment income related to the net results from structured products.

(5)	The net results from P&C structured products include net investment income and interest expense of $12.3 million and $3.9 million, respectively.

(6)	Net fee income and other includes operating expenses of $12.1 million from the Company's loss prevention consulting services business.

(7)	Interest expense excludes interest expense related to structured products recorded in the Insurance and Reinsurance segments.

(8)	Ratios are based on net premiums earned from P&C operations.

---

(1)	Corporate and Other includes other items of our revenue and expenditures that are not evaluated at the segment level for reporting purposes. The underwriting profit (loss) and its components within this section are predominantly driven from the Company's run-off life operations.

(2)	The Company has reflected the amortization of certain fair value adjustments recorded in conjunction with the Catlin Acquisition within the respective segments.

(3)	Operating expenses of the segments exclude Corporate operating expenses, shown separately.

(4)	Net investment income - excluding Life Funds Withheld Assets does not include net investment income related to the net results from structured products.

(5)	The net results from P&C structured products include net investment income and interest expense of $13.5 million and $10.6 million, respectively.

(6)	Net fee income and other includes operating expenses of $12.2 million from the Company's loss prevention consulting services business.

(7)	Interest expense excludes interest expense related to structured products recorded in the Insurance and Reinsurance segments.

(8)	Ratios are based on net premiums earned from P&C operations.

---

(1)	Corporate and Other includes other items of our revenue and expenditures that are not evaluated at the segment level for reporting purposes. The underwriting profit (loss) and its components within this section are predominantly driven from the Company's run-off life operations.

(2)	The Company has reflected the amortization of certain fair value adjustments recorded in conjunction with the Catlin Acquisition within the respective segments.

(3)	Operating expenses of the segments exclude Corporate operating expenses, shown separately.

(4)	Net investment income - excluding Life Funds Withheld Assets does not include net investment income related to the net results from structured products.

(5)	The net results from P&C structured products include net investment income and interest expense of $24.6 million and $12.8 million, respectively.

(6)	Net fee income and other includes operating expenses of $24.6 million from the Company's loss prevention consulting services business.

(7)	Interest expense excludes interest expense related to structured products recorded in the Insurance and Reinsurance segments.

(8)	Ratios are based on net premiums earned from P&C operations.

---

(1)	Corporate and Other includes other items of our revenue and expenditures that are not evaluated at the segment level for reporting purposes. The underwriting profit (loss) and its components within this section are predominantly driven from the Company's run-off life operations.

(2)	The Company has reflected the amortization of certain fair value adjustments recorded in conjunction with the Catlin Acquisition within the respective segments.

(3)	Operating expenses of the segments exclude Corporate operating expenses, shown separately.

(4)	Net investment income - excluding Life Funds Withheld Assets does not include net investment income related to the net results from structured products.

(5)	The net results from P&C structured products include net investment income and interest expense of $26.9 million and $21.1 million, respectively.

(6)	Net fee income and other includes operating expenses of $23.7 million from the Company's loss prevention consulting services business.

(7)	Interest expense excludes interest expense related to structured products recorded in the Insurance and Reinsurance segments.

(8)	Ratios are based on net premiums earned from P&C operations.

---

(1)	Other within the Insurance segment includes: surety and certain discontinued lines. Other within the Reinsurance segment includes multiline, whole account contracts, credit and surety, accident & health and other lines.

(2)	Amounts from the prior year have been re-presented to reflect current mapping of underlying lines of business to be consistent with the manner in which they are reflected in the current period. The most significant movements include the following movements out of Other in the Insurance segment: livestock business into Specialty; and credit surety into Casualty.

---

(1)	Other within the Insurance segment includes: surety and certain discontinued lines. Other within the Reinsurance segment includes multiline, whole account contracts, credit and surety, accident & health and other lines.

(2)	Amounts from the prior year have been re-presented to reflect current mapping of underlying lines of business to be consistent with the manner in which they are reflected in the current period. The most significant movements include the following movements out of Other in the Insurance segment: livestock business into Specialty; and credit surety into Casualty.

---

(1)	Represents the non-credit component of OTTI losses, adjusted for subsequent sales of securities. It does not include the change in fair value subsequent to the impairment measurement date.

