Large accelerated filer	ý    Accelerated filer    ¨

Non-accelerated filer	¨    Smaller reporting company    ¨

---

---

---

ITEM 1.	BUSINESS

---

•	Property: provides physical loss or damage, business interruption and machinery breakdown cover for virtually all types of property, including commercial buildings, residential premises, construction projects and onshore energy installations. This line of business includes primary and excess risks, some of which are catastrophe-exposed.

•

Marine: provides cover for traditional marine classes, including offshore energy, cargo, liability, recreational marine, fine art, specie, and hull and war. Offshore energy coverage includes physical damage, business interruption, operators extra expense and liability coverage for all aspects of offshore upstream energy, from exploration and construction through the operation and distribution phases.

•	Terrorism: provides cover for physical damage and business interruption of an insured following an act of terrorism and includes kidnap and ransom, and crisis management insurance.

•	Aviation: provides hull and liability, and specific war cover primarily for passenger airlines but also for cargo operations, general aviation operations, airports, aviation authorities, security firms and product manufacturers.

•

Credit and Political Risk: provides credit and political risk insurance products for banks, commodity traders, corporations and multilateral and export credit agencies. Cover is provided for a range of risks including sovereign default, credit default, political violence, currency inconvertibility and non-transfer, expropriation, aircraft non-repossession and contract frustration due to political events.

•

Professional Lines: provides directors’ and officers’ liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity, cyber and privacy insurance, medical malpractice and other financial insurance related covers for commercial enterprises, financial institutions, not-for-profit organizations and other professional service providers. This business is predominantly written on a claims-made basis.

•	Liability: primarily targets primary and low/mid-level excess and umbrella commercial liability risks in the U.S. wholesale markets in addition to primary and excess of loss employers, public, and products liability predominately in the U.K. Target industry sectors include construction, manufacturing, transportation and trucking and other services.

•	Accident and Health: includes accidental death, travel insurance and specialty health products for employer and affinity groups.

•	Discontinued Lines - Novae: includes those lines of business that Novae exited or placed into run-off in the fourth quarter of 2016 and in the first quarter of 2017. These discontinued insurance lines include financial institutions, professional indemnity, international liability, and international direct property.

---

•

Catastrophe: provides protection for most catastrophic losses that are covered in the underlying insurance policies written by our cedants. The underlying policies principally cover property-related exposures but other exposures including workers compensation and personal accident are also covered. The principal perils covered by policies in this portfolio include hurricane and windstorm, earthquake, flood, tornado, hail and fire. In some instances, terrorism may be a covered peril or the only peril. This business is written on a proportional and excess of loss basis.

•

Property: provides protection for property damage and related losses resulting from natural and man-made perils that are covered in the underlying personal and commercial lines insurance policies written by our cedants. The predominant exposure is property damage but other risks, including business interruption and other non-property losses, may also be covered when arising from a covered peril. The most significant perils covered by policies in this portfolio include windstorm, tornado and earthquake, but other perils such as freeze, riots, flood, industrial explosions, fire, hail and a number of other loss events are also included. This business is written on a proportional and excess of loss basis.

•	Professional Lines: provides cover for directors’ and officers’ liability, employment practices liability, medical malpractice, professional indemnity, environmental liability and miscellaneous errors and omissions insurance risks. The underlying business is predominantly written on a claims-made basis. This business is written on a proportional and excess of loss basis.

---

•

Credit and Surety: provides reinsurance of trade credit insurance products and includes proportional and excess of loss structures. The underlying insurance indemnifies sellers of goods and services in the event of a payment default by the buyer of those goods and services. Credit insurance cover is provided to mortgage guaranty insurers and government sponsored entities. Cover for losses arising from a broad array of surety bonds issued by insurers to satisfy regulatory demands or contract obligations in a variety of jurisdictions around the world is also offered.

•	Motor: provides cover to insurers for motor liability and property damage losses arising out of any one occurrence. A loss occurrence can involve one or many claimants where the ceding insurer aggregates the claims from the occurrence. Traditional proportional and non-proportional reinsurance as well as structured solutions are offered.

•	Liability: provides cover to insurers of standard casualty business, excess and surplus casualty business and specialty casualty programs. The primary focus of the underlying business is general liability, although workers' compensation and auto liability covers are also written.

•

Agriculture: provides protection for risks associated with the production of food and fiber on a global basis for primary insurance companies writing multi-peril crop insurance, crop hail, and named peril covers, as well as custom risk transfer mechanisms for agricultural dependent industries with exposures to crop yield and/or price deviations. This business is written on a proportional and aggregate stop loss reinsurance basis.

•	Engineering: provides protection for all types of construction risks and risks associated with erection, testing and commissioning of machinery and plants during the construction stage. This line of business also includes cover for losses arising from operational failures of machinery, plant and equipment, and electronic equipment as well as business interruption.

•	Marine and Other: includes marine, aviation and personal accident reinsurance.

•	Accident and Health: includes specialty health, accidental death, travel, life and disability reinsurance products which are offered on a proportional and catastrophic or per life excess of events loss basis.

•	Discontinued Lines - Novae: includes those lines of business that Novae exited or placed into run-off in the fourth quarter of 2016 and in the first quarter of 2017. These discontinued reinsurance lines include motor reinsurance, general liability reinsurance, international facultative property.

---

---

•	Protect our capital base and earnings by monitoring our risks against our stated risk appetite and limits;

•	Promote a sound risk management culture through disciplined and informed risk taking;

•	Enhance value creation and contribute to an optimal risk-return profile by providing the basis for efficient capital deployment;

•	Support our group-wide decision making process by providing reliable and timely risk information; and

•	Safeguard our reputation.

---

---

•

The Investment & Finance Committee oversees the Group’s investment activities by, among other things, monitoring market risks, the performance of our investment managers and the Group’s asset-liability management, liquidity positions and investment policies and guidelines. The Investment & Finance Committee also prepares the Group’s strategic asset allocation and presents it to the Finance Committee of the Board for approval.

•	The Reinsurance Security Committee ("RSC") sets out the financial security requirements of our reinsurance counterparties and approves our counterparties, as needed.

•	The Cyber, Property, and Credit Product Boards, which oversee the exposure management frameworks and views of risk for our cyber, property, and credit underwriting risks. Each Product Board contributes to portfolio management, setting underwriting guidelines and risk appetite, as well as encouraging general knowledge sharing.

•	The Internal Model Committee oversees the Group's Internal Model framework, including the key model assumptions, methodology and validation framework.

•	The Operational Risk Committee oversees the Group's Operational Risk framework for the identification, management, mitigation and measurement of operational risk and facilitates the embedding of effective operational risk management practices throughout the Group.

•	The Emerging Risks Committee oversees the processes for identifying, assessing and monitoring current and potential emerging risks.

•

The Capital Management Committee oversees the integrity and effectiveness of the Company’s Capital Management Policy, including the capital management policies of the Company’s legal entities and branches, ensuring the Company’s effective implementation of the annual Capital Management Plan, which is approved by the Finance Committee of the Board, and overseeing the availability of capital within the Group.

