As filed with the Securities and Exchange Commission on July 22, 2016

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

IRONSHORE INC.

(Exact name of registrant as specified in its charter)

Cayman Islands

6331

98-0579286

(State or other jurisdiction of

incorporation)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

141 Front Street

Hamilton, HM19

Bermuda

(441) 279-8200

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Joseph W. Roberts

Chief Financial Officer

141 Front Street

Hamilton, HM19

Bermuda

(441) 279-8200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

James J. Clark, Esq.

Susanna M. Suh, Esq.

Kimberly C. Petillo-Décossard, Esq.

Cahill Gordon & Reindel LLP

80 Pine Street

New York, New York 10005-1702

Telephone: (212) 701-3000

Paul S. Giordano, Esq.

Executive Vice President and

General Counsel

1 State Street, 7^th Floor

New York, New York 10004

Telephone: (646) 826-6600

James A. FitzPatrick, Jr., Esq.

Daniel Keating, Esq.

Hogan Lovells US LLP

875 Third Avenue

New York, New York 10022

Telephone: (212) 918-3000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the “Securities Act”), check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) (check one):

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer x

(Do not check if a smaller

reporting company)

Smaller reporting company ¨

CALCULATION OF REGISTRATION FEE



Title of each class of securities to be registered	Proposed maximum aggregate offering price (1)(2)	Amount of registration fee (3)
Ordinary Shares, par value $0.01 per share	$100,000,000	$10,070

(1)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act.

(2)	Includes any additional shares that the underwriters have the option to purchase.

(3)

A registration fee of $12,880 was previously paid with the filing of the registration statement filed on June 17, 2014 (Form S-1 No. 333-196837). Pursuant to Rule 457(p) under the Securities Act, $10,070 of the previously paid registration fee is offset against the registration fee otherwise due for this registration statement.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED ●, 2016

PRELIMINARY PROSPECTUS

LOGO

● Ordinary Shares

IRONSHORE INC.

This is the initial public offering of our ordinary shares. Prior to this offering, there has been no public market for our ordinary shares. We currently expect the initial public offering price to be between $● and $● per ordinary share. The selling shareholders identified in this prospectus are offering all of the ordinary shares offered in this offering. The selling shareholders will receive all of the proceeds from this offering, and we will not receive any of the proceeds from this offering.

The underwriters have the option to purchase up to ● additional ordinary shares from the selling shareholders at the initial public offering price, less the underwriting discount. The underwriters can exercise this option within 30 days from the date of this prospectus.

We will apply to have our ordinary shares listed on ● under the symbol “●.” The listing will be subject to the approval of our application.

Investing in our ordinary shares involves risks. See “Risk Factors” beginning on page 11.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


	Per Ordinary Share	Total
Initial public offering price	$	$
Underwriting discount	$	$
Proceeds to selling shareholders (before expenses of the selling shareholders)	$	$

The underwriters expect to deliver the shares to purchasers on or about ● , 2016 through the book-entry facilities of The Depository Trust Company.

Joint Book-Running Managers


BofA Merrill Lynch		Citigroup		J.P. Morgan		UBS Investment Bank

●, 2016

You should rely only on the information contained in this prospectus. Neither we nor the selling shareholders have authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We, the selling shareholders and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. The selling shareholders and the underwriters are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.

TABLE OF CONTENTS


	Page
CERTAIN DEFINED TERMS		ii
REGISTERED TRADEMARKS AND TRADEMARK APPLICATIONS		ii
MARKET AND INDUSTRY DATA		iii
NON-GAAP FINANCIAL MEASURES		iii
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		iii
PROSPECTUS SUMMARY		1
RISK FACTORS		11
USE OF PROCEEDS		41
DILUTION		41
DIVIDEND POLICY		41
CAPITALIZATION		42
SELECTED HISTORICAL FINANCIAL INFORMATION		43
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		45
INSURANCE INDUSTRY OVERVIEW		97
BUSINESS		103
MANAGEMENT		130
EXECUTIVE COMPENSATION		138
PRINCIPAL AND SELLING SHAREHOLDERS		156
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		157
DESCRIPTION OF SHARE CAPITAL		159
SHARES ELIGIBLE FOR FUTURE SALE		169
CERTAIN INCOME TAX CONSIDERATIONS		171
UNDERWRITING		181
LEGAL MATTERS		189
EXPERTS		189
WHERE YOU CAN FIND ADDITIONAL INFORMATION		190
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS		F-1
GLOSSARY		G-1

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CERTAIN DEFINED TERMS

Unless the context suggests otherwise, references in this prospectus to “Ironshore,” “the Company,” “we,” “us” and “our” refer to Ironshore Inc. and its subsidiaries. Other entities are referred to as follows:

“ERR” means Excess Risk Reinsurance Inc., a Mississippi corporation and a wholly owned subsidiary of the Company.

“Fosun” means Fosun International Limited, a Hong Kong company.

“ICCL” means Ironshore Corporate Capital Ltd., a UK company and a wholly owned subsidiary of the Company.

“IEL” means Ironshore Europe Limited, an Irish company and a wholly owned subsidiary of the Company.

“Ironshore Indemnity” means Ironshore Indemnity Inc., a Minnesota corporation and a wholly owned subsidiary of the Company.

“Ironshore Insurance” means Ironshore Insurance Ltd., a Bermuda company and a wholly owned subsidiary of the Company.

“Ironshore Specialty” means Ironshore Specialty Insurance Company, an Arizona corporation and a wholly owned subsidiary of the Company.

“Ironshore U.S.” means Ironshore Holdings (U.S.) Inc., a Delaware corporation and a wholly owned subsidiary of the Company.

“Iron-Starr Agency” means Iron-Starr Excess Agency Ltd., a Bermuda company and a wholly owned subsidiary of the Company.

“Lexon” means, collectively, Lexon Surety Group, LLC, a Florida limited liability company; Surety Agency Holding Company, LLC, a Florida limited liability company; and Surety Management Company, LLC, a Kentucky limited liability company.

“PMA” means Pembroke Managing Agency Limited, a UK company and a wholly owned subsidiary of the Company.

“SIRL” means Starr Insurance & Reinsurance Limited, a Delaware limited liability company.

Certain abbreviations and definitions of certain insurance, reinsurance, financial and other terms used in this prospectus are defined in the “Glossary” section of this prospectus.

REGISTERED TRADEMARKS AND TRADEMARK APPLICATIONS

“Crisis ThreeSixty,” “IronHealth,” “IronPro,” “IronServe,” “Ironshore,” “Ironshore Environmental,” “Ironshore Europe,” “Ironshore Insurance,” “Ironshore International,” “Ironshore Specialty” and our respective designs, logos and phrases, among others, are our trademarks and the subject of either a trademark registration or an application for registration in the United States, the European Union and/or certain other jurisdictions. Other brands, names and trademarks contained in this prospectus are the property of their respective owners. Solely for convenience, the trademarks, service marks and trade names are referred to in this prospectus without the ^SM and ^® symbols, but such references are not intended to indicate, in any way, that the owner thereof will not assert, to the fullest extent under applicable law, such owner’s rights to these trademarks, service marks and trade names.

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MARKET AND INDUSTRY DATA

We use market and industry data, forecasts and projections throughout this prospectus. We have obtained certain market and industry data from publicly available industry publications. These sources generally state that the information they provide has been obtained from sources believed by us to be reliable, but that the accuracy and completeness of the information are not guaranteed. The forecasts and projections are based on historical market data, and there is no assurance that any of the forecasts or projected amounts will be achieved.

NON-GAAP FINANCIAL MEASURES

In this prospectus, we have presented net operating income, net operating income per diluted share and operating return on average shareholders’ equity, which are “non-GAAP financial measures” as defined in Regulation G of the Exchange Act. We define net operating income as net income attributable to Ironshore Inc., excluding after tax net realized and unrealized investment gains or losses, transaction expenses and net foreign exchange gain or loss. We define net operating income per diluted share as net operating income divided by the average of our diluted ordinary shares outstanding during the period. We define operating return on average shareholders’ equity as net operating income divided by average shareholders’ equity (determined using the average shareholders’ equity balances for the quarter or year as the case may be). We use net operating income as an internal performance measure in the management of our operations because it excludes factors that are heavily influenced by and fluctuate in part according to the availability of market opportunities and other factors. We believe that these non-GAAP financial measures, which may be defined differently by other companies, enable investors, analysts, rating agencies and other users of our financial information to more easily analyze our results of operations and our underlying business performance and allow for a more complete understanding of the performance of our business. These measures, however, should not be viewed as a substitute for those determined in accordance with GAAP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for a reconciliation of net operating income, net operating income per diluted share and operating return on average shareholders’ equity to the closest financial measures under GAAP.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this prospectus are, or are derived from, forward-looking statements. These statements reflect only current, good faith views or assessments with respect to possible future events and financial performance and involve Ironshore’s current assessment and judgment of risks and uncertainties. Forward-looking statements can generally be identified by the use of forward-looking terminology such as “target,” “may,” “strategy,” “will,” “could,” “future,” “expects,” “intends,” “estimates,” “anticipates,” “plans,” “believes” or “continues” or their negative, or variations or similar terminology.

Forward-looking statements are subject to numerous assumptions, risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated, projected, forecast, estimated or budgeted in such forward-looking statements include, among others, the following factors:

•

the possibility of actual claims exceeding our loss reserves;

•

a downgrade in our financial strength ratings;

•

potential loss of key members of our management team and our ability to attract and retain personnel;

•

potential losses from, and volatility caused by, claims for catastrophic events;

•

the possibility that we may become subject to additional onerous governmental or regulatory requirements or fail to comply with applicable regulatory requirements;

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•

the impact of potential government intervention in our industry or adverse changes to existing regulatory requirements;

•

general economic, financial or insurance industry conditions;

•

adverse investment performance;

•

our reliance on brokers and other intermediaries for our business and the impact of our potential failure to maintain relationships with such brokers and other intermediaries or their failure to transmit payments between us and our insureds;

•

our ability to obtain reinsurance coverage at reasonable prices or on terms that adequately protect us;

•

our ability to raise additional capital in the future on favorable terms or at all;

•

the actual and perceived impact of Fosun’s ownership of us, including on our capital structure and our financial strength and credit ratings;

•

the impact of continued or increased premium levies by Lloyd’s of London (“Lloyd’s”) for the Lloyd’s Central Fund, a significant downgrade of a Lloyd’s rating or a withdrawal of Lloyd’s licenses;

•

the possibility that our managing general agents, general agents or other producers of our business may exceed their underwriting authorities or otherwise breach obligations owed to us;

•

our ability to obtain adequate managerial and operational resources to successfully expand our operations;

•

the potential impact of internal or external fraud, excessive risk taking, operational errors, systems malfunctions, or cybersecurity incidents;

•

heightened competition in our industry;

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deviations from expected renewal rates of our existing policies and contracts;

•

the impact of significant fluctuations in the property and casualty insurance industry;

•

the impact of quarterly fluctuations in our operating results;

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the failure of any of the loss limitation methods we employ;

•

the impact of unanticipated losses from geopolitical risks, including acts of terrorism;

•

potential effects on our business of emerging claim and coverage issues;

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the impact of inflation;

•

exposure to the credit risk of reinsurance counterparties;

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the potential violation of the applicable laws and regulations to which we are subject relating to sanctions, anti-money laundering and anti-bribery practices;

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•

the impact of changes in accounting practices and future pronouncements on our reported financial results;

•

the impact of various risks associated with transacting business in foreign countries, including foreign currency exchange rate risk, on our investment in, and revenues from, our operations outside the U.S.;

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our dependence on third party providers for certain administrative and operational services;

•

unforeseen liabilities or asset impairments arising from possible acquisitions and dispositions of businesses or difficulties integrating acquired businesses;

•

tax law changes in the U.S. and other countries; and

•

other risks and uncertainties discussed in the “Risk Factors” section and elsewhere in this prospectus.

Because forward-looking information is subject to various risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking information. Therefore, we caution you not to place undue reliance on such information, which speaks only as of the date of this prospectus.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements included elsewhere in this prospectus, including “Risk Factors” beginning on page 11. All forward-looking information is expressly qualified in its entirety by these cautionary statements. The information contained in this prospectus is accurate only as of the date of this prospectus regardless of the time of delivery. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our ordinary shares. You should read this entire prospectus carefully. In particular, you should read the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes contained elsewhere in this prospectus before making an investment decision. Some of the statements in this summary constitute forward-looking statements. See “Special Note Regarding Forward-Looking Statements.” For the definitions of certain terms used in this prospectus, see “Certain Defined Terms” and “Glossary.” All dollar amounts referred to in this prospectus are in U.S. dollars unless otherwise indicated. All per share amounts referred to in this prospectus are derived from amounts attributable to Ironshore Inc. or its common shareholders, such as “net income attributable to Ironshore Inc.” and “total shareholders’ equity attributable to common shareholders.”

Our Company

Overview

Ironshore provides specialty commercial property and casualty insurance coverage for risks on a global basis through a wide network of regional and global brokers. We were founded in December 2006 with over $1 billion in private equity capital to capitalize on opportunities in the specialty property and casualty (“P&C”) insurance industry. Our founders selected Bermuda as the initial base of our insurance operations because of the advantages offered by Bermuda’s flexible and responsive regulatory environment for companies that meet specified solvency and liquidity requirements. We were able to commence operations quickly and expand as business warranted. In 2007 and 2008, we made investments to build our business including the acquisition of two U.S. insurance companies, which provided us with authority to write U.S. business on both an admitted and excess and surplus lines (“E&S”) basis, and PMA, which enabled us to access the Lloyd’s market. The financial crisis of 2008, which had a material negative impact on several leading global insurers, created a unique opportunity for Ironshore to accelerate its hiring and growth strategy. Since then, in addition to disciplined acquisitions, our organic growth strategy has focused on hiring industry leading insurance underwriting talent in several key specialty areas of focus, expanding our geographic footprint by adding additional U.S. regional offices, establishing a presence in Canada, Australia, China, Singapore and Hong Kong and launching a European platform based in Dublin, Ireland. We continue to grow our business by leveraging the Ironshore brand and reputation for specialty underwriting expertise and our diversified distribution network. As a result, our annual gross premiums written have grown from $383.1 million in 2008 to $2.16 billion in 2015, a compound annual growth rate of 28.1%, and, over the same period, we earned $595.1 million and $591.1 million in cumulative net operating income and cumulative net income attributable to Ironshore Inc., respectively. According to data from SNL Financial, in 2015 we were one of the top ten insurers in the U.S. E&S market as measured by E&S direct premiums written.

We offer a variety of specialty commercial insurance products across numerous geographic regions and lines of business. Our business is organized into three segments: the U.S., International and Bermuda. Our U.S. operations generated $1,403 million, or 64.8%, of our gross premiums written in 2015, our International operations generated $597 million, or 27.6%, of our gross premiums written in 2015, and our Bermuda operations generated $164 million, or 7.6% of our gross premiums written in 2015. The following charts show the composition of our business by segment and class for the year ended December 31, 2015.

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Gross Premiums Written in 2015

By Segment		By Type of Risk

The primary lines of business offered by our U.S. operations are professional and management liability, property, healthcare liability, environmental, specialty casualty and construction, aviation and political risk and surety. In 2015, 72% of the gross premiums of our U.S. operations was written on an E&S basis and 28% was written on a non-E&S basis. Our U.S. operations are headquartered in New York City and are supported by offices in 20 additional cities throughout the U.S.

Our International operations provide specialty coverages worldwide, including financial institutions liability, professional indemnity, marine, accident and health, warranty and indemnity, political risk, war and terrorism and property coverages. We have offices in the following locations outside the U.S.: Australia, Canada, Dubai, Germany, Hong Kong, Ireland, Japan, Netherlands, New Zealand, Shanghai, Singapore, Switzerland and the UK. In addition, we serve the Latin American market through our office in Miami.

Our Bermuda operations provide property insurance on a worldwide basis and offer catastrophe excess liability, financial lines and healthcare liability insurance through Iron-Starr Agency.

As of March 31, 2016, we had cash and invested assets of $5.3 billion, total assets of $7.5 billion and total shareholders’ equity attributable to common shareholders of $2.1 billion. For 2015, our operating return on average shareholders’ equity (“operating ROE”) was 8.0%.

Our insurance company subsidiaries, Ironshore Insurance, Ironshore Indemnity, Ironshore Specialty and IEL, have an A.M. Best financial strength rating of “A” (Excellent). The Lloyd’s insurance market has financial strength ratings of “A” (Excellent) from A.M. Best, “AA-” (Very Strong) from Fitch, and “A+” (Strong) from Standard & Poor’s, and our Syndicate 4000 at Lloyd’s benefits from these ratings.

Our Market

As a specialty P&C insurer, we write U.S. business on both an admitted and an E&S basis. The P&C insurance industry is divided between standard lines (also referred to as the admitted market) and non-standard lines (also referred to as the non-admitted market or E&S market). The E&S market functions as a supplemental market for insurance of a type, or in an amount, that is not available in the standard lines market. The E&S market represented approximately 7.1% of 2014 direct premiums written in the U.S. P&C insurance market.

Unlike standard lines insurers, E&S insurers are not subject to the rate and form regulations of the state insurance regulators. Therefore, E&S insurers have more flexibility to use policy forms and rates that they believe are appropriate for the risks they underwrite and accept. This allows the unique qualities of the underlying risk to be fully evaluated and underwritten and provides the E&S insurer with greater flexibility to

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customize pricing and terms and conditions to meet the needs of the insured. Competition in the E&S market tends to focus less on price than in the standard lines insurance market and more on other value-based considerations such as availability, terms of coverage, customer service and underwriting expertise.

Competitive Strengths

We believe our competitive strengths, described below, position us to capitalize on the opportunities presented in the specialty property and casualty insurance marketplace.

Proven Management Team

Our senior management team has substantial industry expertise, a demonstrated track record of success and an average of over 25 years of experience in the insurance industry. Our senior management team is led by Kevin H. Kelley, our Chief Executive Officer. Prior to joining Ironshore in 2008, Mr. Kelley served as Chairman of the Board and Chief Executive Officer of Lexington Insurance Company, a principal subsidiary of American International Group, Inc.