---

(1)	Represents the non-credit component of OTTI losses, adjusted for subsequent sales of securities. It does not include the change in fair value subsequent to the impairment measurement date.

---

---

---

(1)	AFS in the prior year includes net realized gains (losses) on equity securities and other investments. Due to the implementation of ASU 2016-01, as noted in Note 1(b), "Significant Accounting Policies - Recent Accounting Pronouncements," the movements on these investments are now shown separately.

---

---

(1)

The fair value movements in derivative assets and liabilities relating to modified coinsurance and funds withheld contracts are included within the associated asset or liability at each period in the Unaudited Consolidated Balance Sheets. Notional amounts associated with reinsurance agreements under which the Company assumes reinsurance risk are recorded as asset derivative notional amounts. Notional amounts associated with the GreyCastle Life Retro Arrangements and other outward reinsurance contracts under which the Company cedes risk are recorded as liability derivative notional amounts. Included in the liability derivative notional amount at June 30, 2018 is the cumulative net realized and unrealized loss on the life retrocession embedded derivative of $0.9 billion.

(2)

At June 30, 2018, the Company held cash collateral related to foreign currency derivative positions and certain other derivative positions of $43.4 million for derivatives in an asset position and paid cash collateral of $3.1 million for derivatives in a liability position. At December 31, 2017, the Company held cash collateral related to a foreign currency derivative position and certain other derivative positions of $3.9 million for derivatives in an asset position and paid cash collateral of $1.3 million for derivatives in a liability position. The assets and liabilities related to the net collateral paid or held were recorded as Other assets and Other liabilities within the Unaudited Consolidated Balance Sheets as the collateral and derivative positions are not intended to be settled on a net basis.

---

(1)	Derivative gains (losses) from derivative instruments designated as hedges of the net investment in a foreign operation are recorded in the cumulative translation adjustment account within AOCI for each period.

---

---

---

---

---

---

(1)	Short-term investments consist primarily of U.S. and Non-U.S. Government securities and Corporate securities.

(2)	Cash equivalents balances subject to fair value measurement include certificates of deposit and money market funds. Operating cash balances are not subject to recurring fair value measurement guidance.

(3)

Excluded from Other Investments are certain investments that are measured using net asset value as a practical expedient in the amount of $227.2 million and $198.2 million at June 30, 2018 and December 31, 2017, respectively. Under GAAP, these investments are excluded from the fair value hierarchy table. In addition, the Other investments balance excludes loans held at amortized cost, which totaled $173.2 million at June 30, 2018 and $173.0 million at December 31, 2017. For further information, see Item 8, Note 6, "Other Investments," to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.

(4)

Other assets and other liabilities include derivative instruments. The derivative balances included in each category are reported gross of cash collateral by level with a counterparty netting adjustment presented separately in the Counterparty Netting column. The fair values of the individual derivative contracts are reported gross in their respective levels based on the fair value hierarchy. For further details regarding derivative fair values and associated collateral received or paid, see Note 5, "Derivative Instruments."

(5)

Funds withheld on GreyCastle Life Retro Arrangements (net of future policy benefit reserves recoverable) include balances related to the life retrocession embedded derivative, under which all investment results associated with the Life Funds Withheld Assets related to the GreyCastle Life Retro Arrangements described in Note 1(a), "Significant Accounting Policies - Basis of Preparation and Consolidation," accrue to the benefit of GCLR.

---

---

---

(1)	Net transfers include both movement in and movement out of Level 3. Corporate for the three months ended June 30, 2017, includes $1.1 million of incoming transfers partially offset by $0.1 million of outgoing transfers. Other asset-backed securities, for the three months ended June 30, 2017, includes $6.7 million of outgoing transfers partially offset by $3.4 million of incoming transfers.

---

(1)

Net transfers include both movement in and movement out of Level 3. RMBS for the six months ended June 30, 2018, includes $6.0 million of incoming transfers partially offset by $1.0 million of outgoing transfers. Corporate for the six months ended June 30, 2017, includes $1.2 million of incoming transfers partially offset by $0.1 million of outgoing transfers. RMBS for the six months ended June 30, 2017, includes $4.1 million of incoming transfers partially offset by $3.4 million of outgoing transfers. Other asset-backed securities, for the six months ended June 30, 2017, includes $6.7 million of outgoing transfers partially offset by $6.1 million of incoming transfers.

