The principal offices of Platinum US are located at 195 Broadway, New York, New York, where Platinum US subleases from St. Paul approximately 74,000 square feet of office space. The term of the lease ends August 31, 2003. We are currently considering other possible locations for principal offices of Platinum US. Platinum US has also entered into assignments of leases with St. Paul with respect to approximately 4,000 square feet of office space in Chicago, 6,300 square feet of office space in Miami and 540 square feet of office space in Tokyo. The terms of these leases will end in 2005, 2006 and 2004, respectively.
The principal offices of Platinum UK are located at 52 Lime Street, London, where Platinum UK subleases from St. Paul approximately 7,600 square feet of office space. The term of this sublease ends in 2004.
The following table sets forth certain selected financial data of the Company as of and for the period ended December 31, 2002 and of St. Paul Re for the years ended December 31, 1998, 1999, 2000 and 2001, and for the period ended November 1, 2002. The data for the Company as of and for the period ended December 31, 2002 were derived from the Company's consolidated financial statements beginning on page 47 of this Form 10-K, which have been audited by KPMG LLP. The data for St. Paul Re for the years ended December 31, 2000 and 2001 and for the period ended November 1, 2002 were derived from the selected historical combined financial statements of the reinsurance underwriting segment of St. Paul prior to the Public Offering (the Predecessor Business) beginning on page P-1 of this Form 10-K, which have been audited by KPMG LLP. The data for the years ended December 31, 1998 and 1999 were derived from the unaudited selected historical combined financial statements of the reinsurance underwriting segment of St. Paul not included in this Form 10-K. You should read the selected financial data in conjunction with such financial statements beginning on page P-1 of this Form 10-K, and the related "Management's Discussion and Analysis of Financial Condition and Underwriting Results of the Predecessor Business" beginning on page P-18 of this Form 10-K. You should also read the selected financial data in conjunction with the Company's consolidated financial statements as of and for the period ended December 31, 2002 beginning on page 47 of this Form 10-K, and the related "Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 38 of this Form 10-K.
The following discussion and analysis should be read in conjunction with the Company's consolidated financial statements and the related notes included on pages 47 through 65 of this Form 10-K. The Company's consolidated financial statements have been prepared in accordance with U.S. GAAP. See page PF-4 for "Management's Discussion and Analysis of Pro Forma Financial Condition and Underwriting Results" and page P-18 for "Management's Discussion and Analysis of Financial Condition and Underwriting Results of the Predecessor Business."
Platinum Holdings is a Bermuda reinsurance holding company organized on April 19, 2002. The Company provides property and marine, casualty and finite reinsurance coverages to a diverse clientele of insurers and select reinsurers on a worldwide basis. The Company operates through three licensed reinsurance subsidiaries: Platinum US, Platinum UK and Platinum Bermuda.
The Company has organized its worldwide reinsurance business around three operating segments:
The Global Property and Marine operating segment includes principally property and marine reinsurance coverages that are written both in the United States and international markets. This business consists of catastrophe excess-of-loss reinsurance treaties. This operating segment also includes property per risk excess-of-loss treaties and property proportional treaties. Marine reinsurance includes coverage for hull, cargo and off-shore energy, as well as third party marine coverages for "protection and indemnity" and excess liabilities, primarily under excess-of-loss treaties. The Company writes a limited amount of other types of reinsurance on an opportunistic basis. This operating segment generated $89,341,000, or 30.0 percent, of Platinum's 2002 net premiums written.
The Global Casualty operating segment includes principally reinsurance treaties that cover umbrella liability, general liability, professional liability, workers' compensation and automobile liability. This segment also includes accident and health reinsurance treaties, which are predominantly reinsurance of health insurance products. We generally write casualty reinsurance on an excess-of-loss basis, in that we pay claims after the claim becomes larger than our attachment point (whether there be a ceding company retention or an underlying insurance policy). Most frequently, we respond to claims on an individual risk basis, which is when the claim for a single, original insured exceeds our attachment point. We write some excess-of-loss treaties on an occurrence basis, which respond when all claims from multiple original insureds from a single event for a particular ceding company exceed our attachment point. This is the case with our casualty clash and workers' compensation products. On an opportunistic basis, we may write proportional treaties. This operating segment generated $164,929,000 or 55.3 percent, of Platinum's 2002 net premiums written.