---

---

•

Excess of loss per risk – the reinsurer indemnifies us for loss amounts of all individual policies effected, defined in the treaty terms and conditions. Per risk treaties are an effective means of risk mitigation against large single losses (e.g. a large fire claim). This includes our Northshore Re catastrophe bond program, which provides a combined $550 million of limit across the Group. Refer to Item 7 'Management’s Discussion and Analysis of Financial Condition and Results of Operations' – Underwriting Results – Consolidated – Underwriting Expenses' for additional information on our Northshore Re catastrophe bond program.

•	Catastrophe excess of loss – provides aggregate loss cover for our insurance portfolio against the accumulation of losses incurred from a single event (e.g. windstorm).

---

---

---

---

---

•

Major failures and disasters which could cause a severe disruption to working environments, facilities and personnel, represent a significant operational risk to us. Our Business Continuity Management framework strives to protect critical business functions from these effects to enable us to carry out our core tasks in time and at the quality required. During 2018, we continued to review our Business Continuity Planning procedures through cyclical planned tests.

•	We have developed a number of Information Technology ("IT") platforms, applications and security controls to support our business activities worldwide. Dedicated security standards are in place for our IT systems to ensure the proper use, availability and protection of our information assets.

•

Our use of third party vendors exposes us to a number of increased operational risks, including the risk of security breaches, fraud, non-compliance with laws and regulations or internal guidelines and inadequate service. We manage material third party vendor risk, by, among other things, performing a thorough risk assessment on potential large vendors, reviewing a vendor’s financial stability, ability to provide ongoing service and business continuity planning.

---

•	We maintain cash and cash equivalents and high quality, liquid investment portfolios to meet expected outflows, as well as those that could result from a range of potential stress events. We place internal limits on the maximum percentage of cash and investments which may be in an illiquid form as well as a minimum percentage of our investment portfolio to mature within a defined timeframe.

•	We maintain committed borrowing facilities, as well as access to diverse funding sources to cover contingencies. Funding sources include asset sales, external debt issuances and lines of credit.

•	Internal risk capital - We use our internal capital model to assess the capital consumption of our business, measuring and monitoring the potential aggregation of risk at extreme return periods.

•

Regulatory capital requirements - In each country in which we operate, the local regulator specifies the minimum amount and type of capital that each of the regulated entities must hold in support of their liabilities and business plans. We target to hold, in addition to the minimum capital required to comply with the solvency requirements, an adequate buffer to ensure that each of our operating entities meets its local capital requirements. Refer to Item 8, Note 20 to the Consolidated Financial Statements, 'Statutory Financial Information' for further details.

•

Rating agency capital requirements - Rating agencies apply their own models to evaluate the relationship between the required risk capital of a company and its available capital resources. The assessment of capital adequacy is usually an integral part of the rating agency process. Meeting rating agency capital requirements and maintaining strong credit ratings are strategic business objectives of the Company. Refer to Item 7 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources' for further information on our financial strength.

---

---

---

---

---

---

---

---

---

ITEM 1A.	RISK FACTORS

---

•	$430M in aggregate, primarily related to Hurricanes Michael and Florence, the California Wildfires, and Typhoon Jebi in 2018;

•	$835 million, in aggregate, primarily related to U.S. weather-related events, Hurricanes Harvey, Irma and Maria, Mexico earthquakes and California wildfires in 2017;

•	$204 million, in aggregate, relating to U.S. weather-related events, Hurricane Matthew, Fort McMurray wildfires, the Japanese, Ecuadorian and South Island earthquakes, North Calgary hailstorm and European floods in 2016;

---

---

---

---

---

---

---

---

---

•	Providing reinsurance capacity in markets and to consumers that we target;

•	Requiring our further participation in industry pools and guaranty associations;

•	Expanding the scope of coverage under existing policies; e.g., following large disasters;

•	Further regulating the terms of (re)insurance contracts; or

•	Disproportionately benefiting the companies of one country over those of another.

---

---

---

---

---

---

---

•	actual or anticipated variations in our quarterly results, including as a result of catastrophes or our investment performance;

•	any share repurchase program;

•	changes in market valuation of companies in the insurance and reinsurance industry;

•	changes in expectations of future financial performance or changes in estimates of securities analysts;

•	fluctuations in stock market processes and volumes;

•	issuances or sales of common shares or other securities in the future;

•	the addition or departure of key personnel;

•	changes in tax law; and

•	announcements by us or our competitors of acquisitions, investments or strategic alliances.

ITEM 1B.	UNRESOLVED STAFF COMMENTS

---

ITEM 2.	PROPERTIES

ITEM 3.	LEGAL PROCEEDINGS

ITEM 4.	MINE SAFETY DISCLOSURES

---

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a)	In thousands.

(b)	Shares are repurchased from employees to satisfy withholding tax liabilities that arise upon the vesting of restricted stock units.

---

ITEM 6.	SELECTED FINANCIAL DATA

---

(1)

During 2018 and 2017, the Company recognized transaction and reorganization expenses of $67 million and $27 million, respectively, related to its transformation program which was launched in 2017. This program encompasses the integration of Novae Group plc ("Novae") which commenced in the fourth quarter of 2017, the realignment of our accident and health business, together with other initiatives designed to increase our efficiency and enhance our profitability while delivering a customer-centric operating model. During 2015, the Company implemented a number of profitability enhancement initiatives which resulted in recognition of transaction and reorganization expenses of $46 million and general and administrative expenses of $5 million.

(2)	During 2017, the Company recognized a tax expense of $42 million due to the revaluation of net deferred tax assets pursuant to the U.S. Tax Reform. Refer to Item 8, Note 18 to the Consolidated Financial Statements 'Income Taxes' for further details.

(3)	During 2018 and 2017, the Company recognized amortization of value of business acquired ("VOBA") of $171 million and $50 million, respectively, related to the acquisition of Novae. Refer to Item 8, Note 3 and Note 5 to the Consolidated Financial Statements 'Business Combinations' and 'Goodwill and Intangible Assets' for further details.

(4)	During 2015, the Company accepted a request from PartnerRe Ltd., a Bermuda exempted company ("PartnerRe") to terminate the Agreement and Plan of Amalgamation (the "Amalgamation Agreement") with the Company. PartnerRe paid the Company a termination fee of $280 million.

(5)

During 2015, the Company early adopted the Accounting Standard Update ("ASU") 2015-02 "Consolidation (Topic 810) Amendments to the Consolidation Analysis", issued by the Financial Accounting Standards Board. The adoption of this accounting guidance resulted in the Company concluding that it was no longer required to consolidate the results of operations and the financial position of Ventures Re. The Company adopted this accounting guidance using the modified retrospective approach and ceased to consolidate Ventures Re effective January 1, 2015. For the year ended December 31, 2014, net income available to common shareholders included an amount attributable from noncontrolling interests of $6,181.

(6)	Operating ratios are calculated by dividing the respective operating expenses by net premiums earned.