---

(1)	P&C business only, net of provision for uncollectible reinsurance.

---

•	For casualty lines, net prior year development was $33.9 million favorable. This was driven by better than expected loss experience reported in the 2015 and prior years for international casualty and across all years for global risk management. This was partially offset by deteriorations in the excess and surplus portfolio to recognize changes in the composition of the business in recent years.

•	For property lines, net prior year development was $70.5 million unfavorable. This was driven by significant large loss experience on the 2017 accident year, deteriorations in both catastrophe and non-catastrophe losses for the London wholesale property book and worse than expected attritional experience reported on the international open market and energy property portfolios.

•	For specialty lines, net prior year development was $13.0 million unfavorable. This was driven by worse than expected attritional loss experience reported in marine, aerospace, fine art and specie and crisis management portfolios, predominantly on the 2017 accident year.

---

•	Net favorable prior year development for the short-tail lines totaled $62.9 million primarily due to better than expected development on attritional losses on the Property, Marine and Crop books and the release of the general catastrophe reserves held at the end of the prior year, partially offset by strengthening on older catastrophe and large losses.

•	Net favorable prior year development for the long-tail lines totaled $1.8 million and details of the significant components are as follows:

•	For casualty lines, net prior year development was $9.8 million unfavorable mainly driven by worse than expected attritional experience on the London professional book and EMEA motor book being partially offset by better than expected attritional experience on the North America book.

•	For other lines, net prior year development was $11.5 million favorable due to favorable experience on attritional losses primarily related to the credit and surety book.

---

(1)	"Outstanding" data represent June 30, 2018 and December 31, 2017 accreted values.

(2)	On July 7, 2017, the Company repurchased and canceled $16.7 million of the original debt issuance. See below for further details.

(3)	This issuance carries a fixed coupon of 3.25% for a period of ten years, then a floating rate of three-month EURIBOR plus 2.90% from (and including) June 29, 2027 through maturity. The outstanding amount is subject to movement due to foreign exchange.

---

---

---

---

---

---

(1)

For certain annuity contracts that are subject to the GreyCastle Life Retro Arrangements, future policy benefit reserves were historically increased for the impact of changes in unrealized gains on investments supporting such contracts as if the gains had been realized, with a corresponding entry to other comprehensive income ("Shadow Adjustments"). Upon completion of the GreyCastle Life Retro Arrangements, no further Shadow Adjustments were recorded. At December 31, 2017, the cumulative impact of the Shadow Adjustments was $184.9 million. During the six months ended June 30, 2018, net movements of $(46.5) million were recorded, resulting in a total cumulative net impact of Shadow Adjustments on future policy benefit reserves of $138.5 million at June 30, 2018.

(2)	The reclassification out of AOCI due to the adoption of ASU 2016-01 includes $233.8 million of net unrealized gains less $11.9 million of deferred tax on net unrealized gains as discussed in Note 1(b), "Significant Accounting Policies - Recent Accounting Pronouncements."

---

---

(1)	Includes XL-Ireland, which was the former ultimate parent and is now in liquidation proceedings. The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation.

---

(1)	Includes XL-Ireland, which was the former ultimate parent and is now in liquidation proceedings. The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation.

---

(1)	Includes XL-Ireland, which was the former ultimate parent and is now in liquidation proceedings. The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation.

---

(1)	Includes XL-Ireland, which was the former ultimate parent and is now in liquidation proceedings. The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation.

---

(1)	Includes XL-Ireland, which was the former ultimate parent and is now in liquidation proceedings. The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation.

---

(1)	Includes XL-Ireland, which was the former ultimate parent and is now in liquidation proceedings. The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation.

---

(1)	Includes XL-Ireland, which was the former ultimate parent and is now in liquidation proceedings. The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation.

---

(1)	Includes XL-Ireland, which was the former ultimate parent and is now in liquidation proceedings. The Company expects the net assets of XL-Ireland to be distributed to XL Group upon completion of the liquidation.