The Finite Risk operating segment includes principally finite reinsurance solutions to ceding companies whose needs may not be met efficiently through traditional reinsurance products. We focus on providing such clients with customized solutions for their risk management and other financial management needs. We seek to develop client-specific solutions after spending time with the client to understand its business needs. The classes of risks underwritten through finite products are generally consistent with the classes covered using traditional products. This operating segment generated $43,844,000 or 14.7 percent, of Platinum's 2002 net premiums written.
Assumed reinsurance premiums are recognized as revenues proportionately over the coverage period. Net premiums earned are recorded in the statement of income, net of our cost to purchase reinsurance. Premium not yet recognized as revenue are recorded in the balance sheet as unearned premiums, gross of any ceded unearned premiums. Written and earned premiums, and the related costs, which have not yet been reported are estimated and accrued. Due to the time lag inherent in reporting of premiums by ceding companies, such estimated premiums written and earned, as well as related costs, may be significant. Differences between such estimates and actual amounts are recorded in the period in which the actual amounts are determined. Due to the nature of reinsurance, premiums are not always reported to the Company in a timely manner; therefore, we account for such premiums using the initial estimates and then adjust as additional information becomes available.
We also accrue for reinstatement and additional premiums resulting from losses. Such accruals are based upon actual contractual terms, and the only element of management judgment involved is with respect to the amount of loss reserves, as described below. Reinstatement and additional premiums are written at the time a loss event occurs where coverage limits for the remaining life of the contract are reinstated under pre-defined contract terms. Reinstatement premiums are the premiums charged for the restoration of the reinsurance limit of a catastrophe contract to its full amount after payment by the reinsurer of losses as a result of an occurrence. These premiums, though triggered by past events, relate to the future coverage for the remainder of the initial contract term, and are earned over the remaining contract term. Additional premiums are premiums that may be charged to a ceding company after coverage has expired, and result from various items such as loss experience during the contract term. Because additional premiums relate to expired coverage periods, they are recognized as earned immediately.
A liability is established for unearned premiums representing the portion of premiums written that relate to the unexpired terms of contracts and policies in force. Such liabilities are computed by pro-rata methods based on the type of coverage provided and the underlying subject insurance exposures.
Unpaid losses and LAE are estimated based upon historical company and industry experience for unreported claims and historical company experience of losses reported by reinsured companies for insurance assumed from such insurers, the total of which is reduced for portions ceded to other reinsurers. Unpaid losses and LAE are subject to the effects of trends in loss severity and frequency. These estimates are reviewed regularly and adjusted as experience develops or new information becomes known. Any such adjustments are reflected in results of operations in the period in which they become known and are accounted for as changes in estimates.
Under U.S. GAAP, we are not permitted to establish a liability for a loss until the occurrence of an event which may give rise to a loss. Once such an event occurs, we establish liabilities based upon estimates of total losses incurred by the ceding insurers as a result of the event and our estimate of the portion of such loss we have reinsured. As a result, only liabilities applicable to losses incurred up to the reporting date may be established.
using the most current information available to us. Unpaid losses and LAE are based upon reports, individual case estimates received from ceding companies and management's estimates. Management's estimates are used mostly to estimate IBNR loss amounts. For certain catastrophic events, there is considerable uncertainty underlying the assumptions and associated estimated unpaid losses and LAE. While the Company commenced operations in 2002, the business written is sufficiently similar to the historical business of St. Paul that the Company plans to use the historical loss experience of the reinsurance business of St. Paul to assist in the estimation of its ultimate losses and LAE.
Consequently, the ultimate liability for a loss is likely to differ from the original estimate. Whenever we determine that any existing estimate of liability for loss is inadequate, we are required to record such change in estimate, increasing the loss reserves with a corresponding reduction, which could be material, in our operating results in the period in which the deficiency is identified. Changes in previously recorded estimates for reported claims could result in significant upward or downward changes to our financial condition or results of operations in any particular period.