(7)	Book value per common share and book value per diluted common share are based on total common shareholders’ equity divided by common shares and diluted common share outstanding, respectively.

(8)	Calculations and share amounts at December 31, 2015 include 1,358,380 additional shares delivered to the Company in January 2016 under the Company's Accelerated Share Repurchase ("ASR") agreement entered into on August 17, 2015. Refer to Item 8, Note 14 to the Consolidated Financial Statements 'Shareholders' Equity' for further details.

---

ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

---

•	Net income available to common shareholders of $0.4 million

•	Operating income(1) of $161 million, or $1.92 per diluted common share(1)

•	Gross premiums written of $6.9 billion

•	Net premiums written of $4.7 billion

•	Net premiums earned of $4.8 billion

•	Estimated pre-tax catastrophe and weather-related losses, net of reinstatement premiums, of $430 million (insurance: $204 million and reinsurance: $226 million), or 9.0 points on current accident year loss ratio related to the California Wildfires, Hurricanes Michael and Florence, Typhoon Jebi as well as U.S. and European weather-related events

•	Net favorable prior year reserve development of $200 million

•	Underwriting income(2) of $124 million and combined ratio of 99.9%

•	Net investment income of $439 million

•	Net investment losses of $150 million

•	Amortization of value of business acquired ("VOBA") of $172 million

•	Transaction and reorganization expenses of $67 million

•	Foreign exchange gains of $29 million

•	Total cash and investments of $15.0 billion; fixed maturities, cash and short-term securities comprise 89% of total cash and investments and have an average credit rating of AA-

•	Total assets of $24.1 billion

•	Reserve for losses and loss expenses of $12.3 billion and reinsurance recoverable on unpaid and paid losses of $3.8 billion

•	Total debt of $1.3 billion and a debt to total capital ratio of 21.1%

•	Total common shares repurchased were 0.2 million for $10 million

•	Common shareholders’ equity of $4.3 billion; diluted book value per common share of $49.93

(1)

Operating income (loss) and operating income (loss) per diluted common share are non-GAAP financial measures as defined in Item 10(e) of SEC Regulation S-K. The reconciliations of non-GAAP measures to the most comparable GAAP financial measures (net income (loss) available (attributable) to common shareholders and earnings per diluted common share, respectively) are provided in 'Management's Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary – Results of Operations'.

(2)

Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to net income (loss) before income taxes and interest in income (loss) of equity method investments, the most comparable GAAP measure, is presented in the 'Management's Discussion and Analysis of Financial Condition – Executive Summary – Results of Operations.'

---

•	increasing our relevance in a select number of attractive specialty insurance and global reinsurance markets and continuing the implementation of a more focused distribution strategy;

•	continuing to grow a leadership position in business lines with strong growth potential including U.S. excess and surplus lines, and North America professional lines;

•	increasing our presence at Lloyd's of London ("Lloyd's") achieved through our acquisition of Novae Group plc ("Novae") in 2017 which provides us with access to Lloyd's worldwide licenses and an extensive distribution network;

•	continuing to re-balance our portfolio towards less volatile lines of business that carry attractive rates;

•	launching a new phase of our transformation efforts, an enterprise-wide program to enhance all of our functions and position us to lead in a transforming industry;

•	continuing to improve in the effectiveness and efficiency of our operating platforms and processes;

•	increasing investment in data and analytics; and

•	broadening risk-funding sources and the development of vehicles that utilize third-party capital.

---

---

---

---

---

---

(1)

Underwriting-related general and administrative expenses is a non-GAAP measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to total general and administrative expenses, the most comparable GAAP measure, also included corporate expenses of $108,221, $129,945 and $120,016 for the years ended December 31, 2018, 2017 and 2016, respectively. Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other (Expenses) Revenues, Net' for additional information related to the corporate expenses. Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures' for additional information.

(2)	Tax cost (benefit) of ($11,642), $2,022 and $1,830 for the years ended December 31, 2018, 2017 and 2016, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the ability to utilize capital losses.

(3)	Tax cost (benefit) of ($4,331), ($7,777) and $2,114 for the years ended December 31, 2018, 2017 and 2016, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the tax status of specific foreign exchange transactions.

(4)	Tax cost (benefit) of ($11,036), ($2,839) and $nil for the year ended December 31, 2018, 2017 and 2016, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.

(5)	Tax impact is $nil.

(6)

Operating income (loss) is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliations to the most comparable GAAP financial measures (net income (loss) available (attributable) to common shareholders) is provided in the table above, and a discussion of the rationale for the presentation of this item is included in 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures'.

(1)	Refer to Item 8, Note 13 to the Consolidated Financial Statements 'Earnings Per Common Share' for further details on the dilution calculation.

(2)

Operating income (loss) per diluted common share is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to the most comparable GAAP financial measures (earnings per diluted common share) is provided in the table above, and a discussion of the rationale for the presentation of this item is included in 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures'.

(3)	Return on average common equity ("ROACE") is calculated by dividing net income (loss) available (attributable) to common shareholders for the year by the average common shareholders' equity determined by using the common shareholders' equity balances at the beginning and end of the year.

(4)

Operating ROACE, a non-GAAP measure as defined in Item 10(e) of SEC Regulation S-K, is calculated by dividing operating income (loss) for the year by the average common shareholders' equity. The reconciliation to ROACE, the most comparable GAAP measure, is presented in the table above. Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures' for additional information.

---

(1)

Ex-PGAAP operating income (loss), ex-PGAAP operating income (loss) per diluted common share and ex-PGAAP operating return on average common equity are non-GAAP financial measures as defined in SEC Regulation S-K. Ex-PGAAP operating ROACE, is calculated by dividing ex-PGAAP operating income (loss) for the year by the average common shareholders' equity. The reconciliation of ex-PGAAP operating income (loss), ex-PGAAP operating income (loss) per diluted common share and ex-PGAAP operating return on average common equity to the most comparable GAAP financial measures, (net income (loss) available (attributable) to common shareholders, earnings (loss) per diluted common share, and ROACE, respectively) are provided in the table above, and a discussion of the rationale for the presentation of these items is included in 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures'.

(2)	Tax cost (benefit) of $(35,061), $(10,003) and $nil for the years ended December 31, 2018, 2017 and 2016, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.

(3)	Tax cost (benefit) of $23,839, $6,203 and $nil for the years ended December 31, 2018, 2017 and 2016, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.

---

---

---

(1)	Book value per diluted common share represents total common shareholders’ equity divided by the number of common shares and diluted common share outstanding, determined using the treasury stock method. Cash settled awards are excluded.

---

---

---

(1)	Underwriting-related general and administrative expenses is a non-GAAP measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to total general and administrative expenses, the most comparable GAAP measure, is presented in 'Management's Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary – Results of Operations'.

(2)

Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to income (loss) before income taxes and interest in income (loss) of equity investments, the most comparable GAAP measure, is presented in 'Management's Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary – Results of Operation'.