---

▪	changes in rates for property and casualty insurance and reinsurance;

▪

changes in the size of claims we receive relating to unpredictable natural or man-made catastrophe losses, such as hurricanes, earthquakes, typhoons, floods, nuclear accidents or terrorism, due to the preliminary nature of some reports and estimates of loss and damage to date, given the complexities and nature of these particular events, including the magnitude, proximity and relatively recent occurrence of these events, incomplete claims data received to date, the likelihood of longer development periods associated with the specific characteristics of these events and the geographic and infrastructure limitations related to the areas affected by these events, among other matters;

▪	changes in the number of insureds and ceding companies affected or the ultimate number and value of individual claims related to natural catastrophe events due to the preliminary nature of reports and estimates of loss and damage to date;

▪

risks and uncertainties relating to the proposed acquisition of XL by AXA SA, including but not limited to (i) that XL may be unable to complete the proposed transaction because, among other reasons, conditions to the closing of the proposed transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction; (ii) uncertainty as to the timing of completion of the proposed transaction; (iii) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement between XL and AXA dated March 5, 2018; (iv) risks related to disruption of management’s attention from XL’s ongoing business operations due to the proposed transaction; (v) the effect of the

---

▪	changes in the amount or type of business that we write, whether due to our actions, changes in market conditions or other factors, and the aggregate amount of premiums attributable to those businesses;

▪	the availability, cost or quality of ceded reinsurance, and the timely and full recoverability of such reinsurance, or other amounts due to us, or changes to our projections relating to such recoverables;

▪	actual loss experience from insured or reinsured events and the timing of claims payments being faster or the receipt of reinsurance recoverables being slower than we anticipated;

▪	increased competition on the basis of pricing, capacity, coverage terms or other factors, such as the increased inflow of third-party capital into reinsurance markets, which could harm our ability to maintain or increase our business volumes or profitability;

▪	greater frequency or severity of claims and loss activity than our underwriting, reserving or investment practices anticipate based on historical experience or industry data;

▪

the impact of changes in the global financial markets, such as the effects of inflation on our business including on pricing and reserving, changes in interest rates, credit spreads and foreign currency exchange rates and future volatility in the world's credit, financial and capital markets that adversely affect the performance and valuation of our investments, future financing activities and access to such markets, our ability to pay claims or our general financial condition;

▪	our ability to successfully implement our business strategy;

▪	our ability to successfully attract and raise additional third-party capital for existing or new investment vehicles;

▪	changes in credit ratings or rating agency policies or practices, which could trigger cancellation provisions in our assumed reinsurance agreements or affect the availability of our credit facilities;

▪	the potential for changes to methodologies, estimations and assumptions that underlie the valuation of our financial instruments, that could result in changes to investment valuations;

▪	changes to our assessment as to whether it is more likely than not that we will be required to sell, or have the intent to sell, available-for-sale ("AFS") fixed maturity securities before their anticipated recovery;

▪	unanticipated constraints on our liquidity, including the availability of borrowings and letters of credit under our credit facilities, which may inhibit our ability to support our operations, including our ability to underwrite policies and pay claims;

▪	the ability of our subsidiaries to pay dividends to XL Group, XLIT Ltd. ("XLIT"), and Catlin Insurance Company Ltd ("CICL UK").

▪	changes in regulators or regulations applicable to our brokers or customers or to us, such as changes in regulatory capital balances that our operating subsidiaries must maintain;

▪	the effects of business disruption, economic contraction or economic sanctions due to unpredictable global political and social conditions such as war, terrorism or other hostilities, cyber-attacks, or pandemics;

▪	the actual amount of new and renewal business and acceptance of our products and services, including new products and services and the materialization of risks related to such products and services;

▪	changes in the distribution or placement of risks due to increased consolidation of insurance and reinsurance brokers;

▪	bankruptcies or other financial concerns of companies insofar as they affect property and casualty insurance and reinsurance ("P&C") coverages or claims that we may have as a counterparty;

▪	the loss of key personnel;

▪	the effects of mergers, acquisitions and divestitures, including our ability to modify our internal control over financial reporting, changes to our risk appetite and our ability to realize the strategic value or financial benefits expected, in each case, as a result of such transactions;

▪

the economic, political, monetary and operational impacts of the "Brexit" referendum held on June 23, 2016 in which the U.K. electorate voted to withdraw from the European Union ("E.U."), including unanticipated costs or complications associated with our decision to redomesticate XL Insurance Company SE from the U.K. to Ireland, or the possibility that this redomestication or other Brexit-related decisions do not have the results anticipated;