Underwriting Driven Culture with Strong Risk Management

We continuously monitor, review and refine our management practices in order to ensure we maintain our focus and commitment to these strategic priorities. We combine underwriting judgment and experience with data-driven analysis, enhancing our overall risk selection process. Our underwriting and claims teams include experienced professionals in our chosen specialty lines with the authority to make decisions and quickly respond to our insureds’ unique and rapidly changing needs. Our senior management team monitors our underwriting performance, and we seek to foster a culture of underwriting accountability by aligning compensation of underwriting teams in large part to the underwriting profitability of the business they write.

Global Specialty Insurer

Ironshore is a specialty commercial lines insurance company with an established and growing franchise in the key global insurance markets: the U.S., Lloyd’s and Bermuda. As a specialty insurer, we do not offer all lines of business and instead focus on fewer lines of business for certain niche markets and/or industries. As a result of our underwriters’ experience, we have accumulated extensive expertise regarding the industry and risk characteristics of the product lines we choose to offer. Advisen Ltd has ranked Ironshore as one of the top 3 “New Product Pacesetters” in the insurance industry for each of the years 2010 through 2015. We believe our knowledge, expertise and innovative ability serves as a competitive advantage and enables us to concentrate on specialty products that have a higher profit margin relative to standard lines of insurance. We offer our specialty products through office locations around the world and have established a physical presence in many markets, including distribution offices in 21 cities in the U.S. We serve over 100,000 insureds globally and write coverage for 68 of the Forbes Global 100 companies and approximately 60% of the Forbes Global 500 companies.

Differentiated Distribution Network

We market our insurance products through a brokerage distribution system consisting of select global, national and regional brokers having expertise in the particular specialty markets we serve. In the U.S., for most of our product lines, we have a dual wholesale/retail distribution strategy with an emphasis on targeting retail business. The focus on retail brokers allows us to take advantage of the lower acquisition cost of retail distribution. In addition, our retail channel provides greater proximity to the insureds, which helps us to deepen our relationships with them, better understand underlying risks, tailor products to insureds’ needs, facilitate renewals and handle claims in a more efficient manner.

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Financial Flexibility

We intend to maintain a balance sheet that provides us with the flexibility to both pursue growth opportunities and maintain our financial strength. As of March 31, 2016, we had $2.4 billion of total capitalization, and our financial leverage, defined as the ratio of our total debt to our total capitalization, was 14.4%. We expect that our asset leverage ratio, defined as the ratio of our invested assets and cash to our total equity capitalization, of 2.57x as of March 31, 2016 will continue to increase and supplement our earnings growth. We recognize the importance of our insurance company subsidiaries’ “A” (Excellent) A.M. Best financial strength rating to our brokers and insureds and intend to manage our business to maintain this rating.

Strategic Opportunities Through Fosun

Our relationship with our parent company, Fosun, provides us with strategic opportunities for international growth, especially in Asia. Fosun has a global network of portfolio, client and vendor companies and deep connections in China that we believe will help us expand into Asia and other markets. As Chinese companies expand internationally, we believe our access to Fosun’s network will provide opportunities for new business and new clients. In addition, we believe we can benefit from Fosun’s expertise in structuring and evaluating emerging market investment portfolios. Fosun also has a global real estate portfolio and industry network that we believe will provide opportunities to grow our property insurance underwriting.

Strategy

Our goal is to maximize underwriting profits through market cycles while preserving and achieving long-term growth in shareholders’ equity. We intend to pursue this goal with the following strategies:

Management of Underwriting Risk

Our underwriting philosophy is to generate an underwriting profit through prudent risk selection and appropriate pricing. We believe that the key to this approach is adherence to strict underwriting standards across all types of business. We seek to manage pricing cycles by reducing our risk during periods of less favorable market conditions and potentially increasing our risk-taking when pricing conditions improve. Our senior management monitors the underwriting process and we target a combined ratio percentage in the high 80% to low 90% range for all lines combined through all insurance market cycles.

Focus on Specialized Coverages

We focus on writing specialized, niche coverages where risks are complex and which we believe provide greater opportunities for underwriting profit. We rely on our experienced underwriting personnel, our diverse geographic operating platforms and the breadth of our lines of business across property and specialty casualty insurance products to maximize underwriting profits in our chosen specialty product areas. We seek to use our management’s expertise, experience and market relationships to identify and underwrite well-priced risks while delivering innovative insurance solutions to our customers. We believe our flexibility and our expertise in certain niche markets will allow us to create a well-balanced portfolio of risks.

Disciplined Approach to Growth

We have grown organically by hiring experienced underwriting teams focused on select niche specialty lines of business. In our major lines of business, our underwriters have significant expertise and experience writing large amounts of business. We expect to continue to grow organically, and in a disciplined manner, overall underwriting submission volumes through expansion of our geographical footprint and product depth in and around our core lines of business. We also continue to add depth to our existing core products. In addition,

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we leverage our underwriting expertise and platforms to generate additional fee income when possible, such as by serving as managing general agent for other insurance companies. We opportunistically evaluate potential new teams and acquisitions, and we will continue to remain disciplined in pursuing those that meet our requirements for return on risk-adjusted capital and cultural fit.

Leverage Industry Practice Groups

We intend to continue to drive growth through the use of industry practice groups. We currently operate seven industry practice groups: healthcare, energy, financial institutions, construction, personal lines, real estate and China client services. Each group is led by a senior executive with extensive underwriting experience who reports directly to Ironshore’s CEO. Focusing on industry practice groups helps us develop deep, sector-specific expertise in underwriting, which allows us to address emerging risks and deliver innovative products. The use of industry practice groups also facilitates our ability to offer a broad range of products to our customers, providing them with optimal coverage solutions.

Foster Strategic Relationships with Leading Reinsurers

We maintain long-standing relationships with well-capitalized reinsurers. We intend to continue to leverage these relationships to support the growth of our business. We have reinsurance treaties that enable us to provide greater underwriting limits to our insureds than we would otherwise generally offer on our own from a risk management perspective. The ability to offer greater gross limits allows us to position Ironshore as a lead market in key lines of business and enhances our ability to set pricing, terms and conditions.

Enhance Operational Efficiencies

Administrative and operational functions are provided to all of our business lines through a centralized platform that we call IronServe. IronServe includes experienced, dedicated Ironshore personnel who manage and oversee third party personnel who provide us with cost-effective global administrative operational support and information technology functions. IronServe enables our business line professionals to focus on client facing activities, while providing a variable cost support function that is scalable depending on overall market conditions and our needs. We target an expense ratio of less than 30%. We believe that, as we grow further, IronServe will continue to provide a competitive cost advantage and increased operational flexibility. We may also have opportunities to offer our IronServe capabilities to third parties for fee income.

Investment Strategy

The primary objectives of our investment portfolio are the preservation of capital, the generation of income and liquidity to support the payment of claims. A secondary objective is to achieve an overall attractive risk-adjusted total portfolio return. Our investments are comprised mostly of investment grade fixed income securities but also include alternative investments such as non-investment grade fixed income securities, equity securities and real estate. See “Business—Investment Portfolio—Investment Strategy.”

Capital Management

We seek to maintain an appropriate level of capital consistent with our financial strength rating, as well as in compliance with regulatory and solvency requirements. We monitor our capital positions on an ongoing basis in order to allocate capital in an efficient manner among our insurance company subsidiaries. Our capital allocation alternatives include growing our current lines of business, investing in new growth opportunities including potential acquisitions and changing our investment allocations or reinsurance purchasing strategy. Subject to market conditions, we will also consider returning capital to shareholders principally through dividends or share repurchase.

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Our Principal Shareholder

Since November 20, 2015, the Company has been indirectly owned by Fosun, a Hong Kong company listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) since July 16, 2007. Fosun was founded in 1992 in Shanghai. Fosun’s businesses include two major segments, integrated finance and industrial operations. The principal offices of Fosun are located at Room 808, ICBC Tower, 3 Garden Road, Central, Hong Kong.

Prior to this offering, the Company had a total of 140,657,340 outstanding shares, all of which were beneficially owned by Fosun. After the completion of this offering, Fosun will beneficially own ● shares of our ordinary shares, or approximately ●% of our outstanding shares, assuming the underwriters’ option to purchase additional shares is not exercised and completion of the assured entitlement distribution to Fosun’s shareholders. Fosun has granted the underwriters a 30-day option to purchase up to an additional ● shares. If the underwriters exercise this option in full, Fosun will beneficially own approximately ●% of our outstanding shares after completion of this offering assuming completion of the assured entitlement distribution to Fosun’s shareholders. See “Principal and Selling Shareholders—Assured Entitlement Distribution.”

Because Fosun will own more than 50% of the voting power of our ordinary shares after this offering, we are considered to be a “controlled company” for purposes of the ● (the “Stock Exchange”) listing requirements. As such, we are permitted to opt out of the Stock Exchange listing requirements that would otherwise require our board of directors to be comprised of a majority of independent directors and require our compensation and human resources committee and nominating and governance committee to be comprised entirely of independent directors. Notwithstanding the foregoing, Fosun will agree to vote its shares to elect independent directors to our board of directors such that independent directors comprise a majority of our board of directors. In addition, Fosun will agree that each member of our audit committee and our nominating and governance committee and a majority of our compensation and human resources committee will be independent directors, in each case, in accordance with the rules of the Stock Exchange. We expect that independent directors will join our board of directors such that our board of directors and these committees will meet these independent director standards at or prior to the closing of this offering.

Corporate Information

Ironshore Inc. was organized as a corporation under the laws of the Cayman Islands in 2006. The principal executive offices of Ironshore Inc. are located at 141 Front Street, Hamilton, HM19 Bermuda. The telephone number for Ironshore Inc. is (441) 279-8200. Our internet address is http://www.ironshore.com. Information contained on our website is not part of this prospectus.

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The Offering

Issuer

Ironshore Inc., a Cayman Islands corporation.

Securities Offered

● ordinary shares, par value $0.01 per share. All shares are being offered by the selling shareholders.

Underwriters’ Option to Purchase Additional Shares

● ordinary shares.

Shares Authorized

400,000,000 shares.

Ordinary Shares Outstanding

140,657,340 shares as of March 31, 2016.

Offering Price

$● per ordinary share.

Lock-Up Agreements

We and the selling shareholders will be subject to customary lock-up agreements for a period of ● days commencing on the date of this prospectus, which will be subject to customary exceptions and an exception for the distribution by Fosun to its shareholders of up to ● ordinary shares of Ironshore, as part of an “assured entitlement,” as required pursuant to Practice Note 15 of the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange. See “Principal and Selling Shareholders—Assured Entitlement Distribution” for more information about Fosun’s assured entitlement distribution. For more information about the lock-up agreements, see “Underwriting.”

Voting Rights

Each ordinary share entitles its holder to one vote on all matters to be voted on by shareholders generally. However, pursuant to our amended and restated articles of association, the voting rights exercisable by any shareholder or group that is a U.S. person will be limited to 9.5% of the total voting power conferred by our shares. See “Description of Share Capital—Ordinary Shares.”

Use of Proceeds

The selling shareholders will receive all of the proceeds from this offering, and we will not receive any proceeds from this offering. See “Use of Proceeds.”

Dividend Policy

We intend to pay quarterly dividends on our ordinary shares at an initial rate of approximately $● per share beginning in ●. The declaration, payment and amount of future dividends to holders of our ordinary shares will be at the discretion of our board of directors and will depend on many factors, including our financial condition and results of operations, liquidity requirements, market opportunities, capital requirements of our subsidiaries, legal requirements, regulatory constraints and other factors that our board of directors deems relevant. See “Dividend Policy.”


Transfer Agent		●

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Proposed Stock Exchange Trading Symbol

“●”

Risk Factors

You should consider carefully all of the information set forth in this prospectus and, in particular, should evaluate the specific risk factors set forth in the section entitled “Risk Factors” beginning on page 11 for an explanation of certain risks of investing in our ordinary shares, including the following:

•

If actual claims exceed our loss reserves, our financial condition and results of operations could be adversely affected;

•

A downgrade in our financial strength ratings could harm our business. A downgrade of the ratings of one or more of our insurance subsidiaries or the Lloyd’s market or a negative watch/outlook could have a material adverse effect on our business, financial condition and operating results;

•

Our business could be adversely affected by the loss of key members of our management team or if we are unable to attract and retain personnel;

•

Claims for catastrophic events could cause large losses and substantial volatility in our results of operations, and, as a result, the value of the ordinary shares may fluctuate widely or be severely diminished;

•

The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition and results of operations;

•

We could face unanticipated losses from geopolitical risks, including acts of terrorism, which could have a material adverse effect on our financial condition and results of operations;

•

We rely on brokers and other intermediaries for our business, and if we fail to maintain our relationships with them or if they fail to transmit payments between us and our insureds, our business could be adversely affected;

•

We may be unable to obtain reinsurance coverage at reasonable prices or on terms that adequately protect us;

•

Potential government intervention in our industry or our becoming subject to additional onerous governmental or regulatory requirements could hinder our flexibility and negatively affect the business opportunities that may be available to us in the market; and

•

Competition for business in our industry is intense. If we are unable to compete effectively, we may not be able to gain market share and our business may be materially adversely affected.

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Summary Historical Consolidated Financial Information

The following table sets forth our summary historical consolidated financial data, at the dates and for the periods indicated. The summary historical consolidated statements of operations data for the years ended December 31, 2015, 2014 and 2013 and the summary historical consolidated balance sheet data as of December 31, 2015 and 2014 have been derived from our audited consolidated financial statements, which have been audited by Ernst & Young LLP, included elsewhere in this prospectus, and our consolidated financial statements, which have been audited by Ernst & Young LLP, as of December 31, 2013 not included in this prospectus. The summary historical consolidated balance sheet data as of March 31, 2016 and the summary historical consolidated statement of operations data for the three months ended March 31, 2016 and 2015 have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of our management, include all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the information set forth herein. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 or for any future period. See “Glossary” for the definitions of the ratios used below.

The following information is only a summary and should be read in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.


	Three Months Ended March 31,						Year Ended December 31,
	2016			2015			2015			2014			2013
	(in thousands, except per share data and ratios)
Statement of Operations Data:
Revenues:
Gross premiums written	$	530,705		$	515,256		$	2,163,852		$	2,210,554		$	1,993,123
Reinsurance premiums ceded		(169,280	)		(161,495	)		(684,028	)		(591,734	)		(535,404	)

Net premiums written		361,425			353,761			1,479,824			1,619,180			1,457,719

Net premiums earned		355,287			393,127			1,543,251			1,526,996			1,254,323
Net investment income		29,204			27,555			113,300			97,043			84,372
Net realized and unrealized gains (losses) on investments		43,325			30,661			(48,351	)		28,039			(70,462	)
Net foreign exchange gains (losses)		6,538			(4,955	)		(11,054	)		(5,283	)		(2,989	)
Other income		51,034			10,196			50,413			33,566			29,554

Total revenues		485,388			456,584			1,647,559			1,680,361			1,294,798
Expenses:
Losses and loss adjustment expenses		237,159			250,858			1,010,218			1,077,274			745,173
Acquisition expenses		47,246			57,008			210,053			214,708			174,052
General and administrative expenses		92,977			71,636			322,728			279,101			250,643
Transaction expenses (1)		—			7,615			39,529			—			—
Interest expense		5,630			5,523			22,169			21,906			21,663

Total expenses		383,012			392,640			1,604,697			1,592,989			1,191,531
Income before tax (expense) benefit		102,376			63,944			42,862			87,372			103,267
Income tax (expense) benefit		(12,001	)		(2,072	)		14,941			(2,906	)		(5,723	)

Net income		90,375			61,872			57,803			84,466			97,544
Net income (loss) attributable to non-controlling interest		—			—			—			(11	)		177

Net income attributable to Ironshore Inc.	$	90,375		$	61,872		$	57,803		$	84,477		$	97,367

Weighted average ordinary shares outstanding—Basic		140,657			135,919			137,195			135,186			134,334
Weighted average ordinary shares outstanding—Diluted (2)		140,657			142,002			143,107			139,935			137,687
Net income per ordinary share outstanding—Basic	$	0.64		$	0.46		$	0.42		$	0.62		$	0.72
Net income per ordinary share outstanding—Diluted (2)	$	0.64		$	0.44		$	0.41		$	0.61		$	0.71

Other Financial Data:
Net operating income (3)	$	45,547		$	43,832		$	152,365		$	68,319		$	175,211
Net operating income per diluted share (3)	$	0.32		$	0.31		$	1.07		$	0.49		$	1.27

Selected Ratios:
Loss ratio (4)		66.8	%		63.8	%		65.5	%		70.5	%		59.4	%
Acquisition costs ratio (5)		13.3	%		14.5	%		13.6	%		14.1	%		13.9	%
General and administrative expense ratio (6)		8.0	%		13.7	%		14.6	%		13.3	%		15.8	%

Combined ratio (7)		88.1	%		92.0	%		93.7	%		97.9	%		89.1	%

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	March 31, 2016		December 31,
	March 31, 2016		2015		2014		2013
	(in thousands, except per share data)
Balance Sheet Data:
Total cash and investments	$	5,304,314	$	5,103,141	$	4,682,048	$	3,901,476
Reinsurance recoverable		849,997		835,821		759,695		670,803
Total assets		7,486,466		7,249,372		6,699,088		5,717,632
Reserve for losses and loss adjustment expenses		3,286,389		3,197,541		2,838,158		2,181,812
Unearned premiums		1,314,490		1,304,591		1,310,908		1,207,707
Debt obligations		347,421		347,291		346,802		246,352
Total liabilities		5,424,218		5,282,810		4,859,327		3,971,288
Total shareholders’ equity attributable to common shareholders		2,062,248		1,966,562		1,839,761		1,742,435

Other Per Ordinary Share Data:
Book value per ordinary share (8)	$	14.66	$	13.98	$	13.60	$	12.90
Diluted book value per ordinary share (9)	$	14.66	$	13.98	$	13.10	$	12.49

(1)

Transaction expenses include fees and expenses associated with the Fosun Acquisition, fees and expenses associated with the Fosun Equity Investment and accelerated vesting of certain share based compensation awards in connection with the Fosun Acquisition. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation—General—Company History.”

(2)	The weighted average ordinary shares outstanding-diluted reflects the dilution from options, warrants and restricted share units using the treasury stock method.