---

---

---

(1)	The general and administration expense ratio includes corporate expenses not allocated to underwriting segments of 2.3%, 3.1% and 3.2% for 2018, 2017 and 2016, respectively. These costs are further discussed in the 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Expenses (Revenues), Net' section.

---

---

---

•	$65 million of net favorable prior year reserve development on property and other lines business primarily due to overall better than expected loss emergence related to the 2017 catastrophe events.

•	$32 million of net favorable prior year reserve development on professional lines business due to the recognition of better than expected loss experience, particularly on the 2014 and 2015 accident years.

•	$18 million of net favorable prior year reserve development on marine business primarily due to better than expected loss emergence on more recent accident years.

•	$22 million of net adverse prior year reserve development on liability business primarily due to reserve strengthening within our U.S. excess casualty book of business mainly driven by a higher frequency of large auto and general liability claims mainly related to the 2015 accident year.

•	$28 million of net favorable prior year reserve development on marine business due to better than expected loss emergence on more recent accident years including a large case reserve reduction on a 2013 accident year claim.

---

•	$26 million of net favorable prior year reserve development on professional lines business due to the recognition of better the expected emerging loss experience, particularly on the 2013 and 2014 accident years.

•	$12 million of net favorable prior year reserve development on property and other business primarily due to overall better than expected loss emergence related to the 2016 accident year.

•	$8 million of net adverse prior year reserve development on liability business due to reserve strengthening on several large claims within our run-off Bermuda excess casualty book of business and limited reserve strengthening within our U.S. excess casualty book of business.

•	$28 million of net favorable prior year reserve development on property and other business driven by better than expected loss emergence primarily related to accident years 2012 through 2015.

•	$14 million of net favorable prior year reserve development on professional lines business driven by better than expected development related to various accident years, partially offset by reserve strengthening relating to updated information on specific claims impacting accident years 2010 and 2011.

•	$12 million of net favorable prior year reserve development on marine business driven by better than expected loss emergence primarily driven by reductions in mid-size loss estimates impacting accident year 2015.

•	$8 million of net adverse prior year reserve development on liability business primarily related to reserve strengthening on certain claims within our excess casualty book of business.

•	$33 million of net favorable prior year reserve development on credit and surety business primarily due to generally better than expected loss emergence, primarily related to accident years 2013 and 2014.

•	$23 million of net favorable prior year reserve development on motor business primarily due to non proportional treaty business related to older accident years.

•	$23 million of net favorable prior year reserve development on liability business due to progressively increased weight given by management to experience based indications on older accident years.

•	$21 million of net favorable prior year reserve development on professional lines business reflecting the generally favorable experience on older accident years as we continue to transition to more experience based methods.

•	$44 million of net favorable prior year reserve development on professional lines business, reflecting the generally favorable experience on older accident years, particularly 2009 through 2012, as we continue to transition to more experience based methods.

---

•	$43 million of net favorable prior year reserve development on liability business due to progressively increased weight given by management to experience based indications on older accident years, particularly 2008 through 2010.

•	$33 million of net favorable prior year reserve development on credit and surety business, due to better than expected loss emergence, primarily related to accident years 2012 through 2015.

•	$19 million of net favorable prior year development on property and other business due to overall better than expected loss emergence across multiple accident years, partially offset by reserve strengthening related to accident year 2016.

•	$1 million of net favorable prior year reserve development on motor business, due to better than expected loss emergence spanning multiple accident years, largely offset by the impact of the change in Ogden rate.

•	$105 million of net favorable prior year development on property and other business, primarily related to the 2010 through 2015 accident years driven by better than expected loss emergence.

•	$55 million of net favorable prior year reserve development on motor business, primarily related to non-proportional business spanning multiple accident years, driven by better than expected loss emergence.

•	$44 million of net favorable prior year reserve development on liability business, primarily related to the 2006 through 2011 accident years, for reasons discussed in the overview.

•	$30 million of net favorable prior year reserve development on professional lines business, primarily related to the earlier accident years, for reasons discussed in the overview.

•	$10 million of net favorable prior year reserve development on credit and surety business, spanning multiple accident years and driven by generally better than expected loss emergence.

---

---

---

---

---

---

---

---

---

---

(1)	Pre-tax yield is calculated by dividing net investment income by the average month-end amortized cost balances for the periods indicated.

---

(1)	Excluding overseas deposits.

(2)	The pre-tax return on other investments is calculated by dividing total net investment income from other investments by the average month-end fair value balances held for the periods indicated, excluding overseas deposits.

---

---

(1)	Change in net unrealized investment gains (losses) on fixed maturities is calculated by taking net unrealized investment gains (losses) at period end less net unrealized investment gains (losses) at the prior period end.

(2)	The average cash and investments balance is calculated by taking the average of the month-end fair value balances held for the periods indicated.

(3)

Pre-tax total return on average cash and investments excluding foreign exchange rate movements is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to pre-tax total return on cash and investments, the most comparable GAAP financial measure, included foreign exchange gains (losses) of $(48) million, $80 million and $(79) million for the years ended December 31, 2018, 2017 and 2016, respectively.

---

(1)	Includes restricted cash and cash equivalents of $597 million and $415 million for 2018 and 2017, respectively.

---

(1)	Includes bonds issued by states, municipalities, and political subdivisions.

(2)	Includes U.S. government-sponsored agencies, Residential mortgage-backed securities ("RMBS") and Commercial mortgage-backed securities ("CMBS").

(3)	Non-investment grade and non-rated securities.

---

(1)	Includes supranationals only within the eurozone.

---

(1)	Non-investment grade securities

---

---

---

---

---

(1)	Refer to consolidated statements of cash flows included in Item 8, ‘Financial Statements and Supplementary Data’, for further details.

•

Net cash provided by operating activities was $11 million in 2018, compared to $259 million in 2017 and $407 million in 2016. Our insurance and reinsurance operations typically receive cash inflows from premiums, net of policy acquisition costs, and reinsurance recoverables. Our cash outflows are principally for the payment of claims and loss adjustment expenses, premium payments to reinsurers and operating expenses. Cash provided by operating activities can fluctuate due to timing differences in the collection of premium receivable and reinsurance recoverables and the payment of losses and ceded premiums payable.

---

•

Operating cash flows decreased in 2018 compared to 2017, primarily attributable to losses paid on short-tail lines of business related to the 2017 and 2018 catastrophe events, consideration paid for the RITC transaction of the 2015 and prior years of account of Syndicate 2007, the quota share retrocessional agreement with Harrington Re, (refer to Item 8, Note 9 to the Consolidated Financial Statements 'Reserve for Losses and Loss Expenses' for further details) and increased purchases of traditional reinsurance and retrocession covers, partially offset by an increase in premium collected due to higher gross premiums written in 2018, together with an increase in reinsurance recoveries, and an increase in interest and dividends received.

•	Investing cash inflows in 2018 principally related to the net proceeds from the sale and redemption of fixed maturities of $364 million (2017: $300 million, 2016: $221 million), net proceeds from the sale of equity securities of $173 million (2017: $342 million, 2016: $3 million) and the net proceeds from the sale of other investments of $181 million (2017: $108 million, 2016: $25 million).