▪	changes in general economic, political or monetary conditions, including new or continued sovereign debt concerns in Euro-Zone countries or emerging markets such as Brazil or China, or governmental actions for the purpose of stabilizing financial markets;

▪	changes in applicable tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof;

▪	judicial decisions and rulings, new theories of liability or emerging claims coverage issues, legal tactics and settlement terms;

•	the effects of climate change (such as changes to weather patterns, sea levels or temperatures) on our business, which our modeling or risk management practices may not adequately address due to the uncertain nature of climate change; and

---

•	the other factors set forth in Item 1A, "Risk Factors," included the Company's Annual Report on Form 10-K for the year ended December 31, 2017, Part II, Item 1A, "Risk Factors," included herein and our other documents on file with the SEC.

(1)

Net investment income - P&C operations includes all net investment income related to the net results from structured products and excludes all net investment income from the assets supporting the Life Funds Withheld Assets, as defined in Item 1, Note 1(a), "Significant Accounting Policies - Basis of Preparation and Consolidation," to the Unaudited Consolidated Financial Statements included herein.

(2)	Represents a non-GAAP financial measure as discussed further below. See "Reconciliation of Non-GAAP Financial Measures" below.

---

▪	The combined ratio related to the P&C operations is the sum of the loss and loss expense ratio and the underwriting expense ratio. A combined ratio under 100% represents an underwriting profit and over 100% represents an underwriting loss. In the P&C industry, the combined ratio is a widely used measure of underwriting profitability.

▪	The loss and loss expense ratio related to the P&C operations is calculated by dividing the net losses and loss expenses incurred by the net premiums earned for the Insurance and Reinsurance segments.

▪	The acquisition expense ratio related to the P&C operations is calculated by dividing the acquisition costs incurred by the net premiums earned for the Insurance and Reinsurance segments.

▪	The operating expense ratio related to the P&C operations is calculated by dividing the operating expenses incurred by the net premiums earned for the Insurance and Reinsurance segments.

▪	The underwriting expense ratio related to the P&C operations is the sum of acquisition costs and operating expenses for the Insurance and Reinsurance segments divided by net premiums earned for the Insurance and Reinsurance segments.

---

---

---

---

---

(1)

Investment results for the Life Funds Withheld Assets - including interest income, unrealized gains and losses, and gains and losses from sales - are passed directly to the reinsurer pursuant to a contractual arrangement which is accounted for as a derivative. Changes in the fair value of the embedded derivative associated with the GreyCastle Life Retrocession Arrangements are reflected within "Net realized and unrealized (gains) losses on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets" in the reconciliation.

(2)	The tax impact was calculated at the applicable jurisdictional effective tax rate, which could differ from the Company’s effective tax rate.

(3)	Diluted weighted average number of common shares outstanding is used to calculate per share data except when it is anti-dilutive to earnings per share or when there is a net loss. When it is anti-dilutive or when a net loss occurs, basic weighted average common shares outstanding is utilized in the calculation of net loss per share and net operating loss per share.

---

---

(1)	Source: Bloomberg Finance L.P.

(1)	Source: Bloomberg Finance L.P.

---

(1)	Detailed analyses of aggregated in-force exposures and probable maximum loss levels are done periodically. The measurement dates represent the date of the last completed detailed analysis by geographical zone.

(2)	Probable maximum losses, which include secondary uncertainty that incorporates variability around the expected probable maximum loss for each event, do not represent our maximum potential exposures and are pre-tax.

---

---

---

*	N/M - Not Meaningful

▪	Global Lines - increase of 11.6%, for the three months ended June 30, 2018, is mainly driven by higher new business in political risk & trade credit business lines, higher retention in crisis management and increases on current year and prior year contracts in London wholesale casualty business lines.

▪	International - increase of 18.3%, for the three months ended June 30, 2018, is attributable to an improvement in rates in international property and international financial lines.

▪	North America - increase of 9.0%, for the three months ended June 30, 2018, is due to higher new business in North America construction lines and expansion on a large captive account in North America property business.

▪	Global Lines - increase of 4.3%, for the six months ended June 30, 2018, is mainly driven by higher retention in accident & health and crisis management and increases on current year and prior year contracts in London wholesale casualty business lines.