(3)

Net operating income and net operating income per diluted share are non-GAAP financial measures. We define net operating income as net income attributable to Ironshore Inc., excluding after tax net realized and unrealized investment gains or losses, transaction expenses and net foreign exchange gain or loss. We define net operating income per diluted share as net operating income divided by the average of our diluted ordinary shares outstanding during the period. We use net operating income as an internal performance measure in the management of our operations because it excludes factors that are heavily influenced by and fluctuate in part according to the availability of market opportunities and other factors. We believe that showing net operating income enables investors, analysts, rating agencies and other users of our financial information to more easily analyze our results of operations and our underlying business performance. Net operating income should not be viewed as a substitute for net income attributable to Ironshore Inc. calculated in accordance with GAAP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for a reconciliation of net operating income and net operating income per diluted share to the closest financial measures under GAAP.

(4)	The loss ratio is calculated by dividing losses and loss adjustment expenses by net premiums earned.

(5)	The acquisition cost ratio is calculated by dividing acquisition expenses by net premiums earned.

(6)

The general and administrative expense ratio is calculated by dividing general and administrative expenses less other income by net premiums earned for our operating segments. Corporate general and administrative expenses, transaction expenses and corporate other income are not included in the calculation.

(7)	The combined ratio is the sum of the loss ratio, acquisition cost ratio and general and administrative expense ratio.

(8)	Book value per ordinary share is calculated by dividing total shareholders’ equity less non-controlling interest by our basic ordinary shares outstanding at each respective period end. For a computation of book value per ordinary share, see note (9) to “Selected Historical Financial Information.”

(9)

Diluted book value per ordinary share is calculated by dividing total shareholders’ equity less non-controlling interest by our diluted ordinary shares outstanding determined using the treasury stock method at each respective period end. For a computation of diluted book value per ordinary share, see note (9) to “Selected Historical Financial Information.”

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RISK FACTORS

An investment in our ordinary shares involves risks. You should carefully consider the risks described below, together with the other information in this prospectus, before investing in our ordinary shares. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations. We cannot assure you that any of the events discussed in this prospectus will not occur. If they do, our business, financial condition or results of operation could be materially and adversely affected. In such case, you could lose all or part of your investment in, and expected return on, the ordinary shares.

Risks Related to Our Business

If actual claims exceed our loss reserves, our financial condition and results of operations could be adversely affected.

Our success depends upon our ability to assess accurately the risks associated with the businesses that we insure. We establish reserves for losses and loss adjustment expenses (“LAE”), which represent estimates involving (i) actuarial and statistical projections, at a given point in time, of our expectations of the ultimate settlement and administration costs of losses incurred, (ii) estimates of future trends in claims severity and frequency, (iii) judicial theories of liability and (iv) other factors, such as variables in claims handling procedures, economic factors and judicial and legislative trends and actions. Most or all of these factors are not directly quantifiable, particularly on a prospective basis. It is possible that we may make underwriting decisions based on incorrect or incomplete information. If inadequate or inaccurate information is provided to us, it is possible that we will misunderstand the nature or extent of the activities or facilities and the corresponding extent of the risks that we insure. In addition, there may be significant reporting lags between the occurrence of the insured event and the time it is actually reported to us and additional lags between the time of reporting and final settlement of claims. We utilize actuarial models as well as available historical insurance industry loss ratio experience and loss development patterns to assist with establishing loss reserves. Actual losses and LAE paid may deviate, perhaps substantially, from our reserve estimates. In addition, catastrophe modeling software tools rely heavily upon actual and interpolated historical loss amounts. These software tools are intended to express expected loss levels and average loss amounts; however, they may not be entirely accurate because each model relies on different assumptions and limitations. Thus, such expectations and averages may be grossly understated and, as a result, place our capital and business at much greater risk than expected. If we fail to accurately assess the risk we assume, we may fail to establish premium rates sufficient to cover the expected levels of loss, and our reserves may be inadequate to cover our losses, thereby causing adverse variation in our financial condition and results of operations.

Our gross reserves for losses and LAE were $3.3 billion as of March 31, 2016. While we believe that this level of reserves is adequate, determining a level of loss reserves is an inherently uncertain process. If our loss and LAE reserves are determined to be inadequate, we will be required to increase reserves at the time of such determination with a corresponding reduction in our net income in the period in which the deficiency is rectified. Claims in respect of events that have occurred may exceed our loss and LAE reserves and have a material adverse effect on our results of operations, in a particular period, or our financial condition in general. As a compounding factor, although most of our insurance contracts have per occurrence policy limits, the nature of property and casualty insurance is such that losses can exceed policy limits for a variety of reasons (including more than one loss occurrence in a policy year or extra-contractual liability) and could significantly exceed the premiums received on the underlying policies, thereby further adversely affecting our results of operations and our financial condition. See also “Business—Risk Management and Underwriting” and “Business—Reserves for Insurance Claims.”

For a detailed discussion of our reserve experience, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Reserves for Losses and Loss Adjustment Expenses.”

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A downgrade in our financial strength and credit ratings could harm our business.

Ratings are an important factor in the competitive position of insurance companies, and a downgrade of our financial strength ratings or a negative watch/outlook could severely limit or prevent us from writing new and renewal insurance policies. Rating agencies regularly review the financial performance and condition of insurers, including our insurance subsidiaries. The financial strength rating for Ironshore Insurance, Ironshore Indemnity, Ironshore Specialty and IEL as assigned by A.M. Best is “A” (Excellent). Ironshore’s Lloyd’s Syndicate 4000 has the benefit of the ratings assigned to the Lloyd’s market as a whole. As a result, Syndicate 4000 is treated as having a rating of “A” (Excellent) by A.M. Best, “AA-” (Very Strong) by Fitch, and “A+” (Strong) by Standard & Poor’s.

The rating agencies assign ratings based upon consideration of qualitative and quantitative factors, including the rated company’s operating performance, investment results, risk profile and capital resources. The rating agencies also may consider factors that may be outside of the rated company’s control, including changes to general economic and insurance market conditions and Fosun credit ratings. A downgrade of the ratings of one or more of our insurance subsidiaries or the Lloyd’s market could have a material adverse effect on our business, financial condition and operating results.

The claims-paying ability ratings assigned by nationally-recognized rating agencies to insurance companies represent independent opinions of financial strength and ability to meet policyholder obligations, and are not directed toward the protection of investors. Any rating is not a recommendation to purchase, sell, or hold any particular security, including our ordinary shares. Such ratings do not comment as to market price or suitability for a particular investor. In addition, there can be no assurance that a rating will be maintained for any given period of time or that a rating will not be lowered or withdrawn in its entirety.

In addition, in view of the earnings and capital pressures recently experienced by many financial institutions, including insurance companies, it is possible that rating organizations will heighten the level of scrutiny that they apply to such institutions, will increase the frequency and scope of their credit reviews, will request additional information from the companies that they rate, and may adjust upward the capital and other requirements employed in the rating organizations’ models for maintenance of certain ratings levels. It is possible that such reviews of us may result in adverse ratings consequences, which could have a material adverse effect on our results of operations and financial condition. An A.M. Best downgrade below A- or withdrawal of any rating could severely limit or prevent us from writing new and renewal insurance policies. See also “Business—Ratings.”

In July 2015, following the announcement that Ironshore and Fosun had entered into a definitive agreement with respect to the Fosun Acquisition, A.M. Best placed under review with negative implications the issuer credit rating of the Company and the financial strength ratings of the Company’s insurance subsidiaries, pending closing of the transaction and completion by A.M. Best of its assessment of the implications of Fosun’s ownership of Ironshore. In June 2016, A.M. Best announced that it removed from under review the ratings of the Company and its insurance subsidiaries and affirmed the financial strength rating for Ironshore Insurance, Ironshore Indemnity, Ironshore Specialty and IEL of “A” (Excellent), each with a negative outlook. The negative outlook reflects A.M. Best’s concern over the financial profile of Fosun, represented by its financial leverage and liquidity position. In affirming the ratings, A.M. Best stated that it believes this offering is part of a strategy that could sufficiently insulate Ironshore from potential issues that Fosun may encounter due to its vulnerable credit profile and aggressive acquisition activity, and will enhance the actions Ironshore has already taken to strengthen its corporate governance structure.

Our credit rating is currently maintained by S&P and Moody’s. Although we closely monitor and manage, to the extent we are able, factors that could influence our credit ratings, there is no assurance that our credit ratings will not be lowered in the future, or that any such downgrade would not occur at times of broader market instability when our options for responding to events may be more limited and general investor

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confidence is low. Furthermore, a reduction in our credit ratings could reduce our access to capital markets, materially increase the cost of issuing securities or incurring debt, and decrease the number of investors and counterparties willing or permitted, contractually or otherwise, to do business with or lend to us, thereby curtailing our business operations and reducing profitability. In May 2015, S&P placed our credit ratings on credit watch with negative implications as a result of the announcement that we had entered into a definitive agreement to be acquired by Fosun.

The Fosun Acquisition is under review by the Committee on Foreign Investment in the United States. The final results of this review are uncertain.

The Fosun Acquisition is under review by the Committee on Foreign Investment in the United States (“CFIUS”). CFIUS is a committee of several U.S. government agencies, led by the Department of the Treasury, authorized to review transactions that could result in control of a U.S. business by a foreign person in order to determine the effect of such transactions on the national security of the United States. At the request of CFIUS, Fosun and Ironshore made a voluntary filing with CFIUS regarding the Fosun Acquisition. The review is a confidential, civil regulatory process and is ongoing. The final results of this review and any impact they may have on Ironshore are uncertain. We expect to obtain the final results of this review before this registration statement becomes effective and to include updated information in a future amendment to this registration statement.

Our business could be adversely affected by the loss of key members of our management team or if we are unable to attract and retain personnel.

Our success has been, and will continue to be, dependent on our ability to retain the services of our existing key executive officers and to attract and retain additional qualified personnel in the future. There can be no assurance that we will be successful in such endeavors. Furthermore, our competitors may utilize aggressive tactics to make it more difficult for us to hire and/or retain personnel or otherwise compete. Such tactics may include offering excessive compensation arrangements to certain employees to induce them not to leave their current employment and bringing litigation against employees who do leave (and possibly us as well) to enjoin their employment by us.

In addition, the pool of talent from which we actively recruit is limited. The inability to attract and retain qualified personnel when available and the loss of services of key personnel could have a material adverse effect on our financial condition and results of operations. Our underwriting staff is critical to our success in the production of business. The loss of the services of our key executive officers or underwriters or the inability to hire and retain other highly qualified personnel in the future could delay or prevent us from fully implementing our business strategy, which could affect our financial performance. Currently, we do not maintain key employee life insurance with respect to any of our employees, other than Kevin H. Kelley, our Chief Executive Officer.

We underwrite property catastrophe insurance in regions that are historically prone to hurricanes and other disasters, and have large aggregate exposure to these disasters. Catastrophes can be caused by various events, including hurricanes, floods, windstorms, earthquakes, hailstorms, explosions, severe winter weather, fires and other natural disasters. Catastrophes can cause losses in a variety of property and casualty lines for which we provide insurance. Actual losses from future catastrophic events could vary materially from estimates due to the inherent uncertainties in this area. In addition to the nature of the property business, we believe that economic and geographic trends affecting insured property, including inflation, property value appreciation and geographic concentration, tend to generally increase the size of losses from catastrophic events over time. The scientific community believes that there is a long-term trend in rising global air and water temperatures. Such a

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trend could increase the frequency and severity of natural disasters. Because this trend is uncertain, we may have difficulty modeling for changes in catastrophe levels. If we do not adequately assess this risk, we could fail to keep adequate reserves for loss from natural catastrophes, which could negatively affect our financial condition and results of operations.

Insurance companies are not permitted to reserve for a catastrophe until it has occurred. In addition, states have from time to time passed legislation that has the effect of limiting the ability of insurers to manage catastrophic risk, such as legislation prohibiting insurers from withdrawing from catastrophe-prone areas. Therefore, claims for catastrophic events could expose us to large losses and cause substantial volatility in our results of operations, which could cause the value of our securities to fluctuate widely or to be severely diminished. In addition, the timing of our insureds’ claims for catastrophic events could occur at a time when our volume of new and renewed underwriting is lower and our resulting receipt of premiums and other income is diminished, which could adversely affect our cash flows.

We could experience large losses from a single event if we are exposed to such event through more than one insurance contract. Such losses are called “clash losses.” Clash losses could occur as a result of acts of terrorism or political instability, fires, explosions, oil spills, building collapses, nuclear accidents or plane crashes. These events are inherently unpredictable, and it may be difficult for us to adequately reserve for such losses. Our financial condition and results of operations could suffer if there is an unexpectedly large number of clash losses or if one such loss is of particularly large value.

Our insurance company subsidiaries are subject to extensive regulation. If we fail to comply with regulatory requirements, our business may be harmed.

Our insurance company subsidiaries are subject to extensive regulation in virtually all the countries in which they are based or in which activities are undertaken. Generally, these regulations are designed to benefit or protect policyholders (rather than our investors) or to reduce systemic financial risk. Failure to comply with these regulations could lead to disciplinary action, including requiring insureds to be compensated for loss, the imposition of penalties and the revocation of our authorization to operate.

Our U.S. insurance subsidiaries are subject to extensive state regulatory oversight in the U.S. jurisdictions in which they do business. State insurance laws and regulations are administered by agencies that have broad powers. This regulatory oversight could in the future adversely affect our ability to sustain adequate returns in certain lines of business. A portion of our U.S. insurance business is subject to regulation with respect to policy forms and rates and related matters. States in which our U.S. insurance subsidiaries are licensed have insurance guaranty fund laws requiring property and casualty insurance companies doing business in such states to pay assessments to guaranty funds or associations that are organized to pay contractual obligations under insurance policies issued by impaired or insolvent insurance companies. These assessments may increase in the future depending upon the rate of insolvencies of insurance companies. We cannot predict the amount of any assessments applicable to guaranty funds.

In states where they are licensed, our U.S. insurance subsidiaries are typically required to participate in mandatory property and casualty shared market mechanisms or pooling arrangements, which provide various insurance coverages to individuals or other entities that are otherwise unable to purchase such coverage in the commercial insurance marketplace. The amount of future losses or assessments from such shared market mechanisms and pooling arrangements cannot be predicted with certainty. The underwriting results of these pools historically have been unprofitable. We cannot be sure that future losses or assessments from such mechanisms and pooling arrangements will not have a material adverse effect on our results of operations or financial condition.

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Potential government intervention in our industry or changes to existing regulatory requirements could hinder our flexibility and negatively affect the business opportunities that may be available to us in the market.

Many of the laws and regulations to which our insurance company subsidiaries are subject, including those to which our international businesses are subject, are regularly re-examined. Future laws, changes in regulations or in the interpretation of existing laws and regulations, and actions by regulators, including changes in administration and enforcement policies, could from time to time adversely impact pricing, reserve and capital adequacy or exposure to litigation and could increase the costs of regulatory compliance by our insurance company subsidiaries or otherwise negatively impact our financial position, results of operations and liquidity.

Our business could be adversely affected by changes in state laws relating to asset and reserve valuation requirements, surplus requirements, limitations on investments, and risk-based capital requirements and, at the federal level, by laws and regulations that may affect certain aspects of the insurance industry, including proposals for preemptive federal regulation. The U.S. federal government generally has not directly regulated the insurance industry except for certain areas of the market, such as insurance for flood, nuclear and terrorism risks. However, the federal government has undertaken initiatives or considered legislation in several areas that may impact the insurance industry, including tort reform, corporate governance and the taxation of reinsurance companies. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Financial Stability Oversight Council (the “FSOC”) was established and was authorized to recommend that certain financial companies, including insurance companies, be regulated by the Board of Governors of the Federal Reserve if they are found to be “systematically important.” The Dodd-Frank Act also established the Federal Insurance Office which is authorized to study, monitor and report to Congress on the insurance industry and to recommend that the FSOC designate an insurer as an entity posing risks to the U.S. financial stability in the event of the insurer’s material financial distress or failure. Any additional regulations established as a result of the Dodd-Frank Act could increase our costs of compliance or lead to disciplinary action. In addition, legislation has been introduced from time to time that, if enacted, could result in the federal government assuming a more direct role in the regulation of the insurance industry, including federal licensing in addition to or in lieu of state licensing and reinsurance for natural catastrophes. We are unable to predict whether any legislation will be enacted or any regulations will be adopted, or the effect any such developments could have on our business, financial condition or results of operations.

We consider the credit score of insureds as a factor in pricing and underwriting decisions where allowed by state law. Certain consumer groups and regulators have questioned whether the use of credit scoring unfairly discriminates against some groups of people and are advocating new laws and regulations to prohibit or restrict the use of credit scores in underwriting and pricing decisions. If enacted in a large number of states in which we operate, laws or regulations that significantly restrict the use of credit scores could impact our pricing and underwriting processes, which could, in turn, materially and adversely affect our business, financial condition, results of operations and prospects.

The European Union (the “EU”) has implemented a new regulatory regime for the regulation of the insurance and reinsurance sector known as “Solvency II.” Solvency II is a regulatory regime which seeks to enhance transparency, promote harmonization, and encourage a proactive approach to company solvency. It is built on a risk-based approach to setting capital requirements of insurers and reinsurers. Solvency II became effective in all EU member states on January 1, 2016. In June 2015, the U.S. was granted provisional equivalence under Solvency II in the area of group solvency calculation. No equivalence determination has been made with respect to the U.S. in the areas of reinsurance or group supervision. Although most of the detailed EU rules implementing Solvency II are now known, there remains a certain degree of uncertainty over the application of some of those rules by the relevant regulators and, in addition, it is possible that changes will be made to Solvency II in the future. If either of these occurs, it could have a material adverse effect on our results of operations and financial condition.

Under the Dodd-Frank Act, the Secretary of the Treasury and the Office of the U.S. Trade Representative (“USTR”) are jointly authorized to negotiate a covered agreement with one or more foreign governments, authorities, or regulatory entities. A covered agreement is a written bilateral or multilateral

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agreement that “relates to the recognition of prudential measures with respect to the business of insurance or reinsurance that achieves a level of protection for insurance or reinsurance consumers that is substantially equivalent to the level of protection achieved under State insurance or reinsurance regulation.” In November 2015, the U.S. Department of the Treasury and USTR provided written notice to Congressional Committees of their intention to formally initiate negotiations on a covered agreement with the EU seeking, in part, to obtain treatment of the U.S. insurance regulatory system by the EU as equivalent under Solvency II and recognition by the EU of the U.S. integrated state and federal insurance regulatory and oversight system, including with respect to group supervision. Once effective, a covered agreement could preempt certain state insurance laws.