•

Financing cash outflows primarily related to dividends paid to common and preferred shareholders on a recurring basis of $176 million in 2018 (2017: $188 million, 2016: $172 million). Financing cash outflows also included common share repurchases of $10 million in 2018 ( 2017: $286 million and 2016: $510 million). We note that market share repurchases are discretionary; the timing and amount of the additional repurchase transactions will depend on a variety of factors including, but not limited to, global (re)insurance and financial market conditions and opportunities, capital management and regulatory considerations (refer to 'Capital Resources – Share Repurchases' below for further details).

---

---

---

---

(1)	We are obligated to pay claims for specified loss events covered by the (re)insurance contracts that we write. Loss payments represent our most significant future payment obligation. In contrast to our other contractual obligations, our cash payments are not determinable from the terms specified

---

(2)	In the ordinary course of business, we renew and enter into new leases for office space which expire at various dates.

(3)	We have $507 million of unfunded investment commitments related to our other investments portfolio, which are callable by our investment managers. Refer to Item 8, Note 6(c) to the Consolidated Financial Statements 'Investments' for further details. In addition, we have $4 million of unfunded commitments related to our commercial mortgage loans portfolio.

(4)	Refer to Item 8, Note 11(a) to the Consolidated Financial Statements 'Debt and Financing Arrangements' for further details.

(5)	Debt (interest payments) includes $8 million of unamortized discount and debt insurance expenses.

•	reserves for losses and loss expenses;

•	reinsurance recoverable on unpaid losses, including the provision for uncollectible amounts;

•	gross premiums written;

•	fair value measurements of financial assets and liabilities; and

•	other-than-temporary impairments ("OTTI") in the carrying value of available-for-sale securities.

---

•	Expected Loss Ratio Method ("ELR Method"): This method estimates ultimate losses for an accident year or underwriting year by applying an expected loss ratio to the earned or written premium for that year. Generally, expected

---

•

Loss Development Method (also referred to as the "Chain Ladder Method" or "Link Ratio Method"): This method assumes that the losses incurred/paid for each accident year or underwriting year at a particular development stage follow a relatively similar pattern. It assumes that on average, every accident year or underwriting year will display the same percentage of ultimate losses incurred/paid at the same point in time after the inception of that year. The percentages incurred/paid are established for each development stage (e.g. 12 months, 24 months, etc.) after examining historical averages from historical loss development data and/or external industry benchmark information. Ultimate losses are then estimated by multiplying the actual incurred/paid losses by the reciprocal of the established incurred/paid percentage. The strengths of this method are that it reacts to loss emergence/payments and that it makes full use of historical claim emergence/payment experience. However, this method has weaknesses when the underlying assumption of stable loss development/payment patterns is not valid. This could be the consequence of changes in business mix, claim inflation trends or claim reporting practices and/or the presence of large claims, among other things. Furthermore, this method tends to produce volatile estimates of ultimate losses where there is volatility in the underlying incurred/paid patterns. In particular, where the expected percentage of incurred/paid losses is low, small deviations between actual and expected claims can lead to very volatile estimates of ultimate losses. As a result, this method is often unsuitable at early development stages for an accident year or underwriting year.

•

Bornhuetter-Ferguson Method ("BF Method"): This method can be seen as a combination of the ELR and Loss Development Methods, under which the Loss Development Method is given progressively more weight as an accident year or underwriting year matures. The main advantage of the BF Method is that it provides a more stable estimate of ultimate losses than the Loss Development Method at earlier stages of development, while remaining more sensitive to emerging loss development than the ELR Method. In addition, the BF Method allows for the incorporation of external market information through the use of expected loss ratios, whereas the Loss Development Method does not incorporate such information.

---

---

•	Insurance and Reinsurance Professional Lines

---

•	Reinsurance Credit and Surety

•	Insurance Credit and Political Risk

•	more significant weight given to industry benchmarks in forming our key actuarial assumptions;

•	potential volatility of actuarial estimates, given the number of years of development it takes to produce a meaningful incurred loss as a percentage of ultimate losses;

•	inherent uncertainties about loss trends, claims inflation (e.g. medical, judicial, social) and general economic conditions; and

•	the possibility of future litigation, legislative or judicial change that may impact future loss experience relative to the prior industry loss experience relied upon in reserve estimation.

---

•	estimates of the size of insured industry losses from the catastrophic event and our corresponding market share;

---

•	a review of our portfolio of contracts to identify those contracts which may be exposed to the catastrophic event;

•	a review of modeled loss estimates based on information previously reported by customers and brokers, including exposure data obtained during the underwriting process;

•	discussions of the impact of the event with our customers and brokers; and

•	catastrophe bulletins published by various independent statistical reporting agencies.

---

---

---

---

---

---

•	changes in renewal rates or rates of new business accepted by cedants (changes could result from changes in the relevant insurance market that could affect more than one of our cedants or could be a consequence of changes in the marketing strategy or risk appetite of an individual cedant);

•	changes in underlying exposure values; and/or

•	changes in rates being charged by cedants.

---

•	Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments.

---

•	Level 2 – Valuations based on quoted prices in active markets for similar assets or liabilities, quoted prices for identical assets or liabilities in inactive markets, or for which significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.

•	Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The unobservable inputs reflect our judgments about assumptions that market participants might use.

---

---

a.	The length of time and extent to which the fair value is less than the amortized cost.

b.	The financial condition, near-term and long-term prospects for the issuer of the security, including relevant industry conditions and trends, and the implications of rating agency actions, and offering prices.

c.	the reason for the decline (e.g. credit spread widening, credit event, foreign exchange rate movements);

d.	The historical and implied volatility of the fair value.

e.	The collateral structure and credit support of the security, if applicable.

---

•	declines in value greater than 20% for nine consecutive months, and

•	declines in value greater than 10% for twelve consecutive months.

---

ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

---

---

(1)	Assumes 10% change in underlying currencies relative to the U.S. dollar.

---

---

ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

---

---

---

---

---

---

---

---

1.	HISTORY

•	AXIS Specialty Limited ("AXIS Specialty Bermuda"), a Bermuda domiciled company is licensed to provide specialty insurance and treaty reinsurance products on a worldwide basis. In addition, AXIS Specialty Bermuda conducts (re)insurance business through its branch in Singapore, AXIS Specialty Limited (Singapore Branch).

•

AXIS Insurance Company, domiciled in Illinois and AXIS Reinsurance Company, domiciled in New York, together with AXIS Reinsurance Company (Canadian branch) are licensed to offer a range of specialty insurance and treaty reinsurance products to a variety of niche markets on a worldwide basis. AXIS Surplus Insurance Company, domiciled in the state of Illinois is eligible to write insurance on a surplus lines basis.