▪	International - increase of 18.1%, for the six months ended June 30, 2018, is attributable to new business in international casualty and favorable pricing in international property and international financial lines.

---

▪	North America - increase of 7.5%, for the six months ended June 30, 2018, due to higher new business in construction, growth in cybertech business lines and expansion on a large captive account in North America property open market business.

---

•	For casualty lines, net prior year development was $28.8 million favorable. This was driven by better than expected loss experience reported in the 2015 and prior years for international casualty and across all years for global risk management. This was partially offset by deteriorations in the excess and surplus portfolio to recognize changes in the composition of the business in recent years.

•	For property lines, net prior year development was $69.3 million unfavorable. This was driven by significant large loss experience on the 2017 accident year, deteriorations in both catastrophe and non-catastrophe losses for the London wholesale property book and worse than expected attritional experience reported on the international open market and energy property portfolios.

•	For specialty lines, net prior year development was $12.6 million unfavorable. This was driven by worse than expected attritional loss experience reported in marine, aerospace, fine art and specie and crisis management portfolios, predominantly on the 2017 accident year.

---

*	N/M - Not Meaningful

---

▪	Bermuda - increase of 7.8%, for the three months ended June 30, 2018, mainly due to additional business underwritten with a key client in the property treaty line of business.

▪	North America - decrease of 3.4%, for the three months ended June 30, 2018, primarily driven by cancellations within the casualty and property treaty lines of business. These cancellations were partially offset by new business written within the accident & health line.

▪	London - increase of 13.3%, for the three months ended June 30, 2018, predominantly from new business and renewals at improved rates.

▪	EMEA - increase of 18.2%, for the three months ended June 30, 2018, mainly from new business and a reduced rate of cancellations year over year within the casualty line of business.

▪	LAC - increase of 8.3%, for the three months ended June 30, 2018, driven by new business within the crop and other lines of business. This increase was partially offset by cancellations across the book.

▪	Bermuda - increase of 11.1%, for the six months ended June 30, 2018, primarily due to new business within the property book. In addition, increased premium was achieved in this region as a result of the inclusion of the marine energy proportional book, which was transferred from our EMEA operations.

▪	North America - decrease of 0.8%, for the six months ended June 30, 2018, driven by cancellations within the casualty and property treaty line of business due to non-renewals. This was partially offset by new business.

▪	London - increase of 13.9%, for the six months ended June 30, 2018, primarily driven by new business and rate improvements in the property book and casualty line of business.

▪	EMEA - decrease of 0.2%, for the six months ended June 30, 2018, largely attributable to cancellations, share reductions mainly within the property lines, and the transfer of the marine energy proportional book to Bermuda. The decrease was partially offset by new business, predominantly within the casualty and property lines of business.

▪	LAC - increase of 9.7%, for the six months ended June 30, 2018, driven by new business within crop, other and credit lines of business. In addition, during the period, there was favorable foreign exchange gains driven by the Chinese Yuan and the Thai Baht strengthening against the U.S. dollar compared to the same period of 2017.

---

---

▪	Net favorable prior year development for the short-tail lines totaled $43.9 million. This was driven primarily by better than expected development on attritional losses on the Property, Marine and Crop books and release of general catastrophe reserves, partially offset by strengthening on older catastrophes and large losses.

•	Net favorable prior year development for the long-tail lines totaled $16.9 million. Details of the significant components are as follows:

•	For casualty lines, net prior year development was $9.1 million favorable mainly due to better than expected development on attritional losses, primarily on the North America book.

•	For other lines, net prior year development was $7.8 million favorable due to better than expected attritional experience on the Credit & Surety book.

•	The acquisition expense ratio deteriorations, of 1.3 and 0.9 percentage points for the three and six months ended June 30, 2018, respectively, were predominantly resulting from an increase from a material inception written in Bermuda, as well as increased outwards profit commissions.

•	The operating expense ratio deteriorations of 0.4 and 0.1 percentage points, for the three and six months ended June 30, 2018, respectively, were driven by increasing compensation costs in Bermuda and EMEA.

*	N/M - Not Meaningful

---

(1)	The performance of investment portfolios is measured on a local currency basis. For the aggregate performance calculation, respective local currency balances are translated to U.S. dollars using quarter end rates to calculate composite portfolio results.