Written premiums, earned premiums, incurred losses and LAE reflect the net effects of assumed and ceded reinsurance transactions. Reinsurance accounting is followed for assumed and ceded transactions when risk transfer requirements have been met. These requirements involve significant assumptions being made relating to the amount and timing of expected cash flows, as well as the interpretation of underlying contract terms. Reinsurance contracts that do not transfer significant insurance risk are accounted for as deposits with interest expense credited to the contract deposit. Premiums received on retroactive reinsurance contracts are not reflected in the statement of operations, but rather are recorded in the consolidated balance sheet as an increase to unpaid losses and LAE for the liabilities assumed and as assets based on the consideration received. A deferred charge or credit is recorded for any difference between liabilities assumed and consideration received.
In accordance with our investment guidelines, our investments consist largely of high-grade marketable fixed income securities. Investments are carried at estimated fair value as determined by quoted market prices at the reporting date for those or similar investments. Unrealized gains and losses on our investments, net of any deferred tax effect, are included as an element of accumulated other comprehensive income, which is classified as a separate component of shareholders' equity. Realized gains and losses on sales of investments are determined on a specific identification basis. In addition, unrealized depreciation in the value of individual securities considered by management to be other than temporary is charged to income in the period it is determined. Investment income is recorded when earned and includes the amortization of premiums and discounts on investments.
Platinum Holdings and Platinum Bermuda are domiciled in Bermuda. The Company also has subsidiaries in the United States, United Kingdom and Ireland that are subject to the tax laws thereof. The Company applies the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established for deferred tax assets where it is more likely than not that future tax benefits will not be realized.
Net premiums earned for the period from November 1, 2002 through December 31, 2002 were $107,098,000 of which $106,195,000 is related to reinsurance contracts becoming effective in 2002 and assumed from St. Paul. Net premiums earned for Global Property, Global Casualty and Finite Risk were $43,047,000, $39,320,000, and $24,731,000, respectively.
Net investment income was $5,211,000 for the period from November 1, 2002 through December 31, 2002 resulting in a yield of 3.8 percent. The yield reflects the fact that the investment of short-term investments and cash into fixed maturities was delayed during the period from November 1, 2002 through December 31, 2002 pending receipt of certain required regulatory approvals from the United Kingdom and the State of Maryland. Other income includes $2,017,000 of foreign exchange gains resulting from the conversion of the investments of Platinum UK into U.S. dollar denominated investments.
Losses and LAE were $60,356,000 for the period from November 1, 2002 through December 31, 2002. The loss and LAE ratio, also referred to as loss ratio (which is the ratio of losses and LAE, including estimates for claims incurred but not reported, to premiums earned) was 56.4 percent for the two months ended December 31, 2002 and is reflective of the low level of reported losses during the period.
Policy acquisition costs were $25,474,000 for the period from November 1, 2002 through December 31, 2002 representing 23.8 percent of net premiums earned. Operating expenses, including corporate expenses associated with Platinum Holdings, were $16,334,000 and include one-time expenses of $5,353,000 incurred in connection with the Public Offering, the formation of the Company and the assumption of business from St. Paul.
The following table summarizes underwriting activity and ratios for the three operating segments for the period ended December 31, 2002 ($ in thousands):
This operating segment generated $89,341,000 of net premiums written and $43,047,000 of net earned premium. Losses and LAE incurred for the property reinsurance business was $21,558,000 resulting in a loss ratio of 50.1 percent. The loss ratio reflects the fact that there were no catastrophe or other significant losses in the period. Acquisition costs were $7,798,000 and represent 18.1 percent of net premiums earned. Operating expenses were $5,960,000 and include one-time expenses of $1,267,000 incurred in connection with completion of the Public Offering, formation of the Company and the assumption of business from St. Paul.
This operating segment generated $164,929,000 of net premiums written and $39,320,000 of net earned premiums. Losses and LAE incurred for the casualty reinsurance business was $29,498,000 resulting in a loss ratio of 75.0 percent. Acquisition expenses were $9,269,000 and represent 23.6 percent of net earned premiums. This ratio reflects our increased writings of proportional business which generally has a higher commission rate than excess-of-loss business. Operating expenses were $4,136,000 and include $879,000 of one-time expenses related to the transactions discussed above.