Regulators in Bermuda and other jurisdictions are considering various proposals for financial and regulatory reform. The Bermuda Monetary Authority (“BMA”) initially implemented and imposed additional requirements on certain of the companies it regulates as part of its efforts to achieve recognition as an equivalent jurisdiction under Solvency II. On November 26, 2015, via delegated act reviewed and approved by the European Parliament and Council, the European Commission granted Bermuda’s commercial insurers (i.e., insurers other than captives and special purpose insurers) full equivalence in all areas of Solvency II (that is, solvency calculation, group supervision and reinsurance) for an indefinite period of time. On March 4, 2016, the delegated act was published in the official journal of the EU. The grant of full equivalence came into force on March 24, 2016 and applies from January 1, 2016. The potential impact of Solvency II and similar regulatory measures upon our operations is uncertain at this time, although they may result in increased capital requirements and enhanced disclosure requirements applicable to insurers and reinsurers that are subject to them and therefore may have a material adverse effect on our results of operations and financial condition.

In addition to government regulation, we face the risk of increased regulation by Lloyd’s. We participate in the Lloyd’s market through participation in Lloyd’s Syndicate 4000. The Lloyd’s Franchise Board requires annual approval of Syndicate 4000’s business plan, including maximum underwriting capacity, and may require changes to our business plan or additional capital to support our underwriting. Lloyd’s also imposes various charges and assessments on its member companies. If Lloyd’s were to require material changes in Syndicate 4000’s business plan, or if charges and assessments that Syndicate 4000 pays to Lloyd’s or the amount of capital required to be deposited by ICCL as “Funds at Lloyd’s” were to increase significantly, these events could have an adverse effect on our operations and financial results.

See also “Business—Regulation.”

General economic, market or insurance industry conditions could limit our access to capital markets and adversely affect our business.

General economic, market or insurance industry conditions could affect our access to the capital markets, lead to declines in demand for or increased claims made under our insurance policies or negatively affect our investments. In the event of a major financial crisis (for example, a crisis precipitated by the failure to adequately address U.S. government deficit spending and tax revenue generation, downgrades or defaults in U.S. and/or foreign sovereign debt obligations, or the collapse of the Eurozone), we could incur substantial realized and unrealized investment losses in future periods, which would have an adverse impact on our results of operations, financial condition, debt and financial strength ratings, insurance subsidiaries’ capital and ability to access capital markets. See also “Business—Investment Portfolio.”

In addition, distressed economic conditions may increase allegations of misconduct, fraud and negligence. Increased litigation in this area could lead to increased claims in the areas of fiduciary liability and E&O insurance and D&O insurance. If such litigation is successful, it could lead to greater exposure under such contracts which could adversely affect our financial condition and results of operations if such litigation occurs at an unexpected level.

Adverse investment performance may affect our financial results and ability to conduct business.

Our operating results depend in part on the performance of our investment portfolio. Our funds are invested on a discretionary basis by professional investment advisory management firms, subject to investment

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guidelines established and periodically reviewed by the investment and finance committee of our board of directors. Although our investment policies stress preservation of capital, our investments are subject to market-wide risks and fluctuations, as well as to risks inherent in particular securities. General economic conditions can adversely affect the markets for interest-rate-sensitive securities, including the extent and timing of investor participation in such markets, the level and volatility of interest rates and, consequently, the value of fixed maturity investments. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. General economic conditions, stock market conditions and many other factors also can adversely affect the equities markets and, consequently, the value of the equity securities we own. Furthermore, the need for liquidity may result in investment returns below those assumed by us. Investment losses could significantly decrease our assets, thereby adversely affecting the market price of our shares and/or our ability to conduct business.

The impact of fluctuations in the market prices of securities affects our financial statements. We invest in a trading portfolio of fixed maturity investments and equity securities, and commencing in 2016, an available-for-sale portfolio of fixed maturity investments and equity securities. We record the trading and available-for-sale portfolios at fair value on our balance sheet. For our trading portfolio, the unrealized gain or loss associated with the difference between the fair value and the amortized cost of the investments is recorded in net income. For our available-for-sale portfolio, the unrealized gain or loss (absent credit losses) is recorded in accumulated other comprehensive income in shareholders’ equity on our consolidated balance sheet. Therefore, an increase in market interest rates could cause a decrease in our shareholders’ equity and financial position.

We rely primarily on insurance brokers and other intermediaries for the business we receive. Any of our brokers or other intermediaries could cease doing business with us at any time, and we may not be successful in maintaining our current relationships with our significant brokers and other intermediaries. The loss of business provided by these brokers and intermediaries could adversely affect our financial results.

In addition, we are exposed to the credit risk of brokers who collect premiums from our insureds. We generally pay amounts owed on claims to brokers, who pay these amounts to the insureds who have purchased insurance from us. In some jurisdictions, if the broker fails to make such payments, we may remain liable to the insured for the deficiency. Similarly, in some jurisdictions, the insured will no longer be liable to us after they have paid their premiums to the broker, regardless of whether the broker transmitted such payments to us. Consequently, we assume some degree of credit risk associated with our brokers. See also “Business—Distribution.”

We may be unable to obtain reinsurance coverage at reasonable prices or on terms that adequately protect us.

We use reinsurance to help manage our exposure to insurance risks. Reinsurance is a practice whereby one insurer, called the reinsurer, agrees to indemnify another insurer, called the ceding insurer, for all or part of the potential liability arising from one or more insurance policies issued by the ceding insurer. The availability and cost of reinsurance are subject to prevailing market conditions, both in terms of price and available capacity, which can affect our business volume and profitability. We may not be able to obtain reinsurance on acceptable terms or from entities with satisfactory creditworthiness. In such event, if we are unwilling to bear an increase in our net exposure, we would have to reduce the level of our underwriting commitments, which would reduce our revenues. Many reinsurance companies have begun to exclude certain coverages from, or alter terms in, the reinsurance contracts we enter into with them. Some exclusions are with respect to risks that we cannot exclude in policies we write due to business or regulatory constraints. In addition, reinsurers are imposing terms, such as lower per occurrence and aggregate limits, on direct insurers that do not wholly cover the risks written by these

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direct insurers. As a result, we, like other direct insurance companies, write insurance policies which to some extent do not have the benefit of reinsurance protection. These gaps in reinsurance protection expose us to greater risk and greater potential losses. For example, certain reinsurers have excluded coverage for terrorist acts or priced such coverage at unreasonably high rates. Many direct insurers, including us, have written policies without terrorist act exclusions and in many cases we cannot exclude terrorist acts because of regulatory constraints. We may, therefore, be exposed to potential losses as a result of terrorist acts. See also “Business—Reinsurance.”

We may require additional capital in the future, which may not be available or may only be available on unfavorable terms.

We monitor our capital adequacy on a regular basis. The capital requirements of our business depend on many factors, including our ability to write new and renewal business successfully and to establish premium rates and reserves at levels sufficient to cover losses. Our ability to underwrite is largely dependent upon the expected quality of our claims paying process and our perceived financial strength as estimated by potential insureds, brokers, other intermediaries and independent rating agencies. To the extent that our existing capital is insufficient to fund our future operating requirements and/or cover claim losses, we may need to raise additional funds through financings or limit our growth. Any equity or debt financing, if available at all, may be on terms that are unfavorable to us. Disruptions, uncertainty, or volatility in the capital and credit markets may also limit our access to capital required to operate our business. If we are not able to obtain adequate capital, our business, results of operations and financial condition could be materially adversely affected.

Continued or increased premium levies by Lloyd’s for the Lloyd’s Central Fund, a significant downgrade of a Lloyd’s rating or a withdrawal of Lloyd’s licenses could materially and adversely affect us.

The Lloyd’s Central Fund protects Lloyd’s policyholders against the failure of a member of Lloyd’s to meet its obligations. The Council of Lloyd’s has the discretion to use assets in the Lloyd’s Central Fund to pay claims on Lloyd’s policies issued after 1992. Lloyd’s requires members to contribute to the Central Fund, normally in the form of an annual contribution, although a special contribution may be levied. The Council of Lloyd’s has discretion to call on members to contribute an amount of their underwriting capacity (currently up to 3%) in any one year.

Additionally, Lloyd’s insurance business is subject to local regulation, including regulation in the U.S. Regulators in the U.S. require Lloyd’s to maintain certain minimum deposits in U.S. situs trust funds as protection for policyholders in the U.S. These deposits may be used to cover liabilities in the event of a major claim arising in the U.S., and Lloyd’s may require Lloyd’s members to deposit additional assets in these trust funds to meet claims payment obligations and maintain minimum trust fund amounts.

Any premium levy or cash call could increase the expenses of ICCL without providing compensating revenues and could have a material adverse effect on its financial condition and results of operations.

The Lloyd’s insurance market currently has financial strength ratings of “A” (Excellent) from A.M. Best, “AA-” (Very Strong) from Fitch, and “A+” (Strong) from Standard & Poor’s. In the event that a Lloyd’s rating is downgraded in the future, the downgrade could have a material adverse effect on our ability to underwrite business through our Lloyd’s operations and therefore on our financial condition and results of operations.

Lloyd’s syndicates rely on licenses granted by insurance regulators permitting Lloyd’s to conduct insurance business in their respective jurisdictions. Withdrawal of any such licenses could have a material adverse effect on our ability to underwrite business through our Lloyd’s operations and therefore on our financial condition and results of operations.

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Our financial condition and results of operations could be materially adversely affected if our managing general agents, general agents, other producers or third party administrators exceed their authorities, otherwise breach obligations owed to us or commit fraud or if our employees take excessive risks.

In connection with certain lines of business and insurance programs, following our underwriting, financial, claims and information technology due diligence reviews, we authorize managing general agents, general agents, other producers and third party administrators to write business and/or settle claims on our behalf within underwriting and claims settlement authorities prescribed by us. We have incorporated profit sharing incentives in many, although not all, of the underwriting arrangements in an attempt to align interests between us and our managing general agents, general agents or other producers, but it still may be the case that a managing general agent, general agent or other producer may be more motivated to earn current commission income on a large volume of premium than to write business which will be profitable for our business over the long-term. We have less control and supervision over these underwriters and claims staff than our own employees and rely on the controls of our agents to write business within the underwriting authorities and settle claims within guidelines provided by us. Although we monitor our business on an ongoing basis, our monitoring efforts may not be adequate and our agents may exceed their underwriting authorities or otherwise breach their obligations owed to us. To the extent that our agents exceed their authorities, otherwise breach their obligations owed to us or commit fraud, this may result in a material adverse effect upon our financial condition and results of operations.

Our employees, including members of management and underwriters, make decisions and choices in the ordinary course of business that involve exposing us to risk. We have incorporated compensation incentives to avoid rewarding, and employ controls and procedures designed to monitor and prevent, excessive risk taking by our employees but these measures may not be effective in preventing our employees from taking excessive risks. If our employees take excessive risks, our financial condition and results of operations could be materially adversely affected.

Our rapid growth and expansion may cause us difficulty in obtaining adequate managerial and operational resources and restrict our ability to successfully expand our operations.

We have grown rapidly and intend to seek additional growth and acquisition opportunities. This rapid growth has placed, and we expect will continue to place, a significant strain on our management and our operations and financial resources. Management of growth will require, among other things:

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stringent control of costs;

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continued development of financial and management controls and information technology systems;

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expansion of internal controls;

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hiring and training of new and existing personnel; and

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coordination among our logistical, technical, accounting and finance personnel.

Our success will also depend, in part, on our ability to continue to attract, retain and motivate qualified personnel. Our failure to successfully manage our growth and personnel needs could have a material adverse effect on our business, financial condition and results of operations.

We rely on our systems, employees, and those of Genpact International, Inc. (“Genpact”) and certain other third party vendors and service providers in conducting our operations, and certain failures, including internal or external fraud, operational errors, systems malfunctions, or cyber-security incidents, could materially adversely affect our operations.

We are exposed to many types of operational risk, including the risk of fraud by employees and outsiders, clerical and recordkeeping errors, and computer or telecommunications systems malfunctions. Our businesses depend on our ability to process a large number of increasingly complex transactions. If any of our operational, accounting, or other data processing systems fail or have other significant shortcomings, we could be

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materially adversely affected. We are similarly dependent on our employees. We could be materially adversely affected if one or more of our employees causes a significant operational breakdown or failure, either as a result of human error or intentional sabotage or fraudulent manipulation of our operations or systems. Third parties with which we do business, including vendors that provide services or security solutions for our operations, could also be sources of operational and information security risk to us, including from breakdowns, failures, or capacity constraints of their own systems or employees. Additionally, by outsourcing these services, we may be exposed to enhanced risk of data security breaches. Any of these occurrences could diminish our ability to operate one or more of our businesses, or cause financial loss, potential liability to insureds, inability to secure insurance, reputational damage, or regulatory intervention, which could materially adversely affect us.

We rely on multiple operating systems of ours and of our third party providers’ to issue policies, pay claims, run modeling functions, and complete various internal processes. We may be subject to disruptions of such operating systems arising from events that are wholly or partially beyond our control, which may include, for example, electrical or telecommunications outages, natural or man-made disasters, such as earthquakes, hurricanes, floods, or tornados, disease pandemics, or events arising from local or regional politics, including terrorist acts. Such disruptions may give rise to losses in service to insureds and loss or liability to us. In addition, there is the risk that our controls and procedures as well as business continuity and data security systems prove to be inadequate. The computer systems and network systems we and others use could be vulnerable to unforeseen problems. These problems may arise in both our internally developed systems and the systems of third party service providers. In addition, our computer systems and network infrastructure present security risks, and could be susceptible to hacking, computer viruses, unauthorized access, deceptive communications (phishing) or identity theft. Any such failure could affect our operations and could materially adversely affect our results of operations by requiring us to expend significant resources to correct the defect, as well as by exposing us to litigation or losses not covered by insurance. Although we have business continuity plans and other safeguards in place, our business operations may be adversely affected by significant and widespread disruption to our physical infrastructure or operating systems and those of third party service providers that support our business.

Information security risks for large institutions have generally increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, activists, and other external parties. Our operations rely on the secure processing, transmission and storage of confidential information in our computer systems and networks. We rely on our digital technologies, computer and email systems, software, and networks to conduct our operations. Our technologies, systems and networks may become the target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of our or our insureds’ confidential, proprietary and other information, or otherwise disrupt our or our insureds’ or other third parties’ business operations.

Although to date we have not experienced any material losses relating to cyber-attacks or other information security breaches, there can be no assurance that we will not suffer such losses in the future. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, our size and scale, our expanded geographic footprint and international presence, the outsourcing of some of our business operations, and the continued uncertain global economic environment. As a result, cyber-security and the continued development and enhancement of our controls, processes and practices designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority. As cyber-threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.

Disruptions or failures in the physical infrastructure or operating systems that support our businesses and customers, or cyber-attacks or security breaches of the networks, systems or devices that our customers use to access our products and services could result in customer attrition, regulatory fines, penalties or intervention, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs, any of which could materially adversely affect our results of operations or financial condition.

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Competition for business in our industry is intense. If we are unable to compete effectively, we may not be able to gain market share and our business may be materially adversely affected.

The insurance industry is highly competitive. We face competition in all fields in which we operate, based on global capability, product breadth, innovation, quality of service and price. We may also face competition from new entrants that provide products similar to those provided by us. In addition, industry consolidation, including business combinations among insurance and other financial services companies, has resulted in competitors with more financial resources. Increased competition could result in fewer submissions and lower rates, which could adversely impact our growth and profitability. We believe that controlling ownership of Ironshore by Fosun, which is based in China and has non-investment grade credit ratings, has negatively impacted our ability to compete in certain lines of business or for business from certain types of insureds, such as those connected to the U.S. government. Fosun’s controlling interest in Ironshore may continue to have an adverse effect on our ability to compete effectively against our competitors for certain desirable business. If we are not able to compete effectively against our competitors, our revenue may be adversely impacted and we may not be able to maintain market share.

Competition for business is intense in all of our business lines and in every insurance market. Our competitors include global insurance companies, U.S. standard lines and E&S companies and other Lloyd’s syndicates. Many of these competitors have significantly greater capital, infrastructure, personnel and other resources and higher ratings. In addition, some insureds have been retaining a greater proportion of their risk portfolios than previously, and some industrial and commercial companies have been increasingly relying upon their own subsidiary insurance companies, known as captive insurance companies, self-insurance pools, risk retention groups, mutual insurance companies and other mechanisms for funding their risks to allow for better control of risk management and costs, rather than risk transferring insurance. Additional competitive pressures arise from the entry of non-traditional market participants, such as banks, private equity and hedge funds, accounting firms and insurance carriers themselves, offering risk management or transfer services. In particular, there has been a growing trend for transfer of traditional insurance-type (or reinsurance) risk to capital market investors through myriad forms of securities, derivatives and special purpose vehicles, which has increased overall insurance capacity in the market. See also “Business—Competition.”

Our future operating results may be adversely impacted if actual renewals of our existing policies and contracts do not meet our expectations.

A majority of our insurance policies are for a one-year term. In our financial forecasting process, we make certain assumptions about the number of policies that we expect to be renewed. If our expectations of renewals are not met, our gross premiums written for future periods could be negatively impacted and thus could hurt our operating results.

The property and casualty insurance industry has been subject to significant fluctuations.

Historically, insurers have experienced significant fluctuations in operating results due to competition, frequency of occurrence or severity of catastrophic or other insured events, levels of capacity, changing legal and judicial environments, fluctuating interest rates, general economic conditions and other factors. This cyclical nature is further amplified by levels of storm activity and other weather patterns or events, resulting in unpredictably hard or soft markets. Premium levels and policy terms may be adversely affected by increases in insurance industry capacity, a reduction of prices in response to favorable loss experience and other factors. The supply of insurance has increased over the past several years and could increase further, which would lead to increased competition. There can be no assurance that our industry capacity projections will be accurate. As a result, there can be no assurance that profitable pricing will be available to us or to the industry generally now or in the future.

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Our quarterly operating results are subject to fluctuation and have historically varied from quarter to quarter.