•

AXIS Specialty Europe SE ("AXIS Specialty Europe") is a European public limited liability company, incorporated as a non-life insurer under the laws of Ireland. It is a Societas Europaea (SE), or European society company, and has been registered in accordance with company law of the E.U. AXIS Specialty Europe also conducts insurance business through its branch in the United Kingdom, AXIS Specialty Europe SE ("UK Branch"). Effective January 1, 2019, AXIS Specialty Europe will also conduct insurance business through new branches in Belgium and in the Netherlands.

•	AXIS Re SE ("AXIS Re") is a European public limited liability company, incorporated as a reinsurer under the laws of Ireland. AXIS Re SE is also a Societas Europaea (SE). AXIS Re also conducts reinsurance business through its branch in Switzerland, AXIS Re SE, Dublin (Zurich Branch).

•

The Company operates in the Lloyd's of London ("Lloyd's") market through AXIS Corporate Capital UK Limited which is the sole corporate member of AXIS Syndicate 1686 ("Syndicate 1686"). Effective August 4, 2017, AXIS Managing Agency Ltd. ("AXIS Managing Agency") assumed management of Syndicate 1686, replacing the Company's third-party managing agency agreement with Asta Managing Agency Limited, which had been in place since 2014. Effective January 1, 2019, AXIS Corporate Capital UK Limited and Novae Corporate Underwriting Limited ("NCUL") will provide 70% and 30%, respectively, of Syndicate 1686's capital support.

•

On October 2, 2017, AXIS Specialty UK Holdings Limited, a wholly owned subsidiary of the Company, acquired a 100% ownership interest in Novae Group plc ("Novae"). Novae operates in the Lloyd's market through NCUL, the sole corporate member of Novae Syndicate 2007 ("Syndicate 2007") and owns Lloyd’s managing agency, Novae Syndicates Limited ("NSL") which operated in the Lloyd’s insurance market and managed Syndicate 2007 until January 1, 2018, when the Company received authorization from Lloyd’s for AXIS Managing Agency to commence management and oversight of Syndicate 2007.

•

AXIS Ventures Limited ("AXIS Ventures"), regulated by the BMA as an insurance manager, generates fee income from services provided to strategic capital partners. AXIS Ventures Reinsurance Limited ("Ventures Re") is a Bermuda domiciled insurer and is a registered segregated accounts company under the Bermuda Segregated Accounts Companies Act 2000, as amended. Ventures Re manages capital for investors interested in deploying funds directly into the property-catastrophe and other short-tail business.

---

•	reserve for losses and loss expenses;

•	reinsurance recoverable on unpaid losses, including the provision for uncollectible amounts;

•	gross and net premiums written and net premiums earned;

•	fair value measurements of financial assets and liabilities; and

•	other-than-temporary impairments ("OTTI") in the carrying value of available-for-sale securities.

---

a)	Investments

---

---

b)	Cash and Cash Equivalents

c)	Premiums and Acquisition Costs

---

d)	Losses and Loss Expenses

e)	Reinsurance

---

f)	Foreign Exchange

h)	Derivative Instruments

---

i)	Goodwill and Intangible Assets

---

k)	Treasury Shares

l)	New Accounting Standards Adopted in 2018

•	requires equity investments (except those accounted for under the equity method of accounting, investments that are consolidated or those that meet a practicability exception) to be measured at fair value with changes in fair value recognized in net income;

•	simplifies the impairment assessment of equity investments without readily determinable values by requiring a qualitative assessment to identify impairment, eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost,

•	requires the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes;

•	requires separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the organization has elected to measure the liabilities in accordance with the fair value option;

•	requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and

•	clarifies that the reporting organization should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the organization’s other deferred tax assets.

---

1.	the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified;

2.	the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.

---

m)	Recently Issued Accounting Standards Not Yet Adopted

---

1.	whether any expired or existing contracts are or contain leases;

2.	the lease classification for any expired or existing leases; and

3.	initial direct costs for any existing leases.

---

a)	Acquisition of Novae Group plc

---

•	Deferred acquisition costs: To eliminate Novae's deferred acquisition costs;

•	Prepaid reinsurance premiums: To reflect adjustments to align premium recognition accounting policies;

•	VOBA: To establish the fair value of VOBA identifiable intangible asset related to the acquisition of Novae;

•	Goodwill: To establish the fair value of goodwill related to the acquisition of Novae;

•	Indefinite lived and finite lived intangible assets: To establish the fair value of identifiable intangible assets related to the acquisition of Novae and to eliminate Novae's pre-existing intangible assets;

•	Other assets: To reflect an investment at fair value and deferred tax assets on fair value adjustments;

---

•	Reserves for losses and loss expenses: To reflect adjustments arising from the alignment of premium recognition accounting policies and reserving methodologies, as well as the price associated with the Reinsurance to Close ("RITC") of the 2015 and prior years of account of Syndicate 2007;

•	Unearned premiums: To reflect adjustments to align premium recognition accounting policies; and

•	Other liabilities: To reflect deferred tax liabilities on fair value adjustments.

•	Lloyd's syndicate capacity: The value of Lloyd's syndicate capacity, which represents Novae's right to underwrite a certain allocated limit of premium in the Lloyd's market.

•	Distribution network:

•	Coverholders: The value of sales of insurance policies that result directly from relationships with insurance intermediaries who are authorized by Novae's managing agent to enter into contracts of insurance to be underwritten by Syndicate 2007, in accordance with the terms of a binding authority.

•	Large brokers: These relationships include Novae's large brokers and consideration was given to the expectation of the renewal of these relationships and the associated expenses.

•	SME brokers: These relationships consist of Novae's brokers with the exception of the large brokers listed above and consideration was given to the expectation of the renewal of these relationships and the associated expenses.

•	MGA contract: Represents the value of managing agent fees and profit commission Novae earns related to the provision of underwriting services to Special Purpose Arrangement, SPA 6129.

---

•

Lloyd's syndicate capacity: Lloyd's syndicate capacity was valued using the Multi-Period Excess Earnings Method, an application of the Income Approach. Key inputs used in the valuation model used for this intangible asset included projected pre-tax operating profit attributable to syndicate capacity, contributory asset charges which represent the required return on and of intangibles assets utilized to generate future revenue and operating income, and an appropriate discount rate.

•

Distribution network: Distribution network including coverholders, large broker and SME brokers was valued using the Distributor Method, an application of the Income Approach. Key inputs used in the valuation model used for this intangible asset included net premiums earned attributable to existing distributors, attrition rates, profit margins, projected pre-tax operating profit attributable to existing distributors, contributory asset charges which represent the required return on and of intangibles assets utilized to generate future revenue and operating income, and an appropriate discount rate.

•

MGA contract: MGA contract was valued using the Multi-Period Excess Earnings Method, an application of the Income Approach. Key inputs used in the valuation model used for this intangible asset included SPA 6129's stamp capacity with Lloyd's, return on stamp capacity, fee income and profit commission associated with the managing agent contract for SPA 6129, profit margins, contributory asset charges which represent the required return on and of intangibles assets utilized to generate future revenue and operating income, and an appropriate discount rate.