Platinum Holdings has entered into a 364-day committed credit facility with a group of banks which provides $100,000,000 of aggregate borrowing capacity. The credit facility contains various covenants and agreements, including the requirement to maintain a specified tangible net worth and leverage ratios, and terminates on June 20, 2003 unless extended with the consent of the banks. As of December 31, 2002, there were no amounts outstanding pursuant to the credit facility.
Platinum UK and Platinum Bermuda are not licensed, approved or accredited as reinsurers anywhere in the United States and therefore, under the terms of most of their contracts in the United States, they have to provide security to reinsureds to cover unpaid liabilities in a form acceptable to state insurance commissioners. Typically, this type of security takes the form of a letter of credit issued by an acceptable bank, the establishment of a trust, or a cash advance. Platinum UK and Platinum Bermuda expect to obtain letters of credit through commercial banks. In turn, Platinum UK and Platinum Bermuda may be required to provide the banks security by giving the banks liens over certain of Platinum UK's and Platinum Bermuda's investments.
Platinum Holdings operates a treasury function responsible for managing banking relationships, capital raising activities including equity and debt issues, Platinum Holdings's overall cash, cash pooling and liquidity positions and the payment of internal and external dividends.
The consolidated financial statements of the Company as of December 31, 2002 and for the period then ended, together with the report thereon by KPMG LLP, independent certified public accountants, are set forth below in this Item 8. The combined statements of the reinsurance underwriting segment of St. Paul prior to the Public Offering (the Predecessor Business), together with the report thereon by KPMG LLP, independent certified public accountants, are set forth on pages P-1 through P-17 hereto. The unaudited pro forma combined statements of underwriting results of the Company for the years ended December 31, 2002 and 2001 are set forth on pages PF-1 through PF-4 hereto.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE PERIOD FROM APRIL 19, 2002 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2002
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE PERIOD FROM APRIL 19, 2002 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2002
The consolidated balance sheet has been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). This balance sheet reflects the consolidated position of Platinum Holdings and its subsidiaries (the "Company"), including Platinum Re (UK) Limited, Platinum Underwriters Bermuda, Ltd., Platinum Underwriters Finance, Inc. ("Platinum Finance"), Platinum Regency Holdings and, Platinum Underwriters Reinsurance, Inc. ("Platinum US"). All material intercompany transactions have been eliminated in preparing these consolidated financial statements.
Fixed maturities held by the Company are classified as available-for-sale and are reported at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income as a separate component of shareholders' equity. Premiums and discounts on fixed maturity securities are amortized into interest income over the life of the security under the effective yield method. The fair values of fixed maturities are based on quoted market prices at the reporting date for those or similar investments.
Realized gains and losses on sales of investments are determined on the basis of the specific identification method. When a decline in fair value of investments is considered to be "other than temporary," the investments are written down to fair value. The write down is considered a realized investment loss in the consolidated statement of income.
Unrealized investment gains and losses, net of any deferred tax effect, are included as an element of accumulated other comprehensive income, which is classified as a separate component of shareholders' equity.
Assumed reinsurance premiums are recognized as revenues proportionately over the coverage period. Net premiums earned are recorded in the statement of underwriting results, net of our cost to purchase reinsurance. Net premiums not yet recognized as revenue are recorded in the balance sheet as unearned premiums, gross of any ceded unearned premiums. Written and earned premiums, and the related costs, which have not yet been reported are estimated and accrued. Due to the time lag inherent in reporting of premiums by ceding companies, such estimated premiums written and earned, as well as related costs, may be significant. Differences between such estimates and actual amounts are recorded in the period in which the actual amounts are determined. Due to the nature of reinsurance, premiums are not always reported to the Company in a timely manner; therefore we account for such premium using the initial estimates, and then adjust as additional information becomes available.
The Company estimates EBNR based on estimates of ultimate premium, calculated unearned premium and premiums reported from ceding companies. Along with estimating EBNR the Company records the expenses associated with these premiums in the form of losses, loss adjustment expenses ("LAE") and commissions.