(2)	Performance on these portfolios is included in the Total Return on Investments above.

(3)	Performance on the hedge fund portfolio reflects the three and six months ended February 28, 2018 and February 28, 2017, respectively, for both equity and non-equity accounted hedge funds.

---

(1)	For a summary of realized and unrealized losses on all derivative instruments, see Item 1, Note 5, "Derivative Instruments," to the Unaudited Consolidated Financial Statements included herein.

*	N/M - Not Meaningful

---

(1)	Interest expense includes costs related to our debt and collateral facilities and does not include deposit liability accretion, which is included in Net investment results - structured products.

*	N/M - Not Meaningful

---

---

(1)	Carrying value represents the fair value of AFS fixed maturities.

---

(1)

The credit rating for each asset reflected above was principally determined based on the weighted average rating of the individual securities from Standard & Poor's, Moody's Investors Service and Fitch Ratings (when available). U.S. Agency debt and related mortgage-backed securities, whether with implicit or explicit government support, reflect the credit quality rating of the U.S. government for the purpose of these calculations. For U.S. Government and government agencies, the average rating remains AAA as only one of the three major rating agencies downgraded the U.S. from AAA to AA+ in 2011.

•	Gross unrealized losses of $127.9 million related to Government holdings. Securities in a gross unrealized loss position had a fair value of $6.9 billion at June 30, 2018.

•	Gross unrealized losses of $206.0 million related to Corporate holdings. Securities in a gross unrealized loss position had a fair value of $7.2 billion at June 30, 2018.

•	Gross unrealized losses of $117.0 million related to RMBS securities. Securities in an unrealized loss position had a fair value of $3.7 billion at June 30, 2018.

---

---

(1)	Cash equivalents balances subject to fair value measurements include certificates of deposit and money market funds.

(2)

Excluded from Other investments balances are $227.2 million at June 30, 2018 measured using Net Asset Value. Under current GAAP, these investments are excluded from the fair value hierarchy table. In addition, the Other investments balance excludes payment obligations that are carried at amortized cost, which totaled $173.2 million at June 30, 2018. For further information, see Item 8, Note 6, "Other Investments," to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017

(3)	Other assets include derivative instruments, reported on a gross basis.

(4)	Other liabilities include derivative instruments, reported on a gross basis.

---

---

---

•	debt;

•	letter of credit facilities and other sources of collateral; and

•	revolving credit facilities.

▪	sufficient capital to maintain our financial strength and credit ratings, as issued by several rating agencies, at levels considered necessary by management to enable our key operating subsidiaries to compete;

▪	sufficient capital to enable our regulated subsidiaries to meet the regulatory capital levels required in the U.S., the U.K., Bermuda, Ireland, Switzerland, the Society of Lloyd's and other key markets;

▪	letters of credit and other forms of collateral that are required to be posted or deposited, as the case may be, by our operating subsidiaries that are "non-admitted" under U.S. state insurance regulations in order for the U.S. cedant to receive statutory credit for reinsurance. We also use letters of credit to support our operations at Lloyd's; and

▪	revolving credit facilities as a back-up for potential short-term liquidity needs.

▪	the credit available from banks may be reduced due to market conditions, resulting in our need to pledge our investment portfolio to customers, which could result in a lower investment yield;

▪	we may be downgraded by one or more rating agencies, which could trigger an event of default under certain credit facilities and could materially and negatively impact our business, financial condition, results of operations and/or liquidity; and

▪	the volume of business that our subsidiaries that are non-admitted in the U.S. are able to transact could be reduced if we are unable to obtain letter of credit facilities at an appropriate amount.

---

(1)	"Outstanding" data represent June 30, 2018 accreted values.

(2)	"Payments Due by Period" data represents ultimate redemption values.

---

(1)	See Item 8, Note 14(b), "Notes Payable and Debt and Financing Arrangements - Letter of Credit Facilities ("LOC") and Other Sources of Collateral," to the Consolidated Financial Statements included the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for definition of terms used in this table.

(2)	We have the option to increase the size of the Syndicated Facilities by an additional of $500 million across both such facilities.