•

VOBA: VOBA was computed as the difference between the fair value of unearned obligations and the unearned premiums reserve recorded by Novae at the acquisition date. Key inputs used in the valuation model used for this intangible asset included the fair value of the unearned premium computed as the present value of future unearned cash flows, plus the present value of the costs associated with holding capital to support these exposures together with the fair value of reserves computed as the present value of future net losses and loss expense payments, plus the present value of the costs associated with holding capital to support those payments.

---

b)	Acquisition of Compagnie Belge d'Assurances Aviation NV/SA

c)	Acquisition of Contessa

---

4.	SEGMENT INFORMATION

---

---

---

---

---

---

(1)	During the year ended December 31, 2018, an impairment charge of $3,500 was recognized related to the termination of the MGA contract intangible asset identified in connection with the acquisition of Novae.

---

---

a)	Fixed Maturities and Equity Securities

(1)	Residential mortgage-backed securities ("RMBS") originated by U.S. government-sponsored agencies.

(2)	Commercial mortgage-backed securities ("CMBS").

(3)	Asset-backed securities ("ABS") include debt tranched securities collateralized primarily by auto loans, student loans, credit card receivables, collateralized debt obligations ("CDOs") and collateralized loan obligations ("CLOs").

(4)	Municipals include bonds issued by states, municipalities and political subdivisions.

(5)	Represents the non-credit component of the other-than-temporary impairment ("OTTI") losses, adjusted for subsequent sales, maturities and redemptions. It does not include the change in fair value subsequent to the impairment measurement date.

---

---

---

(1)	Effective January 1, 2018, the Company adopted ASU No. 2016-01, which requires equity securities to be measured at fair value with changes in fair value recognized in net income therefore equity securities at fair value are excluded from the table above at December 31, 2018.

---

b)	Mortgage Loans

---

c)	Other Investments

•	Long/short equity funds: Seek to achieve attractive returns primarily by executing an equity trading strategy involving long and short investments in publicly-traded equity securities.

•	Multi-strategy funds: Seek to achieve above-market returns by pursuing multiple investment strategies to diversify risks and reduce volatility. This category includes funds of hedge funds which invest in a large pool of hedge funds across a diversified range of hedge fund strategies.

•	Event-driven funds: Seek to achieve attractive returns by exploiting situations where announced or anticipated events create opportunities.

•	Direct lending funds: Seek to achieve attractive risk-adjusted returns, including current income generation, by investing in funds which provide financing directly to borrowers.

---

•	Private equity funds: Seek to achieve attractive risk-adjusted returns by investing in private transactions over the course of several years.

•	Real estate funds: Seek to achieve attractive risk-adjusted returns by making and managing investments in real estate and real estate securities and businesses.

---

d)	Equity Method Investments

---

f)	Net Investment Gains (Losses)

(1)	Refer to Note 8 'Derivative Instruments'

(2)	Effective January 1, 2018, the Company adopted ASU No. 2016-01. The change in fair value of equity securities is now recognized in net income.

---

---

g)	Restricted Assets

---

h)	Reverse Repurchase Agreements

7.	FAIR VALUE MEASUREMENTS

•	Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

•	Level 2 - Valuations based on quoted prices in active markets for similar assets or liabilities, quoted prices for identical assets or liabilities in inactive markets, or for which significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.

---

•	Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The unobservable inputs reflect the Company's own judgments about assumptions that market participants might use.

---

---

---

---

(1)	Includes Long/short equity, Multi-strategy and Event-driven funds.

---

(1)	Includes Long/short equity, Multi-strategy and Event-driven funds.

---

---

---

(1)	Realized investment gains (losses) on fixed maturities, and realized and unrealized gains (losses) on other assets and other liabilities included in net income are included in net investment gains (losses). Realized and unrealized gains (losses) on other investments included in net income are included in net investment income.

(2)	Unrealized investment gains (losses) on fixed maturities are included in other comprehensive income ("OCI").

(3)	Change in unrealized investment gains (losses) relating to assets held at the reporting date.

---

---

---

(1)	Asset and liability derivatives are classified within other assets and other liabilities in the consolidated balance sheets.

(1)	Net asset and liability derivatives are classified within other assets and other liabilities on the consolidated balance sheets.

---

a)	Relating to Investment Portfolio

---

---

---

•

Expected Loss Ratio Method ("ELR Method"): This method estimates ultimate losses for an accident year or underwriting year by applying an expected loss ratio to the earned or written premium for that year. Generally, expected loss ratios are based on one or more of (a) an analysis of historical loss experience to date, (b) pricing information and (c) industry data, adjusted as appropriate, to reflect changes in rates and terms and conditions. This method is insensitive to actual incurred losses for the accident year or underwriting year in question and is, therefore, often useful in the early stages of development when very few losses have been incurred. Conversely, the lack of sensitivity to incurred/paid losses for the accident year or underwriting year in question means that this method is usually inappropriate in later stages of an accident year or underwriting year’s development.

•

Loss Development Method (also referred to as the "Chain Ladder Method" or "Link Ratio Method"): This method assumes that the losses incurred/paid for each accident year or underwriting year at a particular development stage follow a relatively similar pattern. It assumes that on average, every accident year or underwriting year will display the same percentage of ultimate losses incurred/paid at the same point in time after the inception of that year. The percentages incurred/paid are established for each development stage (e.g. 12 months, 24 months, etc.) after examining historical averages from historical loss development data and/or external industry benchmark information. Ultimate losses are then estimated by multiplying the actual incurred/paid losses by the reciprocal of the established incurred/paid percentage. The strengths of this method are that it reacts to loss emergence/payments and that it makes full use of historical claim emergence/payment experience. However, this method has weaknesses when the underlying assumption of stable loss development/payment patterns is not valid. This could be the consequence of changes in business mix, claim inflation trends or claim reporting practices and/or the presence of large claims, among other things. Furthermore,

---

•

Bornhuetter-Ferguson Method ("BF Method"): This method can be seen as a combination of the ELR and Loss Development Methods, under which the Loss Development Method is given progressively more weight as an accident year or underwriting year matures. The main advantage of the BF Method is that it provides a more stable estimate of ultimate losses than the Loss Development Method at earlier stages of development, while remaining more sensitive to emerging loss development than the ELR Method. In addition, the BF Method allows for the incorporation of external market information through the use of expected loss ratios, whereas the Loss Development Method does not incorporate such information.

---

---

•	estimates of the size of insured industry losses from the catastrophic event and the Company's corresponding market share;

•	a review of portfolio of contracts performed to identify those contracts which may be exposed to the catastrophic event;

•	a review of modeled loss estimates based on information previously reported by customers and brokers, including exposure data obtained during the underwriting process;

•	discussions of the impact of the event with customers and brokers; and

•	catastrophe bulletins published by various independent statistical reporting agencies.

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

(1)	Non-U.S. dollar denominated loss data is converted to U.S dollar at the rates of exchange in effect at the balance sheet date for material underlying currencies. Fluctuations in currency exchange rates cause material shifts in loss development. Reserves for losses and loss expenses, disclosed in the consolidated balance sheets, are also revalued using the exchange rate at the balance sheet date.