Reinstatement premiums and additional premiums are accrued as provided for in the provisions of assumed reinsurance contracts, based on experience under such contracts. Reinstatement premiums are the premiums charged for the restoration of the reinsurance limit of a catastrophe contract to its full amount after payment by the reinsurer of losses as a result of an occurrence. These premiums relate to the future coverage obtained during the remainder of the initial policy term and are earned over the remaining policy term. Additional premiums are premiums charged after coverage has expired, related to experience during the policy term, which are earned immediately. An allowance for uncollectible premiums are established for possible non-payment of such amounts due, as deemed necessary.
Unpaid losses and LAE are estimated based upon reports received from ceding companies, supplemented by the Company's estimates of losses for which ceding company reports have not been received, historical company and industry experience for unreported claims and historical company experience of losses reported by reinsured companies. Unpaid losses and LAE include estimates of the cost of claims that were reported, but not yet paid, and the cost of claims incurred but not yet reported ("IBNR"). Estimated amounts recoverable from reinsurers on unpaid losses and LAE are reflected as assets. While the Company commenced operations in 2002, the business written is sufficiently similar to the historical business of St. Paul that the Company plans to use the historical loss experience of the reinsurance business of St. Paul to estimate its ultimate losses and LAE.
Reinsurance contracts entered into by the Company which are not deemed to transfer significant insurance risk are accounted for as deposits, whereby liabilities are initially recorded at the same amount as assets received. Interest expense related to the deposit is recognized as incurred.
Reinsurance ceded, which transfers risk and the related premiums, commissions and losses incurred to the reinsurer, is reflected as reductions of the respective income and expense accounts. Unearned premiums ceded and estimates of amounts recoverable from reinsurers on paid and unpaid losses are reflected as assets.
Platinum Holdings and Platinum Bermuda are domiciled in Bermuda. Platinum Holdings also has subsidiaries in the United States, United Kingdom and Ireland that are subject to the tax laws thereof. The Company applies the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
Costs incurred by the Company relating to its organization are expensed as incurred.
The Company's financial statements include estimates and assumptions that have an effect on the amounts reported. The most significant estimates are those relating to unpaid losses and LAE. These estimates are continually reviewed and adjustments made as necessary, but actual results could be
significantly different than expected at the time such estimates are made. Results of changes in estimates are reflected in results of operations in the period in which the change is made.
As discussed more fully in Note 8, on November 1, 2002, Platinum Holdings completed an initial public offering of 33,044,000 Common Shares (the "Public Offering") as well as an offering of equity security units. Concurrently with the Public Offering, Platinum Holdings sold 6,000,000 Common Shares to St. Paul in a private placement. Concurrent with these transactions, the Company and St. Paul entered into several agreements for transfer of continuing reinsurance business and certain related assets of St. Paul.
In the case of business written in the United States and the United Kingdom, for a period of one year the Company has the right to underwrite specified reinsurance business on behalf of St. Paul in cases where the Company is unable to underwrite that business because it has not obtained a necessary regulatory license or approval to do so or we have not yet been approved as a reinsurer by the ceding company. The Company will assume such business under various quota share retrocession agreements.
agreement also provides for reimbursement of severance and retention payments to the Company's employees. The Company has amounts receivable from St. Paul of $6,270,000 under this agreement for bonus and retention amounts paid or accrued as of December 31, 2002.
As of December 31, 2002 amounts due from St. Paul were as follows ($ in thousands):
The Company's fixed maturities at December 31, 2002 were as follows ($ in thousands):
Amortized cost and fair value of fixed maturities by contractual maturity at December 31, 2002 are shown below; actual maturities could differ from contractual maturities due to call or prepayment provisions ($ in thousands):
The fair values of financial instruments are based on quoted market prices at the reporting date for those or similar instruments.
Because many of the reinsurance coverages offered by the Company will likely involve claims that may not ultimately be settled for many years after they are incurred, subjective judgments as to ultimate exposure to losses are an integral and necessary component of the process of estimating unpaid losses and LAE. The inherent uncertainties of estimating unpaid losses and LAE are further exacerbated for
The credit agreement contains covenants common to transactions of this type, including maintaining a required level of tangible net worth and minimum a financial leverage ratio. At December 31, 2002, the Company was in compliance with all covenants.