Our operating results are subject to fluctuation and have historically varied from quarter to quarter. We expect our quarterly results to continue to fluctuate in the future due to a number of factors, including the general economic conditions in the markets where we operate, the frequency of occurrence or severity of catastrophic or other insured events, fluctuating interest rates, claims exceeding our loss reserves, competition in our industry, deviations from expected renewal rates of our existing policies and contracts, adverse investment performance and the cost of reinsurance.

The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial condition and results of operations.

We seek to mitigate our loss exposure by writing a number of our insurance contracts on an excess of loss basis. In addition, we limit program size on the policies for each insured and purchase reinsurance for our own account to limit our risk. We also seek to limit our loss exposure by geographic diversification. Geographic zone limitations involve significant underwriting judgments, including the determination of the area of the zones and the inclusion of a particular policy within a particular zone’s limits. We cannot be sure that any of these loss limitation methods will be effective. Various provisions of our policies, such as limitations or exclusions from coverage or choice of forum, negotiated to limit our risks, may not be enforceable in the manner we intend. As a result of these risks, one or more catastrophic or other events could result in claims that substantially exceed our expectations, which could have a material adverse effect on our financial condition and results of operations.

We could face unanticipated losses from geopolitical risks, including acts of terrorism, which could have a material adverse effect on our financial condition and results of operations.

Our insurance policies cover insureds and their risks throughout the world and therefore we have substantial exposure to unexpected, large losses resulting from geopolitical risks such as acts of war, acts of terrorism, political instability, political violence, currency inconvertibility, non-transfer risk (i.e., the inability to transfer hard currency out of a country), trade and other sanctions, confiscation, expropriation, nationalization and deprivation. Geopolitical risk in the countries in which we and our insureds operate may be influenced by factors such as national and international political circumstances (including governmental instability, wars, terrorist acts or security operations), inflation rates, economic uncertainty, economic sanctions, changes in laws or regulation, including laws with respect to taxation, trade barriers, commodity prices, interest rates, restrictions on investments, currency exchange rates and controls. We may experience losses if any such circumstances or events occur and there is no assurance that our reserves will be adequate to cover such losses.

In some cases, we may write policies that specifically insure losses from terrorism. In other cases, we may attempt to exclude losses from terrorism and certain similar risks from policies written by us, but we could be unsuccessful in doing so. Despite our attempts to provide clear policy language, there can be no assurance that a court or an arbitration panel will not limit the enforceability of such policy provisions or otherwise issue a ruling adverse to us.

We currently write policies that cover various types of political risks and trade-related credit risks. Our credit business provides insurance policies to banks, trading companies and manufacturers that insure against the risk of non-payment by their customers. Such risks relate to investments in non-U.S. located assets or financial obligations of predominantly non-U.S. companies in the financial services, mining, energy, telecommunications, commodities, technology and other sectors.

To the extent that the Secretary of the Treasury certifies an event as an act of terrorism, our U.S. insurance operations may be covered by the Terrorism Risk Insurance Program pursuant to the Terrorism Risk Insurance Program Reauthorization Act of 2007 (“TRIPRA”) for up to 84% of losses for 2016, and thereafter for

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up to a percentage of losses for each calendar year which percentage decreases 1 percentage point per calendar year until it reaches 80%, in each case subject to a mandatory deductible of 20% of our prior year’s direct earned premium for covered property and liability coverages. If one or more acts of terrorism result in covered losses exceeding $100 billion in any calendar year, insurers with losses exceeding their deductibles will not be responsible for additional losses. TRIPRA expires on December 31, 2020 and there is no assurance that it will be extended or that significant changes will not be made. We believe that a combination of TRIPRA, our policy exclusions and our reinsurance contracts will protect us from unexpected losses from terrorism and political unrest, but if any of these mechanisms is ineffective, our financial condition and results of operations could be adversely affected.

These risks are inherently unpredictable, although recent events suggest increased frequency and severity. We routinely monitor our exposures to various geographic regions and countries, including countries such as Argentina, Brazil, China, Nigeria, Russia, Turkey and Ukraine, and we seek to diversify geographic exposure. It is difficult to predict the timing of such events or to estimate the amount of loss any given occurrence will generate and it is not possible to completely eliminate our exposure to unforecasted or unpredictable events. Additionally, if any of our counterparties are exposed to any such risks, the risk of non-payment from such counterparties could be increased. To the extent that losses from such risks occur, our financial condition and results of operations could be materially adversely affected.

The effects of emerging claim and coverage issues on our business are uncertain.

As industry practices and legal, judicial, social and other environmental conditions change, unexpected and unintended issues related to claims and coverage may emerge. These issues may adversely affect our business by either extending coverage beyond our underwriting intent or by increasing the number or size of claims. In some instances, these changes may not become apparent until some time after we have issued insurance policy contracts that are affected by the changes. As a result, the full extent of liability under our insurance policy contracts may not be known for many years after a contract is issued. The effects of unforeseen developments or substantial government intervention could adversely impact our ability to achieve our goals.

While our premium rates and reserve levels factor in the potential effects of inflation, our operating results may be adversely impacted by inflation.

Our operations, like those of other property and casualty insurers, are susceptible to the effects of inflation because premiums are established before the ultimate amounts of loss and LAE are known. Although we consider the potential effects of inflation when setting premium rates, our premiums may not fully offset the effects of inflation. Our reserves for losses and LAE include assumptions about future payments for settlement of claims and claims-handling expenses, such as the value of replacing property and associated labor costs for the property business we write, the value of medical treatments and litigation costs. To the extent inflation causes these costs to increase above reserves established for these claims, we will be required to increase our loss reserves with a corresponding reduction in our net income in the period in which the deficiency is identified, which may have a material adverse effect on our financial condition and results of operations. At the same time, inflation may adversely affect the value of fixed-rate, fixed-income securities in our investment portfolio.

We are subject to reinsurance counterparty credit risk.

Although reinsurance makes the assuming reinsurer liable to us to the extent of the risk ceded, we are not relieved of our primary liability to our insureds as the direct insurer. We cannot be sure that our reinsurers will pay all reinsurance claims on a timely basis or at all. For example, reinsurers may default in their financial obligations to us as the result of insolvency, lack of liquidity, operational failure, fraud, asserted defenses based on agreement wordings or the principle of utmost good faith, asserted deficiencies in the documentation of agreements or other reasons. These risks could cause us to incur increased net losses, and, therefore, adversely affect our financial condition. Any disputes with reinsurers regarding coverage under reinsurance contracts could

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be time-consuming, costly and uncertain of success. Downgrades to the credit ratings of our reinsurance counterparties may result in the reduction of rating agency capital credit provided by those reinsurance contracts and could, therefore, result in a downgrade of our own credit ratings. Finally, a material deterioration in the capital levels of our reinsurance counterparties may reduce the amount of statutory capital relief provided by our reinsurance arrangements, which could result in our failure to meet our own statutory capital requirements. We evaluate each reinsurance claim based on the facts of the case, historical experience with the reinsurer on similar claims and existing case law and include any amounts deemed uncollectible from the reinsurer in our reserve for uncollectible reinsurance. See also “Business—Reinsurance.”

Our business is subject to applicable laws and regulations relating to sanctions, anti-money laundering and anti-bribery practices, the violation of which could adversely affect our operations.

We must comply with all applicable economic sanctions, anti-money laundering and anti-bribery laws and regulations of the U.S. and other foreign jurisdictions where we operate, including the UK and Europe. U.S. laws and regulations applicable to us include the economic trade sanctions laws and regulations administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) as well as certain laws administered by the U.S. Department of State. Our business is also subject to anti-money laundering laws and regulations, including the Proceeds of Crime Act 2002, the Terrorism Act 2000 and the Money Laundering Regulations 2007 in the UK, the Bank Secrecy Act of 1970, the Money Laundering Control Act of 1986 and the USA PATRIOT Act of 2001 in the U.S. and equivalent or similar legislation in the other countries where we do business. In addition, we are subject to the Foreign Corrupt Practices Act of 1977 (the “FCPA”) and other anti-bribery laws such as the UK Bribery Act 2010 that generally bar corrupt payments or unreasonable gifts to foreign governments or officials.

These anti-bribery laws also prohibit improper payments or offers of payments to foreign governments and their officials and political parties for the purpose of obtaining or retaining business. We have operations, deal with government entities and have contracts in countries known to experience corruption. Our activities in these countries create the risk of unauthorized payments or offers of payments by our employees, brokers or agents that could be in violation of various laws, including the FCPA, even though these parties are not always subject to our control and supervision. There is no assurance that our existing safeguards and procedures will be completely effective in ensuring compliance with such laws, and our employees, brokers or agents may engage in conduct for which we may be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our reputation, business, operating results, and financial condition.

Regulations administered by OFAC govern transactions with countries and persons subject to U.S. trade sanctions. We are also subject to U.S. Government restrictions on transactions with specific entities and individuals, including, without limitation, those set forth on the Entity List, the Specially Designated Nationals List, the Denied Persons List, the Unverified List, and the U.S. State Department’s lists of debarred parties and sanctioned entities, and we may also be subject to restrictions on transactions with specific entities and individuals subject to the sanctions administered by the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority. These regulations prohibit us from entering into or facilitating unlicensed transactions with, for the benefit of, or in some cases involving the property and property interests of such persons, governments, or countries designated by the relevant sanctions authority under one or more sanctions regimes. Failure to comply with these sanctions and embargoes may result in material fines, sanctions or other penalties being imposed on us or other governmental investigations. In addition, various state and municipal governments, universities and other investors maintain prohibitions or restrictions on investments in companies that do business involving sanctioned countries or entities.

In addition, companies subject to SEC reporting obligations are required under Section 13 of the Exchange Act to disclose in their periodic reports specified dealings or transactions involving Iran or other individuals and entities targeted by certain sanctions promulgated by OFAC that the reporting company or any of

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its affiliates engaged in during the period covered by the relevant periodic report. In some cases Section 13 requires companies to disclose transactions even if they are permissible under U.S. law. The SEC is required to post this notice of disclosure pursuant to Section 13 on its website and report to the President and certain congressional committees regarding such filings. On January 16, 2016, OFAC issued General License H, which authorized certain transactions relating to Iran. We have adopted a policy consistent with General License H, pursuant to which certain of our subsidiaries conduct business relating to Iran, and therefore we may be required to disclose certain transactions pursuant to Section 13 in a future periodic report with the SEC. Disclosure of any such activity, even if such activity is permitted under applicable law, could harm our reputation and have a negative impact on our business.

Although we have policies and controls in place that are designed to ensure compliance with these laws and regulations, it is possible that an employee or intermediary could fail to comply with applicable laws and regulations. In such event, we could be exposed to civil penalties, criminal penalties and other sanctions, including fines or other punitive actions, and the government may seek to impose modifications to business practices, including cessation of business activities in sanctioned countries, and modifications to compliance programs, which may increase compliance costs. In addition, such violations could damage our business and/or our reputation. Such criminal or civil sanctions, penalties, other sanctions, and damage to our business and/or reputation could have a material adverse effect on our financial condition and results of operations.

Changes in accounting practices and future pronouncements may materially impact our reported financial results.

Developments in accounting practices may require us to incur considerable additional expenses to comply with such developments, particularly if we are required to prepare information relating to prior periods for comparative purposes or to apply the new requirements retroactively. The impact of changes in current accounting practices and future pronouncements cannot be predicted but may affect the determination of net income, shareholders’ equity, and other relevant financial statement line items.

In particular, the U.S. Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”, and together with FASB, the “Boards”) continue to work jointly on an insurance contract project, although the Boards acknowledge that the resulting standards will not converge. The FASB and the IASB both issued proposals during 2013 regarding accounting and reporting updates and guidance for insurance contracts which could result in a material change from the current insurance accounting models toward more fair value-based models. The FASB decided that the core accounting framework will remain essentially unchanged for property and casualty insurers, although the required financial statements disclosures have been expanded.

Additionally, the Boards continue to develop a comprehensive model for accounting and reporting of financial instruments, which may lead to further recognition of fair value changes through net income and changes in the way impairments are measured. Changes resulting from these two projects could have a significant impact on the earnings of insurance industry participants. There remains uncertainty with respect to the final outcome of these two projects.

Further, our U.S. insurance subsidiaries are required to comply with statutory accounting principles (“SAP”). SAP and various components of SAP (such as actuarial reserving methodology) are subject to constant review by the National Association of Insurance Commissioners (“NAIC”) and its task forces and committees as well as state insurance departments in an effort to address emerging issues and otherwise improve financial reporting. Various proposals are pending before committees and task forces of the NAIC, some of which, if enacted, could have negative impacts on insurance industry participants. The NAIC is also currently working to reform state regulation in various areas. We cannot predict whether or in what form reforms will be enacted and, if so, whether the enacted reforms will positively or negatively affect us.

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In addition, the NAIC Accounting Practices and Procedures manual provides that state insurance departments may permit insurance companies domiciled therein to depart from SAP by granting them permitted accounting practices. We cannot predict whether or when the insurance departments of the states of domicile of our competitors may permit them to utilize advantageous accounting practices that depart from SAP, the use of which is not permitted by the insurance departments of the states of domicile of our U.S. insurance subsidiaries. We can give no assurance that future changes to SAP or components of SAP or the grant of permitted accounting practices to its competitors will not have a negative impact on us.

Investment in and revenues from our operations outside the U.S. are subject to various risks associated with transacting business in foreign countries, including foreign currency exchange rate risk.

Our operations outside the U.S. are subject to legal, political and operational risks that may be greater than those present in the U.S. An economic recession or downturn, increased competition, or business disruption associated with the political or regulatory environments in the international markets in which we operate could adversely affect us.

In addition, our foreign operations generally conduct business in foreign currencies. As a result, a portion of our assets, liabilities, revenues and expenses are denominated in currencies other than the U.S. dollar and therefore we are subject to risks of foreign currency exchange rate fluctuations. Reported results from our operations in foreign countries may fluctuate from period to period due to exchange rate movements in relation to the U.S. dollar.

A portion of our loss reserves are also in currencies other than the U.S. dollar. In addition, because a portion of our investment portfolio is invested in securities denominated in foreign currencies, our investment income and the value of our investment portfolio may be adversely affected by foreign currency exchange rate fluctuations. We use forward exchange contracts to manage a portion of our foreign currency exposure. However, our foreign currency risk cannot be entirely eliminated and it is possible that we will not successfully structure our forward exchange contracts so as to effectively manage these risks, which could adversely affect our financial condition and results of operations.

Foreign countries have various compliance requirements for financial statement audits and tax filings, which are required in order to obtain and maintain licenses to transact business. If we are unable to properly complete and file our statutory audit reports or tax filings, regulators or tax authorities in the applicable jurisdiction may restrict our ability to do business.

The effects of, and uncertainty regarding, the UK’s likely withdrawal from the European Union could negatively impact our investment portfolio, business and results of operations.

At a referendum in June 2016, a majority of voting UK citizens voted in favor of the UK leaving the European Union. The referendum is non-binding, but it is expected that the UK government will invoke Article 50 of the Treaty on European Union (“Article 50”) to withdraw from the European Union in due course. There is a significant degree of uncertainty about when Article 50 will be invoked and how negotiations relating to the UK’s withdrawal will be conducted, as well as the potential consequences and precise timeframe for such withdrawal. It is expected that the UK’s withdrawal from the European Union will take place within two years of the UK government invoking Article 50. During this period and beyond, the impact on the UK and European economies and the broader global economy could be significant, resulting in negative impacts, such as increased volatility and illiquidity, and potentially lower economic growth on markets in the UK, Europe and globally, which may negatively impact the value of our investment portfolio, business and results of operations.

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We are dependent upon a third party, Genpact, for certain administrative and operational services and, upon the termination of our agreements with this service provider, our business and results of operations could be negatively impacted.

Genpact provides us with global administrative and operational services, including information technology services, back office services related to insurance operations and accounting functions and database management. Upon the expiration of our agreements with Genpact, or if Genpact terminates its agreements with us or fails to perform its obligations, we would be required to devote significant time and resources to replacing these services, and we may be unable to replace these services at prices or on terms as favorable as in our current agreements. In addition, we may be unable to cost-effectively manage certain operational functions of our business or incur unexpected costs if there is any failure or downtime in our financial, administrative or information technology systems during the transitional period. Entry into contracts with less favorable terms or any disruptions in our operational functions may negatively impact our business and results of operations. Any breach of data security could damage our reputation and/or result in monetary damages, which could have a material adverse effect on our results of operations and financial condition. See also Note 16(c) to our audited consolidated financial statements.

We face unforeseen liabilities or asset impairments arising from possible acquisitions and dispositions of businesses or difficulties integrating acquired businesses.

We have engaged in acquisitions of businesses in the past, and may continue to do so in the future. Any future acquisitions may expose us to operational challenges and risks, including:

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integrating financial and operational reporting systems;

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establishing satisfactory budgetary and other financial controls;

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funding increased capital needs and overhead expenses;

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obtaining management personnel required for expanded operations;

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funding cash flow shortages that may occur if anticipated sales and revenues are not realized or are delayed, whether by general economic or market conditions or unforeseen internal difficulties;

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the value of assets acquired may be lower than expected or may diminish due to credit defaults or changes in interest rates and liabilities assumed may be greater than expected;

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the assets and liabilities we may acquire may be subject to foreign currency exchange rate fluctuation; and

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financial exposures in the event that the sellers of the entities we acquire are unable or unwilling to meet their indemnification, reinsurance and other obligations to us.

Additionally, there could be unforeseen liabilities or asset impairments, including goodwill impairments, that arise in connection with businesses that we may acquire in the future. There may be liabilities or asset impairments that we fail, or are unable, to discover in the course of performing due diligence investigations on each business that we have acquired or may acquire. Furthermore, the use of our own funds as consideration in any acquisition would consume capital resources that would no longer be available for other corporate purposes.

Our ability to achieve the benefits we anticipate from any business acquisition will depend in large part upon our ability to successfully integrate such businesses in an efficient and effective manner. We may not be

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able to integrate such businesses successfully, and the process may take longer than expected. The integration of operations may require the dedication of significant management resources, which may distract management’s attention from day-to-day business. If we are unable to successfully integrate the operations of such acquired businesses, we may be unable to realize the benefits we expect to achieve as a result of such acquisitions and our business and results of operations may be lower than expected.

Risks Related to Our Taxation

We may become subject to taxes in the Cayman Islands after October 10, 2026, which may have a material adverse effect on our financial condition and results of operations.