(3)	As of June 30, 2018, the portion of the total LOC facilities allowable to be utilized for revolving loans was $750.0 million. However, $76.1 million of this allowable portion was utilized to issue LOCs, leaving $673.9 million available either to issue additional LOCs or to support other operating or financing needs under these particular facilities.

---

---

---

---

(1)	Government-guaranteed securities and Covered Bonds have been excluded from the above figures.

(2)	Excludes short-term investments and accrued investment income.

(1)	Includes Covered Bonds.

(2)	Excludes short-term investments and accrued investment income.

---

---

(1)	The estimated impact on the fair value of our fixed income portfolio of an immediate hypothetical +100 bps adverse parallel shift in global bond curves.

(2)

The estimated impact on the fair value of our investment portfolio of an immediate hypothetical -10% change in the value of equity exposures in our equity portfolio, certain equity-sensitive hedge fund investments and private equity investments. This includes our estimate of equity risk embedded in the hedge fund and private investments portfolios with such estimates utilizing market exposures provided to us by certain individual fund investments, internal statistical analyses, and/or various assumptions regarding illiquidity and concentrations.

(3)	The estimated impact on the fair value of our fixed income portfolio of an immediate hypothetical +100 basis point increase in all global government related, corporate and structured security spreads to which our fixed income portfolio is exposed. This excludes exposure to credit spreads in our hedge fund, private investment and counterparty exposure.

(4)	The estimated impact on the fair value of our fixed income portfolio of an immediate hypothetical +10% increase in all global government related, corporate and structured security spreads to which our fixed income portfolio is exposed. This excludes exposure to credit spreads in our hedge fund, private investment and counterparty exposure.

(5)	The VaR results are based on a 95% confidence interval, with a one-year holding period, excluding foreign exchange rate risk. Our investment portfolio VaR at June 30, 2018 is not necessarily indicative of future VaR levels as these are based on statistical estimates of possible price changes and, therefore, exclude other sources of investment return such as coupon and dividend income.

(6)

The VaR results are the standalone VaRs, based on the prescribed methodology, for each component of our total investment portfolio. The standalone VaRs of the individual components are non-additive, with the difference between the summation of the individual component VaRs and their respective aggregations being due to diversification benefits across the individual components. In the case of the VaR results for our Total Investment Portfolio, the results also include the impact associated with our insurance and other strategic investments.

(7)

Our Total Investment Portfolio also includes our insurance and other strategic investments that do not form part of our Fixed Income Portfolio or Non-Fixed Income Portfolio. The individual results reported in the above table for our Total Investment Portfolio therefore represent the aggregate impact on our Fixed Income Portfolio, Non-Fixed Income Portfolio and the majority of our insurance and other strategic investments.

---

---

•	Our current stock price reflects a market assumption that the merger will occur. In addition, as a result of the announcement of the merger agreement, trading in our common shares has increased substantially. If the merger is not consummated, the investment goals of our shareholders may be materially different than those of our shareholders on a pre-merger announcement basis;

•	Under certain circumstances, we may be required to pay a termination fee of $499.0 million or an “alternate fee” of $249.5 million;

•	We may be required to pay significant costs relating to the merger, such as legal, accounting, financial advisory and printing fees, whether or not the merger is completed;

•	Time and resources committed by our management to matters relating to the merger could otherwise have been devoted to our existing business or to pursuing other beneficial opportunities;

•	The merger may not be completed as a result of the occurrence of an event, change or other circumstances that have a material adverse effect on our business;

•	The manner in which brokers, insurers, cedants and other third parties perceive XL Group may be negatively impacted, which in turn could affect our ability to compete for or write new business or obtain renewals in the marketplace;

•	Current and prospective employees may experience uncertainty about their future roles with us, which might adversely affect our ability to attract and retain employees who generate and service our business;

•	Our ratings may be adversely affected, which could have an adverse effect on our business, financial condition and operating results; and

•	We could be subject to litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against XL Group to perform its obligations under the merger agreement.

---

(1)	Shares purchased in connection with the vesting of restricted shares granted under our restricted stock plan do not represent shares purchased as part of publicly announced plans or programs. Any such purchases would be made in connection with satisfying tax withholding obligations of those employees.

(2)	For information regarding our share buyback activity see Part I, Item 1, Note 13, "Share Capital," to the Unaudited Consolidated Financial Statements included herein.

---

*	Filed herewith.

---