Deferred income tax liabilities and assets attributable to temporary differences as of December 31, 2002 are as follows ($ in thousands):
On November 1, 2002, Platinum Holdings completed the Public Offering of 33,044,000 Common Shares at a price to the public of $22.50 per share. Concurrently with the completion of the Public Offering, Platinum Holdings sold 6,000,000 Common Shares (or 14 percent of the outstanding Common Shares) to St. Paul at a price of $22.50 per share less the underwriting discount (the "St. Paul Investment") in a private placement pursuant to a Formation and Separation Agreement dated as of October 28, 2002 between Platinum Holdings and St. Paul (the "Formation Agreement"). The Bye-laws of Platinum Holdings provide that the voting power of St. Paul's Common Shares is limited to 9.9 percent of the voting power of the outstanding Common Shares. Pursuant to the Formation Agreement, St. Paul received an option to purchase up to 6,000,000 additional Common Shares at any time during the ten years following the Public Offering at a price of $27.00 per share (the "St. Paul Option"). In return for the Common Shares and the St. Paul Option, St. Paul contributed to the Company cash in the amount of $122 million and substantially all of the continuing reinsurance business and related assets of the reinsurance segment of St. Paul, including all of the outstanding capital stock of Platinum US. Among the fixed assets transferred were furniture, equipment, systems and software, and intangible assets including broker lists, contract renewal rights and licenses. These assets were recorded at the values reflected on St. Paul's books at the time of transfer.
Concurrently with the completion of the Public Offering, Platinum Holdings also sold 3,960,000 Common Shares (or nine percent of the outstanding Common Shares) to RenaissanceRe Holdings Ltd. ("RenaissanceRe") at a price of $22.50 per share less the underwriting discount in a private placement pursuant to an Investment Agreement dated as of September 20, 2002 by and among Platinum Holdings, St. Paul and RenaissanceRe (the "Investment Agreement"). Pursuant to the Investment Agreement,
Following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the period ended December 31, 2002 ($ in thousands, except share and per share data):
The Company has a share incentive plan under which key employees of the Company and its subsidiaries may be granted options and restricted share awards. An option award under the Company's share incentive plan allows for the purchase of Common Shares at a price equal to the closing price of Common Shares on the date of grant. Options to purchase Common Shares are granted periodically by the Compensation Committee of the Board of Directors, generally vest over three or four years, and expire 10 years from the date of grant. There were no restricted share awards in 2002. The following summary sets forth option activity during the period ended December 31, 2002:
Of the 4,347,000 outstanding options at December 31, 2002, none were exercisable. The average remaining life of the options is 9.8 years.
Platinum Holdings also entered into a five-year Services and Capacity Reservation Agreement with RenaissanceRe, effective October 1, 2002, pursuant to which RenaissanceRe will provide services to subsidiaries of the Company in connection with their property catastrophe book of business. At the Company's request, RenaissanceRe will analyze the Company's property catastrophe treaties and contracts and will assist the Company in measuring risk and managing the Company's property catastrophe treaties and contacts. Based upon such analysis, will provide the Company with quotations for rates for non-marine non-finite property catastrophe retrocessional coverage with aggregate limits up to $100 million annually, either on an excess-of-loss or proportional basis. The Company and RenaissanceRe may then enter into retrocessional agreements on the basis of the quotations. The fee for the coverage commitment and the services provided by RenaissanceRe under this agreement is $4 million at inception and at each
The Company has organized its worldwide reinsurance business around three operating segments: Global Property and Marine, Global Casualty and Finite Risk. The Global Property and Marine operating segment includes principally property and marine reinsurance coverages that are written both in the United States and international markets. This business consists of catastrophe excess-of-loss reinsurance treaties. The Global Casualty operating segment includes principally reinsurance treaties that cover umbrella liability, general liability, professional liability, workers' compensation and automobile liability. This segment also includes accident and health reinsurance treaties, which are predominantly reinsurance of health insurance products. The Finite Risk operating segment includes principally finite reinsurance solutions to ceding companies whose needs may not be met efficiently through traditional reinsurance products.