Ironshore Inc. is organized under the laws of the Cayman Islands and has received from the Governor in Cabinet of the Cayman Islands pursuant to the Tax Concessions Law (2011 Revision) of the Cayman Islands an undertaking that until October 10, 2026: (a) no law that is thereafter enacted in the Cayman Islands imposing any tax to be levied on the profits, income, gains or appreciations shall apply to Ironshore Inc. or its operations; and (b) no such tax nor any tax in the nature of estate duty or inheritance tax will be payable by us: (i) on or in respect of shares, debentures or other obligations of Ironshore Inc.; or (ii) by way of the withholding in whole or in part of any relevant payment as defined in Section 6(3) of the Tax Concessions Law (2011 Revision) of the Cayman Islands. This undertaking is subject to the proviso that it is not to be construed so as to prevent the application of any tax or duty to such persons as are ordinarily resident in the Cayman Islands or to prevent the application of any tax payable in relation to any property in the Cayman Islands leased to us. No assurance can be given that we will not become subject to taxes in the Cayman Islands after October 10, 2026.

Ironshore Insurance may become subject to taxes in Bermuda after March 31, 2035, which may have a material adverse effect on our financial condition and results of operations.

The Bermuda Minister of Finance, under the Exempted Undertakings Tax Protection Act 1966, as amended, of Bermuda, has given Ironshore Insurance an assurance that if any legislation is enacted in Bermuda that would impose tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax will not be applicable to Ironshore Insurance or to any of its operations, shares, debentures or other obligations (except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes payable by Ironshore Insurance or us in respect of real property or leasehold interests in Bermuda held by Ironshore Insurance or us) until March 31, 2035. No assurance can be given that Ironshore Insurance will not be subject to any Bermuda tax after March 31, 2035.

We and/or our non-U.S. subsidiaries may be determined to have been engaged in a trade or business in the U.S. for U.S. federal income tax purposes, which could have an adverse effect on our financial condition and results of operations.

Each of Ironshore Inc. and its non-U.S. subsidiaries (other than any UK subsidiary that is a Lloyd’s syndicate member and has one or more managing general agents (called coverholders) in the U.S.) takes the position that it is not engaged in a trade or business in the U.S. for U.S. federal income tax purposes. If Ironshore Inc. or any of such non-U.S. subsidiaries including Ironshore Insurance were determined by the U.S. Internal Revenue Service (the “IRS”) to have been engaged in a trade or business in the U.S., such company generally would be subject to U.S. federal corporate income tax on the portion of its income that is effectively connected to such U.S. trade or business (“ECI”), unless an applicable income tax treaty provides otherwise. In addition, if Ironshore Inc. or any of such non-U.S. subsidiaries is determined to have been engaged in a trade or business in the U.S., such company would be subject to a branch profits tax (at a 30% or lower applicable treaty rate) on its “dividend equivalent amount,” which is generally equal to the portion of such company’s taxable ECI (net of applicable U.S. federal corporate income tax) that is considered to have been withdrawn from the U.S. trade or business.

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We believe that Ironshore Inc. and each of its subsidiaries organized and domiciled outside of the U.S. (other than any UK subsidiary that is a Lloyd’s syndicate member and has one or more managing general agents (called coverholders) in the U.S.) has managed its business and presently intends to continue to manage its business in such a manner that each such company should not be treated as having been engaged in a U.S. trade or business and, thus, should not be subject to U.S. federal taxation (other than the U.S. federal excise tax imposed on insurance and reinsurance premiums attributable to insuring or reinsuring certain U.S. risks and the U.S. federal withholding tax imposed on certain U.S. source investment income). However, because there is considerable uncertainty as to the activities which constitute being engaged in a trade or business within the U.S. and as to the activities that give rise to a permanent establishment for treaty purposes, we cannot be certain that the IRS will not contend successfully that Ironshore Inc. or any of its non-U.S. subsidiaries is/are engaged in a trade or business in the U.S. (and, if an applicable income tax treaty applies, has/have had a permanent establishment in the U.S.). Moreover, because the majority of our shares are expected to continue, immediately following the offering, to be owned by persons that are neither Bermuda residents nor U.S. citizens or residents (“nonqualified persons”), none of our Bermuda subsidiaries would be eligible, immediately following the offering, for any treaty benefits under the income tax treaty between the U.S. and Bermuda (the “Bermuda Treaty”). We expect all of our Bermuda subsidiaries to remain ineligible for any treaty benefits under the Bermuda Treaty until they meet certain ownership/base erosion requirements for the entire taxable year. Qualification for the applicable income tax treaties between the U.S. and our other non-U.S. jurisdictions (including the income tax treaty between the U.S. and the UK (the “UK Treaty”) and the income tax treaty between the U.S. and Ireland (the “Irish Treaty”)) depends on whether several requirements can be satisfied, including whether the relevant subsidiaries are considered being engaged in active insurance or reinsurance business in such non-U.S. jurisdictions, and there is no assurance that these requirements have been or will be satisfied.

Any unanticipated U.S. federal corporate income tax or branch profits tax could have a material adverse effect on our financial condition and results of operations.

We may become subject to U.S. withholding and information reporting requirements under the Foreign Account Tax Compliance Act provisions.

The Foreign Account Tax Compliance Act of 2010 (“FATCA”) provisions generally impose a 30% U.S. federal withholding tax with respect to (i) certain U.S. source income (including interest, dividends and insurance and reinsurance premiums) and, beginning on January 1, 2019, gross proceeds from any sale or other disposition, of property that can produce U.S. source interest or dividends (“withholdable payments”) and (ii) “passthru payments” (generally, withholdable payments and payments that are attributable to withholdable payments) made by foreign financial institutions (“FFIs”)) if such payments are made to certain non-U.S. entities. The commencement of FATCA withholding on withholdable payments began on July 1, 2014, with withholding on passthru payments made by FFIs taking effect no earlier than January 1, 2019. In general, withholdable payments and passthru payments made to a FFI will be subject to FATCA withholding unless the FFI registers with the IRS and agrees to provide extensive information regarding its U.S. account holders, which include certain equity and debt holders of the FFI. In contrast, withholdable payments and passthru payments made to a non-U.S. entity that is not an FFI (“non-financial foreign entity” or “NFFE”) generally will not be subject to FATCA withholding if the stock of such entity is publicly traded on a qualified U.S. stock exchange or such entity is a subsidiary of an NFFE whose stock is publicly traded on a qualified U.S. stock exchange.

Under the regulations implementing FATCA, a foreign insurance company that issues only property and casualty insurance contracts should not be considered an FFI, but a company (such as one of our Bermuda investment subsidiaries) might be treated as an FFI if its gross income is primarily attributable to investing, reinvesting, or trading in financial assets and the entity has an investment manager. A foreign holding company (such as Ironshore Inc. and our Bermuda investment subsidiary holding company) that is part of an expanded affiliated group that includes an investment subsidiary that is an FFI might also be treated as an FFI.

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We believe that we have properly characterized Ironshore Inc. and each of its non-U.S. subsidiaries as either an FFI or an NFFE and have complied with all due diligence, reporting and other applicable requirements under FATCA. However, the FATCA regime is new and very complex. There can be no assurance that we have in fact fully complied with all applicable requirements under FATCA or continue to comply with such requirements in the future. Failure to comply with any applicable requirement under FATCA may cause certain payments made to us to be subject to FATCA withholding, which could have an adverse impact on our financial condition and results of operations.

Changes in U.S. federal income tax law or relevant non-U.S. tax laws could adversely affect our financial condition and results of operations and the investment in our ordinary shares.

Legislation has previously been introduced, and may be introduced in the future, in the U.S. Congress intended to eliminate certain perceived tax advantages of companies (including insurance companies) that have legal domiciles outside the U.S. but have certain U.S. connections. For example, legislation has been introduced in previous sessions of Congress and in the Obama Administration’s budget proposal for fiscal year 2017 to limit the deductibility of reinsurance premiums paid by U.S. companies to non-U.S. affiliates. Another legislative proposal would treat a non-U.S. corporation as a U.S. corporation for U.S. federal income tax purposes if such corporation were considered to be primarily managed and controlled in the U.S.

In 2013, Senate Finance Committee then-Chairman Max Baucus (D-MT) released several tax reform discussion drafts on international tax issues (the “Baucus Bill”) and House Ways and Means Committee Chairman Dave Camp published a tax reform proposal (the “Camp Bill”). Both the Baucus Bill and the Camp Bill contain several provisions that, if enacted, could adversely affect us. For example, the Baucus Bill contains a provision that would repeal the portfolio interest exemption on corporate debt, which could significantly increase tax liabilities on our investment portfolio.

In February 2016, the United States Treasury released a revised 2016 U.S. Model Income Tax Convention, which contained several substantive changes to the 2006 Model Income Tax Convention. These changes outline the United States Treasury’s positions on related issues in future negotiations. While the changes would have no legal effect unless they are incorporated in the relevant income tax treaties through negotiation with other contracting states, there is no assurance that the adoption of any of the changes would not adversely affect income tax liabilities of us or any of our subsidiaries.

If any of the foregoing (or other) legislative proposals were enacted, there could be an adverse impact on our financial condition and results of operations.

The UK companies within the Ironshore group (being Ironshore International Ltd., Ironshore Agency (U.K.) Limited, ICCL, Pembroke JV Limited, Ironshore CC (Two) Ltd., Ironshore CC (Three) Ltd. and PMA, together the “Ironshore UK Subsidiaries”) are subject to UK tax in respect of their worldwide income and gains, which represent a significant portion of the group’s income and operations. Rates of taxation in the UK may change in the future. Any change in the basis or rate of UK corporation tax could have a materially adverse effect on our financial results.

Our operations in non-U.S. jurisdictions are subject to change in tax laws in these jurisdictions, which could also have an adverse impact on our financial condition and results of operations.

The UK tax status of us or any of our subsidiaries could adversely affect our financial results.

Except for the Ironshore UK Subsidiaries, neither we nor any of our subsidiaries are incorporated in the UK. Accordingly, neither we nor any of our subsidiaries (other than the Ironshore UK Subsidiaries) should be treated as being resident in the UK for corporation tax purposes unless their central management and control is exercised in the UK. The concept of central management and control is indicative of the highest level of key

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strategic control of the business of a company, which is wholly a question of fact. The directors of each member of the Ironshore group of companies (other than the Ironshore UK Subsidiaries) intend to manage the relevant company’s affairs with the aim that it is not resident in the UK for UK tax purposes.

A company not resident in the UK for UK tax purposes will be subject to UK corporation tax if it carries on a trade in the UK through a permanent establishment in the UK. The charge to UK corporation tax is limited to profits (both income and chargeable gains) attributable directly or indirectly to such permanent establishment, and the current main rate of corporation tax for companies is 20%.

The UK has no double taxation treaty with Bermuda or the Cayman Islands. A company that is neither resident in the UK nor entitled to the protection afforded by a double taxation treaty between the UK and the jurisdiction in which it is resident will be subject to income tax in the UK (in addition to any income tax suffered by way of deduction or withholding) on the profits of a trade carried on in the UK, even if that trade is not carried on through a permanent establishment in the UK. The charge to UK income tax is at the basic rate (which is currently 20%) and is limited to the profits arising from the part of the trade carried on in the UK.

We and each of our subsidiaries (other than the Ironshore UK Subsidiaries) intend to operate in such a manner so as not to carry on a trade or business in the UK, whether or not through a permanent establishment located therein. There is no certainty, however, that this will not be challenged by Her Majesty’s Revenue & Customs or that this will continue to be the position in the future.

A successful challenge to the residence status for UK tax purposes of us or any of our subsidiaries (other than the Ironshore UK Subsidiaries) or as to whether any of them should be regarded as carrying on a trade in the UK or a change in the way they are managed or conduct their business could have a material adverse effect on the results of the group’s operations.

Transactions between our subsidiaries and any other member of our group of companies could be subject to additional tax under transfer pricing regimes, which could adversely affect our financial results.

Transactions between any of our subsidiaries and any other member of our group of companies are subject to various transfer pricing regimes. In general, these transfer pricing regimes require arm’s-length amounts to be brought into account (either as taxable receipts or deductible payments, as appropriate) for corporation tax purposes where the relevant payment or receipt is not on arm’s-length terms and a local tax advantage is obtained as a result. In particular, the reinsurance arrangements between one or more of our U.S. subsidiaries or Ironshore UK Subsidiaries, on the one hand, and Ironshore Insurance (a Bermuda company), on the other hand, are subject to the U.S. or UK transfer pricing regime. The Directors consider that these reinsurance arrangements are on arm’s-length terms and should not give rise to transfer pricing adjustments. However, there can be no certainty that the applicable tax authority would not seek to challenge this (or any other intra-group transaction involving our subsidiaries) nor that any such challenge would not be successful. If the reinsurance, or the terms of any other intra group transaction, is found not to be on arm’s-length terms and, as a result, a local tax advantage is being obtained, an adjustment will be required to compute local taxable profits as if such transaction were on arm’s-length terms. Any transfer pricing adjustment could adversely impact the tax charge suffered by the Ironshore group.

The impact of Bermuda’s letter of commitment to the OECD to eliminate harmful tax practices is uncertain and could adversely affect our tax status in Bermuda.

The Organization for Economic Cooperation and Development (“OECD”) has published reports and launched a global initiative among member and non-member countries on measures to limit harmful tax competition. These measures are largely directed at counteracting the effects of tax havens and preferential tax regimes in countries around the world. Bermuda was not listed in the most recent report as an uncooperative tax haven jurisdiction because it had previously committed to eliminate harmful tax practices, to embrace

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international tax standards for transparency, to exchange information and to eliminate an environment that attracts business with no substantial domestic activity. We are not able to predict what changes will arise from the commitment or whether such changes will subject us to additional taxes.

We may become subject to increased taxation in Bermuda and other countries as a result of the OECD’s plan on “base erosion and profit shifting.”

The OECD, with the support of the Group of Twenty (“G20”), initiated the “base erosion and profit shifting” (“BEPS”) project in 2013 in response to concerns that international tax standards have not kept pace with changes in global business practices and that changes are needed to international tax laws to address situations where multinational enterprises may pay little or no tax in certain jurisdictions by shifting profits away from jurisdictions where the activities creating those profits may take place. In October 2015, the OECD issued “final reports” in connection with the BEPS project. The final reports have been approved for adoption by the G20 finance ministers in November 2015. The final reports provide the basis for international standards for corporate taxation that are designed to prevent, among other things, the artificial shifting of income to tax havens and low-tax jurisdictions, the erosion of the tax base through interest deductions on intercompany debt and the artificial avoidance of permanent establishments (i.e., tax nexus with a jurisdiction). The measures also contemplate the development of a multilateral instrument to incorporate and facilitate changes to tax treaties.

Legislation to adopt these standards has been enacted or is currently under consideration in a number of jurisdictions to implement these standards, including country-by-country reporting. As a result, our income may be taxed in jurisdictions where it is not currently taxed and at higher rates of tax than currently taxed, which may substantially increase our effective tax rate. Also, the adoption of these standards may increase the complexity and costs associated with tax compliance and adversely affect our financial position and results of operations.

Risks Related to Taxation of Our Shareholders

We may be treated as a passive foreign investment company, in which case a U.S. holder of our ordinary shares would be subject to disadvantageous rules under the U.S. federal income tax laws.

If we are treated as a “passive foreign investment company” (“PFIC”), as defined in “Certain Income Tax Considerations—Taxation of Shareholders—U.S. Holders—Passive Foreign Investment Companies” in any taxable year, U.S. shareholders of our ordinary shares would be subject to unfavorable U.S. federal income tax treatment, including that any dividends we pay with respect to our ordinary shares would not be “qualified dividends” eligible to be taxed to individuals at preferential tax rates and any gain recognized on a disposition of our ordinary shares would be treated as ordinary income and may be subject to an interest charge.

We believe that our financial reserves are not in excess of the reasonable needs of our insurance business, and that we are actively engaged in insurance activities that involve sufficient transfer of insurance risk for purposes of the PFIC rules. Consequently, we believe that we should not be considered a PFIC for the current year, and we presently intend to cause Ironshore Inc. and each of our non-U.S. insurance subsidiaries to operate in such a manner that we should not become a PFIC in any future year. However, there is very little authority as to what constitutes the active conduct of an insurance business for purposes of the PFIC rules, and the IRS could take the position that we are a PFIC. Moreover, PFIC classification is a factual determination made annually, and even if we are not a PFIC in the current year, we could become a PFIC in later years. Accordingly, no assurance can be given that we will not be treated as a PFIC with respect to the current year or any future year.

In April 2015, the IRS issued proposed regulations to clarify the application of foreign insurance company exception to the PFIC rules (the “proposed PFIC insurance regulations”). Under the proposed PFIC insurance regulations, for a foreign insurance company to qualify for the active insurance business exception, it must, through its own employees, be actively engaged in issuing insurance contracts and reinsuring risks underwritten by insurance companies and investment activities and administrative services that are required to

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support or are substantially related to insurance contracts issued or reinsured. Although the proposed PFIC insurance regulations are not effective until finalized, it is possible that, if finalized in their current form, the regulations could be interpreted to heighten the risk that we could be considered a PFIC.

Moreover, even if we are not treated as a PFIC under current law (or as a result of the proposed PFIC insurance regulations being finalized in their current form), we may become a PFIC as a result of change in law (including the adoption of final PFIC insurance regulations that are less favorable than the proposed PFIC insurance regulations). As described below, certain legislative proposals would eliminate or significantly modify the PFIC active insurance exception on which we have relied on. There is no assurance that any such legislative proposal will not be enacted.

We may be treated as a controlled foreign corporation, and we might be subject to the rules for related person insurance income. In either case this may subject a U.S. holder of our ordinary shares to disadvantageous rules under the U.S. federal income tax laws.

If we are a “controlled foreign corporation” (a “CFC”), as defined in “Certain Income Tax Considerations—Taxation of Shareholders—U.S. Holders—Controlled Foreign Corporation Rules,” each 10% U.S. Shareholder (as defined in “Certain Income Tax Considerations—Taxation of Shareholders—U.S. Holders—Controlled Foreign Corporation Rules”) must annually include in its income its pro rata share of our “subpart F income,” even if no distributions are made. Because of the provisions in our organizational documents that limit voting power and other factors, we believe that no person who acquires our shares in this offering should be treated as owning (directly, indirectly through non-U.S. entities, or constructively) 10% or more of the total voting power of all classes of shares of Ironshore Inc. or its non-U.S. subsidiaries. However, as these provisions have not been examined by the IRS, the IRS could successfully challenge the effectiveness of these provisions in our organizational documents. Accordingly, no assurance can be given that a U.S. holder of our ordinary shares will not be characterized as a 10% U.S. Shareholder or that the Company and/or one more of its non-U.S. subsidiaries will not be characterized as a CFC.