---

11.	DEBT AND FINANCING ARRANGEMENTS

a)	Senior Notes and Notes Payable

---

b)	Dekania Notes

---

c)	Credit Facilities

---

---

12.	COMMITMENTS AND CONTINGENCIES

a)	Concentrations of Credit Risk

---

b)	Brokers

---

c)	Lease Commitments

d)	Reinsurance Purchase Commitment

e)	Legal Proceedings

f)	Investments

---

g)	Funds at Lloyd's

13.	EARNINGS PER COMMON SHARE

(1)	Due to the net loss incurred in the year ended December 31, 2017, all the share equivalents were anti-dilutive.

---

a)	Common Shares

---

(1)	Amounts in 2016 include common shares acquired under the accelerated share repurchase program of 1,358,380 (see below for more detail).

(2)	Calculated using whole numbers.

(3)	Shares are repurchased from employees to satisfy withholding tax liabilities that arise upon the vesting of restricted stock awards and restricted stock units. Share repurchases from employees are excluded from the authorized share repurchase plan noted above.

b)	Preferred Shares

---

---

15.	RETIREMENT PLANS

16.	SHARE-BASED COMPENSATION

---

---

a)	Share-Settled Awards

---

17.	RELATED PARTY TRANSACTIONS

---

---

---

(1)	At December 31, 2018 and 2017, the total operating loss carryforwards includes Lloyd's deferred year of account losses of $68 million and $19 million, respectively.

---

(1)	All operating and capital loss carryforwards and tax credits can be carried forward indefinitely with the exception of the U.S. net operating loss, which will expire in 2037.

(2)	At December 31, 2018 and 2017, the U.K. operating loss carryforward includes Lloyd's deferred year of account losses of $403 million and $113 million, respectively.

(3)	As a result of U.S. tax reform, all alternative minimum tax credits will be refunded by tax year 2021.

---

---

(1)

Effective January 1, 2018, the Company adopted ASU No. 2016-01. The adoption of this guidance resulted in a cumulative adjustment to reclassify unrealized investment gains on equity securities from accumulated other comprehensive income to retained earnings. Refer to Item 8, Note 2 'Basis of Presentation and Significant Accounting Policies' to the consolidated financial statements for additional information.

---

(1)	Amounts in parentheses are charges to net income (loss) available (attributable) to common shareholders

---

---

---

---

(1)

During the three months ended March 31, June 30, September 30 and December 31, 2018, the Company recognized transaction and reorganization expenses of $13 million, $19 million, $16 million and $19 million, respectively, related to its transformation program which was launched in 2017. This program encompasses the integration of Novae which commenced in the fourth quarter of 2017, the realignment of the accident and health business, together with other initiatives designed to increase the Company's efficiency and enhance the Company's profitability while delivering a customer-centric operating model. During the three months ended September 30 and December 31, 2017, the Company recognized transaction and reorganization expenses of $6 million and $21 million, respectively.

(2)

During the three months ended March 31, June 30, September 30 and December 31, 2018, the Company recognized amortization of VOBA of $57 million, $53 million, $39 million, $23 million, respectively, related to the acquisition of Novae. During the three months ended December 31, 2017, the Company recognized amortization of VOBA of $50 million. Refer to Item 8, Note 3 and Note 5 to the Consolidated Financial Statements 'Business Combinations' and 'Goodwill and Intangible Assets' for further details.

(3)	During the three months ended December 31, 2017, the Company recognized tax expense of $42 million due to the revaluation of net deferred tax asset pursuant to the U.S. Tax Reform. Refer to Item 8, Note 18 to the Consolidated Financial Statements 'Income Taxes' for further details.

---

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A.	CONTROLS AND PROCEDURES

---

---

ITEM 9B.	OTHER INFORMATION

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11.	EXECUTIVE COMPENSATION

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

---

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES

---

ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)	Financial Statements, Financial Statement Schedules and Exhibits

1.	Financial Statements

2.	Financial Statement Schedules

Schedule I	–    Summary of Investments - Other than Investments in Related Parties

Schedule II	–    Condensed Financial Information of Registrant

Schedule III	–    Supplementary Insurance Information

Schedule IV	–    Supplementary Reinsurance Information

3.	Exhibits

---

---

---

---

*	Exhibits 10.2 through 10.40 represent a management contract, compensatory plan or arrangement in which directors and/or executive officers are eligible to participate.

†	Filed herewith.

ITEM 16.	FORM 10-K SUMMARY

---

---

---

(1)	Other investments exclude investments where the Company is considered to have the ability to exercise significant influence over the operating and financial policies of the investees.

(2)	Equity method investments are excluded as the Company has the ability to exercise significant influence over the operating and financial policies of the investees.

---

(1)	AXIS Capital has fully and unconditionally guaranteed all obligations of AXIS Specialty Finance LLC, a 100% owned finance subsidiary, related to the issuance of $500 million aggregate principal amount of 5.875% senior unsecured notes. AXIS Capital’s obligations under this guarantee are unsecured senior obligations and rank equally with all other senior obligations of AXIS Capital.

(2)

AXIS Capital has fully and unconditionally guaranteed all obligations of AXIS Specialty Finance PLC, a 100% owned finance subsidiary, related to the issuance of $250 million aggregate principal amount of 2.65% and $250 million aggregate principal amount of 5.15% senior unsecured notes. AXIS Capital's obligations under this guarantee are unsecured senior obligations and rank equally with all other senior obligations of AXIS Capital.

(3)	AXIS Capital has fully and unconditionally guaranteed all obligations of AXIS Specialty Finance PLC, a 100% owned finance subsidiary, related to the issuance of $350 million aggregate principal amount of 4.0% senior unsecured notes. AXIS Capital's obligations under this guarantee are unsecured senior obligations and rank equally with all other senior obligations of AXIS Capital.

(4)	On February 15, 2018, AXIS Capital contributed $105 million to AXIS Specialty Global Holdings to support the capital requirements of its U.S. subsidiaries.

---

(1)	On April 15, 2017 a promissory note of $368 million advanced by AXIS Capital to AXIS Specialty Limited on November 7, 2016, matured. For the year ended December 31, 2017, interest earned at an annual rate of 1.132% and was recorded in net investment income.

---

---

(1)	We evaluate the underwriting results of each of our reportable segments separately from the performance of our investment portfolio therefore, we believe it is appropriate to exclude net investment income from our underwriting profitability measure.

(2)

Amounts related to our reportable segments reflect underwriting-related general and administrative expenses, which includes those general and administrative expenses that are incremental and/or directly attributable to our individual underwriting operations. Corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company. As these costs are not incremental and/or directly attributable to our individual underwriting operations, these expenses are excluded from underwriting-related general and administrative expenses. The reconciliation of underwriting-related general and administrative expenses to general and administrative expenses, the most comparable GAAP measure, is presented in Item 7 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary – Results of Operations'.

---