A non-U.S. subsidiary will be treated as a CFC for “related person insurance income” (“RPII”) purposes for a taxable year if, on any day of such taxable year, U.S. persons who directly, indirectly or constructively own any amount of such subsidiary’s shares (whether or not 10% U.S. shareholders) are treated as owning 25% or more of such subsidiary’s shares by vote or value. In such event, if (1) 20% or more of its gross income in any taxable year consists of RPII (the “de minimis gross RPII threshold”) and (2) direct or indirect insureds, whether or not U.S. persons, and persons related to such insureds own directly, indirectly or constructively 20% or more of the voting power or value of such subsidiary’s shares (the “de minimis ownership threshold”), each U.S. person who owns any shares of such non-U.S. subsidiary directly or indirectly on the last day of the taxable year (whether or not a 10% U.S. shareholder) would be required to include its allocable share of such subsidiary’s RPII for the taxable year in its income, even if no distributions are made.

Generally, we do not expect the gross RPII of any of our non-U.S. subsidiaries to equal or exceed de minimis gross RPII threshold in any taxable year for the foreseeable future. Consequently, we do not expect any U.S. person owning our ordinary shares to be required to include in such U.S. person’s gross income for U.S. federal income tax purposes any RPII income, but there can be no assurance that this will be the case. If a non-U.S. subsidiary is considered a RPII CFC (as described above) for a taxable year and such non-U.S. subsidiary does not meet the de minimis gross RPII threshold, each U.S. person who owns any shares of such non-U.S. subsidiary directly or indirectly on the last day of the taxable year (whether or not a 10% U.S. shareholder) would likely be required to include its allocable share of such subsidiary’s RPII for the taxable year in gross income (because it is expected that the de minimis ownership threshold will be exceeded).

U.S. tax-exempt entities who own our ordinary shares may recognize unrelated business taxable income.

A U.S. tax-exempt entity may recognize unrelated business taxable income (which generally will be taxable to such U.S. tax-exempt entity notwithstanding its tax-exempt status) if a portion of our subpart F

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insurance income is allocated to it. In general, subpart F insurance income will be allocated to a U.S. tax-exempt entity owning (or treated as owning) our ordinary shares if we are a CFC as discussed above and such U.S. tax-exempt entity is characterized as a 10% U.S. Shareholder or we earn RPII and the exceptions described above do not apply. The unrelated business taxable income provision may also apply if a tax-exempt entity incurs any acquisition indebtedness with respect to such entity’s ordinary shares.

Changes in U.S. federal income tax law and regulations could subject a U.S. holder of our ordinary shares to disadvantageous rules under U.S. federal income tax laws.

The Baucus Bill contains a provision that would eliminate, and the Camp Bill contains a provision that would significantly modify, the PFIC exception for certain insurance companies. The Baucus Bill also contains a provision that would change the definition of U.S. shareholder for the CFC purposes. These changes, if enacted, could subject U.S. holders of our ordinary shares to disadvantageous PFIC and CFC rules as described above.

Additionally, the U.S. federal income tax laws and interpretations thereof regarding whether a company is a PFIC or whether U.S. persons would be required to include in their gross income the “subpart F income” or the RPII of a CFC are subject to change, possibly on a retroactive basis. There are currently no final regulations regarding the application of the PFIC rules to insurance companies and the regulations regarding RPII are still in proposed form. In April 2015, the IRS issued proposed regulations in an attempt to clarify the application of foreign insurance company exception to the PFIC rules (the “proposed PFIC insurance regulations”). Under the proposed PFIC insurance regulations, for a foreign insurance company to qualify for the active insurance business exception, it must, through its own employees, be actively engaged in issuing insurance contracts and reinsuring risks underwritten by insurance companies and investment activities and administrative services that are required to support or are substantially related to insurance contracts issued or reinsured. New regulations or pronouncements interpreting or clarifying subpart F income, RPII or PFIC rules may be forthcoming. We cannot be certain if, when or in what form such regulations or pronouncements may be provided and whether such guidance will have a retroactive effect.

Risks Related to This Offering and Ownership of Our Ordinary Shares

Due to market volatility and other factors, our share price could change significantly and you could lose all or part of your investment.

The stock markets generally have experienced extreme volatility, often unrelated to the operating performance of the individual companies whose securities are traded publicly. Broad market fluctuations and general economic conditions may materially adversely affect the trading price of our ordinary shares.

Significant price fluctuations in our ordinary shares may result in you not being able to resell your shares at or above the initial public offering price due to a number of factors such as those listed in “—Risks Related to Our Business” and the following, some of which are beyond our control:

•

actual or anticipated fluctuations in our operating results or financial condition;

•

the failure of financial analysts to cover our ordinary shares after this offering;

•

results of operations that vary from the expectations of securities analysts and investors;

•

results of operations that vary from those of our competitors;

•

changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors;

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•

announcements by us, our competitors or our vendors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments;

•

a default under the agreements governing our indebtedness;

•

new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

•

future sales of our ordinary shares by us or our directors, executives or significant shareholders;

•

changes in domestic and international economic and political conditions and regionally in our markets; and

•

investor perceptions of us and the property/casualty insurance industry.

If securities analysts do not publish research or reports about us and our industry, or if they issue unfavorable commentary about us or our industry or downgrade our ordinary shares, the price of our ordinary shares could decline.

The trading market for our ordinary shares will depend in part on the research and reports that securities analysts publish about us and our industry. We do not have control over these analysts. One or more analysts could downgrade our shares or issue other negative commentary about us or our industry. In addition, we may be unable or slow to attract research coverage, and the analysts who publish information about our ordinary shares will have had relatively little recent experience with us, which could affect their ability to accurately forecast our results or make it more likely that we fail to meet their estimates. Alternatively, if one or more of these analysts cease coverage of us, we could lose visibility in the market. As a result of one or more of these factors, the trading price for our shares could decline.

Future offerings of debt or equity securities by us or of our outstanding ordinary shares by Fosun may adversely affect the market price of our ordinary shares.

In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional ordinary shares or offering debt or additional equity securities, including commercial paper, medium-term notes, senior or subordinated notes or preferred shares. Issuing additional ordinary shares or other equity offerings may dilute the economic and voting rights of our existing shareholders or reduce the market price of our ordinary shares, or both. Upon liquidation, holders of our debt securities and preferred shares, if issued, and lenders with respect to other borrowings, would receive a distribution of our available assets prior to the holders of our ordinary shares. Preferred shares, if issued, could have a preference with respect to liquidation distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our ordinary shares. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our ordinary shares bear the risk of our future offerings reducing the market price of our ordinary shares and diluting their shareholdings in us.

If Fosun sells, or the market perceives that Fosun intends to sell, substantial amounts of our ordinary shares in the public market following this offering, the market price of our shares could decline significantly. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price we deem appropriate. See “Shares Eligible for Future Sale.”

Fosun is not subject to any contractual obligation to retain its controlling interest, except that it has agreed, subject to certain exceptions, not to offer, sell, contract to sell, pledge, or otherwise dispose of, or to enter into any hedging transaction with respect to, any of our ordinary shares or any securities convertible into or

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exercisable or exchangeable for our ordinary shares for a period of at least ● days after the date of this prospectus without the prior written consent of the lead underwriters, except to the extent necessary to allow Fosun to make available to its shareholders an “assured entitlement” to a certain number of our ordinary shares, not to exceed ● ordinary shares, as required pursuant to Practice Note 15 of the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange. See “Principal and Selling Shareholders—Assured Entitlement Distribution.”

Fosun will continue to have a controlling interest in our company, and Fosun’s interests may be different from or conflict with those of our other shareholders.

Prior to this offering Fosun beneficially owns 100% of our outstanding shares and after the consummation of this offering Fosun will beneficially own ●% of our outstanding shares (●% if the underwriters’ option to purchase additional shares is exercised) assuming completion of the assured entitlement distribution to Fosun’s shareholders. As a consequence, subject to the final outcome of the CFIUS review described under “Business—Legal Proceedings—CFIUS Review,” Fosun may be able to exert a significant degree of influence or actual control over our management and affairs and control matters requiring shareholder approval, including the election of directors, a merger, consolidation or sale of all or substantially all of our assets, and any other significant transaction. The interests of Fosun may not always coincide with our interests or the interests of our public shareholders.

Fosun makes investments in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us. Fosun may also pursue, for its own account, acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. Such actions on the part of Fosun and inaction on our part could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our board of directors intends to adopt corporate governance guidelines that will, among other things, address potential conflicts between a director’s interests and our interests. In addition, our Code of Business Conduct and Ethics, among other things, requires our employees to avoid actions or relationships that might conflict or appear to conflict with their job responsibilities or our interests. These corporate governance guidelines and Code of Business Conduct and Ethics will not, by themselves, prohibit transactions with Fosun and its affiliates.

In addition, the controlling ownership of Ironshore by Fosun, which is based in China and has non-investment grade credit ratings, may adversely affect the perception of Ironshore among brokers and insureds, particularly in certain lines of business or by certain types of insureds, such as those connected to the U.S. government.

Any future issuance of additional ordinary shares in connection with incentive plans, acquisitions or otherwise will dilute all other shareholdings.

As of March 31, 2016, we had 400,000,000 ordinary shares authorized and 140,657,340 ordinary shares outstanding. We may issue authorized and unissued ordinary shares without any action or approval by our shareholders. We also intend to continue to evaluate acquisition opportunities and may issue ordinary shares in connection with these acquisitions. Any ordinary shares issued in connection with incentive plans, acquisitions, the exercise of outstanding share options, if any, or otherwise would dilute the percentage ownership held by the investors who purchase ordinary shares in this offering.

Because Ironshore Inc. is a holding company and substantially all of our operations are conducted by our operating subsidiaries, our ability to pay dividends will depend on our ability to obtain cash dividends or other permitted payments from our operating subsidiaries.

We conduct substantially all of our operations through our operating subsidiaries. Our ability to pay dividends on our ordinary shares in the future will depend on our ability to obtain cash dividends or other

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permitted payments from our operating subsidiaries. Our operating subsidiaries are separate and distinct legal entities that have no obligation to pay any dividends. In order to improve or maintain their financial strength ratings, our insurance subsidiaries may limit the amount of dividends that they would otherwise pay to us. Moreover, the ability of our insurance company subsidiaries to pay dividends is limited by regulatory requirements. See “Business—Regulation.”

We intend to pay quarterly cash dividends on our ordinary shares at an initial rate of $● per ordinary share beginning in ●. The timing and amount of any cash dividends, however, will be at the discretion of our board of directors and will depend upon our results of operations, financial condition, cash requirements and contractual restrictions and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we incur. As a result, you may not receive any return on an investment in our ordinary shares unless you sell our ordinary shares for a price greater than that which you paid for them. See also “Description of Share Capital—Ordinary Shares—Dividends” and “Dividend Policy.”

Anti-takeover provisions in our charter documents could discourage, delay or prevent a change in control of our company and may adversely affect the trading price of our ordinary shares.

Certain provisions of the corporate law of the Cayman Islands and the amended and restated articles of association to be adopted by our shareholders prior to the consummation of this offering (our “articles of association”) may have the effect of discouraging, delaying or preventing a change in our management or a change in control over us that shareholders may consider favorable. In the absence of a takeover attempt, the existence of any of these provisions could adversely affect the prevailing market price of our ordinary shares if they were viewed as discouraging takeover attempts in the future.

Among other things, our articles of association will:

•

authorize the issuance of “blank check” preferred shares that could be issued by our board of directors to thwart a takeover attempt;

•

not provide for cumulative voting;

•

provide for a classified board with three classes and each class serving for a staggered three-year term, which prevents shareholders from electing an entirely new board of directors at any shareholders’ meeting;

•

provide that the number of directors on our board of directors is fixed by our board of directors within the limits provided in our articles of association and that vacancies on the board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office;

•

allow directors to be removed only for cause;

•

not permit shareholders to call special meetings of shareholders;

•

not permit shareholders to act by written consent;

•

require supermajority shareholder voting to effect amendments to our articles of association and memorandum of association; and

•

require shareholders to provide advance notice of proposals to be considered at a shareholders meeting and director nominations under specific procedures.

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In addition, our articles of association will provide that the courts located within the Cayman Islands will be the sole and exclusive forum for any action or proceeding brought by a shareholder on our behalf, any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent to us or our shareholders, any action asserting a claim or dispute arising pursuant to any provision of the Companies Law of the Cayman Islands, our memorandum of association or our articles of association or any action asserting a claim governed by the internal affairs doctrine or otherwise relating to the internal affairs of the Company, including without limitation, our governance and the relationship between our board of directors, officers and shareholders, unless, in the case of any of the foregoing, the Company consents in writing to the selection of an alternative forum for any such particular action or proceeding. See “Description of Share Capital.”

We may repurchase your ordinary shares without your consent.

Under our articles of association and subject to the law of the Cayman Islands, we have the right, but not the obligation, to require a shareholder to sell to us at fair market value, as determined by our board of directors, some or all of the ordinary shares owned by such shareholder to the extent that the board of directors determines that such shareholder’s ownership of such shares may result in an adverse tax effect on Ironshore Inc. or any of its subsidiaries or any shareholder (or any direct or indirect owner of such shareholder); provided that the board of directors will use reasonable efforts to exercise such discretion equally among similarly situated shareholders.

The enforcement of civil liabilities against us may be difficult.

We and certain of our officers, directors and consultants are not, or may not be, citizens or residents of the U.S., and all or a substantial portion of their respective assets may be located outside of the U.S. As a result, it may be difficult for holders of our ordinary shares to effect service of process within the U.S. upon us or upon such officers, directors or consultants or to realize against them or their assets in the event of any judgment of courts of the U.S. predicated upon civil liabilities under the U.S. federal securities laws or otherwise. For execution or enforcement of any judgment against us, or our officers, directors and consultants, or for the settlement of any dispute, it may be necessary to institute legal proceedings outside the U.S., and it may not be possible to do so. Even if such proceedings are feasible, it may be difficult for holders of the ordinary shares to enforce civil liabilities in foreign jurisdictions, either in original actions or in actions for enforcement of judgments of U.S. courts, predicated upon the U.S. federal securities laws or otherwise.

We have been advised by Conyers Dill & Pearman, our Cayman Islands counsel, that there is doubt as to whether the courts of the Cayman Islands would enforce (i) judgments of U.S. courts obtained in actions against us or our directors and officers who reside outside the U.S. predicated upon the civil liability provisions of the U.S. federal securities laws or (ii) original actions brought in the Cayman Islands against us or those persons predicated solely upon U.S. federal securities laws. We have also been advised by Conyers Dill & Pearman that there is no treaty in effect between the U.S. and the Cayman Islands providing for such enforcement, and there are grounds upon which Cayman Islands courts may not enforce judgments of U.S. courts. Certain remedies available under the laws of the U.S. jurisdictions, including certain remedies available under the U.S. federal securities laws, may not be allowed in the Cayman Islands courts as contrary to that jurisdiction’s public policy.

We will incur significant additional costs as a public company. If we fail to accurately predict or effectively manage these costs, our operating results could be materially and adversely affected.

As a public company, we will incur significantly higher accounting, treasury, legal, risk management, financial compliance, corporate governance, D&O insurance and investor relations and other support expenses than we have as a private company. The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), Securities and Exchange Commission (“SEC”) regulations and Stock Exchange requirements have imposed substantial requirements on public companies. We expect these rules, regulations and requirements to significantly increase our accounting, legal, compliance and other costs and to make some activities more time-consuming and costly.

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Furthermore, our management will have increased demands on its time in order to ensure we comply with public company reporting requirements and the compliance requirements of the Sarbanes-Oxley Act, SEC regulations and Stock Exchange requirements.

We also will need to hire additional accounting, legal, compliance and administrative staff with experience working for public companies. We may be unable to hire such additional staff on terms that are favorable to us, or at all. In addition, such additional staff may not be able to provide such services at levels sufficient to comply with these requirements. Moreover, the rules that will be applicable to us as a public company after this offering could make it more difficult and expensive for us to attract and retain qualified members of our board of directors and qualified executive officers. We also anticipate that these rules will make it more expensive for us to obtain D&O insurance, and we may be required to incur substantially higher costs to obtain such coverage. If we fail to predict these costs accurately or to manage these costs effectively, our operating results could be adversely affected.

We will be required by Section 404 of the Sarbanes-Oxley Act to evaluate the effectiveness of our internal controls. If we are unable to achieve and maintain effective internal controls, our operating results and financial condition could be harmed.

We will be required to comply with Section 404 of the Sarbanes-Oxley Act beginning with the year ending December 31, 2017. Section 404 will require that we evaluate our internal control over financial reporting to enable management to report on, and our independent registered public accounting firm to audit, the effectiveness of those controls. Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements in accordance with generally accepted accounting principles in the U.S. While we have begun the lengthy process of evaluating our internal controls, we are in the early phases of our review and will not complete our review until after this offering is completed. We cannot predict the outcome of our review at this time. During the course of the review, we may identify control deficiencies of varying degrees of severity.

Management has taken steps to improve and continues to improve our internal control over financial reporting, including identification of the gaps in skills base and expertise of staff required in the finance group to operate as a public company. To comply with these requirements, we will need to upgrade our systems, including information technology, implement additional financial and management controls, reporting systems and procedures and hire additional accounting, finance and legal staff and will incur costs in connection with the foregoing. If we are unable to upgrade our systems and procedures in a timely and effective fashion, we may not be able to comply with our financial reporting requirements and other rules that apply to public companies.

As a public company, we will be required to report control deficiencies that constitute a material weakness in our internal control over financial reporting. We also will be required to obtain an audit report from our independent registered public accounting firm regarding the effectiveness of our internal controls over financial reporting. If we fail to implement the requirements of Section 404 in a timely manner, if we or our independent registered public accounting firm are unable to conclude that our internal control over financial reporting is effective or if we fail to comply with our financial reporting requirements, investors may lose confidence in the accuracy and completeness of our financial reports. In addition, we or members of our board of directors and management could be the subject of adverse publicity, investigations and sanctions by regulatory authorities, including the SEC and the Stock Exchange, and be subject to shareholder lawsuits. Any of the above consequences could cause our share price to decline materially and could impose significant unanticipated costs on us.

If our management team is unable to manage our business as a public company, our business may be harmed.

We have historically operated as a private company. Following the completion of this offering, we will operate as a public company. Although certain members of our management have experience managing public

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companies, our management team together does not have experience managing our business as a public company. If we are unable to successfully manage and operate our company as a public entity, our business and results of operations will be adversely affected.

An active, liquid trading market for our ordinary shares may not develop and the value of your shares may be impaired.

Prior to this offering, there has not been a public market for our ordinary shares. We cannot predict the extent to which investor interest in our company will lead to the development of a trading market on the Stock Exchange, how active and liquid that market may become or the prices at which our ordinary shares will trade following this offering. If an active and liquid trading market does not develop, you may have difficulty selling any of our ordinary shares that you purchase and the value of your shares may be impaired.

The initial public offering price for the shares will be determined by negotiations between Fosun, us and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The market price of our ordinary shares may decline below the initial offering price, and you may not be able to sell any of your ordinary shares at or above the price you paid in this offering, or at all.

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USE OF PROCEEDS

The proceeds from this offering, before deducting underwriting discounts, will be approximately $● million (or $● million if the underwriters exercise their option to purchase additional shares in full), assuming the shares offered are sold for $● per share, the midpoint of the price range set forth on the cover of this prospectus. The selling shareholders will receive all of the proceeds from this offering, and we will not receive any proceeds from this offering.

DILUTION

All ordinary shares being sold in this offering were issued and outstanding prior to this offering. Accordingly, this offering will not have a dilutive effect on our shareholders.

Dilution to investors participating in an offering occurs when the per share price in the offering is greater than the book value per share attributable to equity holders as adjusted to give effect to the offering. Our book value represents our total shareholders’ equity less non-controlling interest, and our book value per share represents our total shareholders’ equity less non-controlling interest divided by the number of our ordinary shares outstanding. Our book value per ordinary share will not be affected by the sale of ordinary shares in this offering. To the extent that following this offering, we grant and issue equity awards under an equity incentive plan or we issue additional ordinary shares in the future, there may be dilution to investors participating in this offering.

DIVIDEND POLICY

We are a holding company with no significant business operations of our own. All of our business operations are conducted through our subsidiaries. Dividends and loans from, and cash generated by, our subsidiaries will be our principal sources of cash to repay indebtedness, fund operations and pay dividends. Accordingly, our ability to pay dividends to our shareholders will depend on the earnings and distributions of funds from our subsidiaries. Further, our ability to pay dividends may be restricted by covenants in the terms of any existing and future outstanding indebtedness we incur. See “Risk Factors—Risks Related to This Offering and Ownership of Our Ordinary Shares—Because Ironshore Inc. is a holding company and substantially all of our operations are conducted by our operating subsidiaries, our ability to pay dividends will depend on our ability to obtain cash dividends or other permitted payments from our operating subsidiaries.” We believe that the restrictions contained in the terms of our existing indebtedness will not impair our ability to pay quarterly dividends as described above.

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CAPITALIZATION

The following table sets forth our debt, shareholders’ equity and our consolidated capitalization as of March 31, 2016.

You should read this table together with “Selected Historical Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.


	March 31, 2016
	(dollars in thousands, except share and per share amounts)
Debt	$	347,421
Shareholders’ equity:
Ordinary shares, 400,000,000 authorized, par value $0.01 per share, 140,657,340 shares issued and outstanding		1,407
Additional paid-in capital		1,431,044
Accumulated other comprehensive loss		(88	)
Retained earnings		629,885

Total shareholders’ equity attributable to common shareholders		2,062,248

Total capitalization	$	2,409,669

Ratio of debt to total capitalization		14.4	%

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SELECTED HISTORICAL FINANCIAL INFORMATION

The following table sets forth our selected historical consolidated financial information derived from (i) our consolidated financial statements, which have been audited by Ernst & Young LLP, for the years ended December 31, 2015, 2014 and 2013 and as of December 31, 2015 and 2014 included in this prospectus, and our consolidated financial statements, which have been audited by Ernst & Young LLP, for the years ended December 31, 2012 and 2011 and as of December 31, 2013, 2012 and 2011 not included in this prospectus; and (ii) our unaudited condensed financial statements for the three months ended March 31, 2016 and 2015 and as of March 31, 2016. The unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of our management, include all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the information set forth herein. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 or for any future period. See “Glossary” for the definitions of the ratios used below. The following information is only a summary and should be read in conjunction with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.


	Three Months Ended March 31,						Year Ended December 31,
	2016			2015			2015			2014			2013			2012			2011
	(in thousands, except per share data and ratios)
Statement of Operations Data:
Revenues:
Gross premiums written	$	530,705		$	515,256		$	2,163,852		$	2,210,554		$	1,993,123		$	1,667,666		$	1,423,920
Reinsurance premiums ceded		(169,280	)		(161,495	)		(684,028	)		(591,734	)		(535,404	)		(502,264	)		(464,434	)

Net premiums written		361,425			353,761			1,479,824			1,619,180			1,457,719			1,165,402			959,486

Net premiums earned		355,287			393,127			1,543,251			1,526,996			1,254,323			1,008,576			819,904
Net investment income		29,204			27,555			113,300			97,043			84,372			79,563			69,989
Net realized and unrealized gains (losses) on investments		43,325			30,661			(48,351	)		28,039			(70,462	)		48,876			38,535
Net foreign exchange gains (losses)		6,538			(4,955	)		(11,054	)		(5,283	)		(2,989	)		55			(275	)
Other income (losses)		51,034			10,196			50,413			33,566			29,554			11,749			7,857

Total revenues		485,388			456,584			1,647,559			1,680,361			1,294,798			1,148,819			936,010
Expenses:
Losses and loss adjustment expenses		237,159			250,858			1,010,218			1,077,274			745,173			630,727			598,879
Acquisition expenses		47,246			57,008			210,053			214,708			174,052			130,061			92,481
General and administrative expenses		92,977			71,636			322,728			279,101			250,643			233,214			187,061
Transaction expenses (1)		—			7,615			39,529			—			—			—			—
Interest expense		5,630			5,523			22,169			21,906			21,663			21,629			21,602

Total expenses		383,012			392,640			1,604,697			1,592,989			1,191,531			1,015,631			900,023
Income before tax (expense) benefit		102,376			63,944			42,862			87,372			103,267			133,188			35,987
Income tax (expense) benefit		(12,001	)		(2,072	)		14,941			(2,906	)		(5,723	)		(1,605	)		(1,358	)

Net income		90,375			61,872			57,803			84,466			97,544			131,583			34,629
Net income (loss) attributable to non-controlling interest		—			—			—			(11	)		177			(105	)		61

Net income attributable to Ironshore Inc.	$	90,375		$	61,872		$	57,803		$	84,477		$	97,367		$	131,688		$	34,568

Weighted average ordinary shares outstanding—Basic		140,657			135,919			137,195			135,186			134,334			132,916			132,868
Weighted average ordinary shares outstanding—Diluted (2)		140,657			142,002			143,107			139,935			137,687			136,753			135,161
Net income per ordinary share outstanding—Basic	$	0.64		$	0.46		$	0.42		$	0.62		$	0.72		$	0.99		$	0.26
Net income per ordinary share outstanding—Diluted (2)	$	0.64		$	0.44		$	0.41		$	0.61		$	0.71		$	0.96		$	0.26

Other Financial Data:
Net operating income (loss) (3)	$	45,547		$	43,832		$	152,365		$	68,319		$	175,211		$	83,136		$	(3,627	)
Net operating income (loss) per diluted share (3)	$	0.32		$	0.31		$	1.07		$	0.49		$	1.27		$	0.61		$	(0.03	)

Selected Ratios:
Loss ratio (4)		66.8	%		63.8	%		65.5	%		70.5	%		59.4	%		62.5	%		73.0	%
Acquisition costs ratio (5)		13.3	%		14.5	%		13.6	%		14.1	%		13.9	%		12.9	%		11.3	%
General and administrative expense ratio (6)		8.0	%		13.7	%		14.6	%		13.3	%		15.8	%		17.0	%		20.1	%

Combined ratio (7)		88.1	%		92.0	%		93.7	%		97.9	%		89.1	%		92.4	%		104.4	%

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	March 31, 2016		December 31,
	March 31, 2016		2015		2014		2013		2012		2011
	(in thousands, except per share data)
Balance Sheet Data:
Total cash and investments	$	5,304,314	$	5,103,141	$	4,682,048	$	3,901,476	$	3,476,634	$	2,946,463
Reinsurance recoverable		849,997		835,821		759,695		670,803		697,195		568,252
Total assets		7,486,466		7,249,372		6,699,088		5,717,632		5,111,340		4,329,605
Reserve for losses and loss adjustment expenses		3,286,389		3,197,541		2,838,158		2,181,812		1,856,759		1,432,403
Unearned premiums		1,314,490		1,304,591		1,310,908		1,207,707		984,015		807,285
Debt obligations		347,421		347,291		346,802		246,352		245,940		245,561
Total liabilities		5,424,218		5,282,810		4,859,327		3,971,288		3,467,488		2,823,925
Total shareholders’ equity attributable to common shareholders		2,062,248		1,966,562		1,839,761		1,742,435		1,640,121		1,501,844

Other Per Ordinary Share Data:
Book value per ordinary share (8)	$	14.66	$	13.98	$	13.60	$	12.90	$	12.34	$	11.30
Diluted book value per ordinary share (9)	$	14.66	$	13.98	$	13.10	$	12.49	$	11.84	$	10.98

(1)	Transaction expenses include fees and expenses associated with the Fosun Acquisition, fees and expenses associated with the Fosun Equity Investment and accelerated vesting of certain share based compensation awards in connection with the Fosun Acquisition.

(2)	The weighted average ordinary shares outstanding-diluted reflects the dilution from options, warrants and restricted share units using the treasury stock method.

(3)

(4)	The loss ratio is calculated by dividing losses and loss adjustment expenses by net premiums earned.

(5)	The acquisition cost ratio is calculated by dividing acquisition expenses by net premiums earned.

(6)

(7)	The combined ratio is the sum of the loss ratio, acquisition cost ratio and general and administrative expense ratio.

(8)	Book value per ordinary share is calculated by dividing total shareholders’ equity less non-controlling interest by our basic ordinary shares outstanding at each respective period end. For a computation of book value per ordinary share, see the table in note (9) below.

(9)

Diluted book value per ordinary share is calculated by dividing total shareholders’ equity less non-controlling interest by our diluted ordinary shares outstanding determined using the treasury stock method at each respective period end. The following table contains a computation of book value per ordinary share and diluted book value per ordinary share.


	March 31, 2016		December 31,
	March 31, 2016		2015		2014			2013			2012			2011
	(in thousands, except per share data)
Computation of Book Value and Diluted Book Value Per Ordinary Share

Numerator for book value and diluted book value per ordinary share:
Total shareholders’ equity attributable to common shareholders	$	2,062,248	$	1,966,562	$	1,839,761		$	1,742,435		$	1,640,121		$	1,501,844

Book value per ordinary share:
Denominator: Ordinary shares issued and outstanding—vested		140,657		140,657		135,300			135,114			132,949			132,878
Book value per ordinary share	$	14.66	$	13.98	$	13.60		$	12.90		$	12.34		$	11.30

Diluted book value per ordinary share:
Denominator: Diluted ordinary shares outstanding		140,657		140,657		140,395			139,531			138,498			136,829
Diluted book value per ordinary share	$	14.66	$	13.98	$	13.10		$	12.49		$	11.84		$	10.98

Ordinary shares issued and outstanding—vested and diluted ordinary shares outstanding:
Ordinary shares issued and outstanding—as shown on balance sheet (a)		140,657		140,657		136,626			136,212			135,479			134,820
Ordinary shares issued and outstanding—unvested		—		—		(1,326	)		(1,098	)		(2,530	)		(1,942	)

Ordinary shares issued and outstanding—vested (b)		140,657		140,657		135,300			135,114			132,949			132,878
Dilutive ordinary share equivalents using treasury stock method:
Warrants		—		—		2,436			2,050			1,954			1,189
Options		—		—		1,801			1,688			1,538			987
Restricted shares and restricted share units		—		—		853			679			2,057			1,775

Total		—		—		5,090			4,417			5,549			3,951

Diluted ordinary shares outstanding		140,657		140,657		140,390			139,531			138,498			136,829

(a)

Includes restricted shares but excludes restricted share units until shares are distributed to the holder.

(b)

Includes vested restricted shares and restricted share units.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion and analysis contains forward-looking statements that involve inherent risks and uncertainties. All statements other than statements of historical fact are forward-looking statements. These statements are based on our current assessment of risks and uncertainties. Actual results may differ materially from those expressed or implied in these statements and, therefore, undue reliance should not be placed on them. Important factors that could cause actual events or results to differ materially from those indicated in such statements are discussed in this prospectus, including the sections entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factors.”

This discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto presented elsewhere in this prospectus. All references to dollars are to U.S. dollars.

GENERAL

Company Overview

Ironshore provides specialty commercial property and casualty insurance coverage for risks on a global basis through a wide network of regional and global brokers.

We offer a variety of specialty commercial insurance products across numerous geographic regions and lines of business. Our global presence is supported by our offices located in Europe, Bermuda, Canada, Australia, Asia and 21 cities in the U.S. Our business is organized into three segments: U.S., International and Bermuda. Our U.S. operations generated $1,403 million, or 64.8%, of our gross premiums written in 2015, our International operations generated $597 million, or 27.6%, of our gross premiums written in 2015, and our Bermuda operations generated $164 million, or 7.6%, of our gross premiums written in 2015.

Company History

We were founded in December 2006 with over $1 billion in private equity capital to capitalize on opportunities in the insurance industry. We formed our Bermuda insurance company, Ironshore Insurance Ltd., which began writing property business in 2007.

In November 2007 we purchased Stockbridge Insurance Company (“Stockbridge”) from a subsidiary of White Mountains Re Ltd. and subsequently renamed it Ironshore Indemnity Inc. In January 2008, we acquired TIG Specialty Insurance Company (“TIG”) from a subsidiary of Fairfax Financial Holdings Limited and subsequently renamed it Ironshore Specialty Insurance Company. These transactions, which provided us with authority to write business in the U.S. on both an admitted and an E&S basis, were structured as “shell acquisitions,” with the sellers assuming responsibility for all known, unknown and contingent liabilities relating to pre-acquisition operations. On September 9, 2008, we acquired Pembroke JV Limited and its principal subsidiary, PMA, which enabled us to access the Lloyd’s market. Following these acquisitions, we began to offer products in the IronPro, U.S. Property, International Liability, Marine, Specialty Casualty and IronHealth lines of business.

In late 2008, Kevin H. Kelley, former Chairman and Chief Executive Officer of American International Group, Inc.’s (“AIG”) Lexington Insurance Company (“Lexington”), joined Ironshore. In part as a result of the financial crisis, which had a material negative impact on several of the leading global property and casualty primary insurers, the growth of our business accelerated in 2009. Over the next several years, we were able to take advantage of this market opportunity to make significant hires in several key specialty areas of focus and expand our geographic footprint.

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In August 2009, we raised an additional $300 million of private equity capital. In 2009, we also created Iron-Starr Agency, a specialty lines insurance managing general agency, as a 50/50 joint venture with Starr Insurance & Reinsurance Limited (“SIRL”) and acquired a 60% equity interest in Wright & Co., a program administrator for professional liability and employee benefits coverages (in 2014, we acquired the remaining 40% equity interest in Wright & Co.). We purchased all of SIRL’s equity interests in Iron-Starr Agency in 2010, and we are underwriting partners with SIRL, Hamilton Re, Ltd. and Antares Lloyd’s Syndicate 1274 on business written through Iron-Starr Agency. In May 2010, we issued $250 million of 8.5% senior unsecured notes due 2020 (the “Senior Notes”).

In 2010, we formed IEL, an insurance company licensed to write business in Ireland and, subject to certain regulatory requirements depending on the way business is written, in other EU member states.

In 2013, we acquired ERR, an insurance agency that specializes in employer health care stop loss insurance. We also made a strategic investment and acquired an approximately 20% ownership of Lexon, in two transactions that closed in 2013 and 2014. Lexon is engaged in the business of underwriting, placing, insuring and reinsuring contract and commercial surety bonds, court and probate surety bonds, surety bail bonds, U.S. Customs surety bonds and other related risks.

On August 17, 2014, the Company entered into a definitive equity purchase agreement with Fosun and Mettlesome Investments Limited, pursuant to which the Company agreed to sell to Mettlesome Investments Limited 20% of Ironshore’s total outstanding ordinary shares on a fully diluted basis (the “Fosun Equity Investment”). The Fosun Equity Investment was consummated on February 12, 2015. On May 1, 2015, the Company entered into a definitive merger agreement with Fosun, Mettlesome Investments (Cayman) III Limited (“Purchaser”), Mettlesome Investment 2, a wholly-owned subsidiary of Purchaser (“Merger Sub”) and IS Equityholder Rep, LLC, solely in its capacity as the representative of the equityholders of the Company, pursuant to which the parties agreed that Fosun would acquire indirectly the remaining interest in the Company that Fosun did not already beneficially own (the “Fosun Acquisition”). On November 20, 2015, the Fosun Acquisition was effected by the merger of Merger Sub with and into the Company, with the Company surviving the merger and becoming a wholly owned indirect subsidiary of Fosun.

On April 8, 2016, the Company entered into an agreement to acquire the remaining 80% equity interest in Lexon. The Company will use cash on hand to fund the purchase of Lexon in an all-cash transaction that is expected to close in 2016, subject to regulatory approvals and other customary conditions.

Key Performance Indicators

We believe the following financial measures are meaningful in analyzing our performance and assessing whether we are achieving our objectives: growth in book value per ordinary share, net operating income, net operating income per diluted share, combined ratio, and operating return on average shareholders’ equity. The tables below show the key performance indicators as of March 31, 2016, December 31, 2015 and 2014, and for the three months ended March 31, 2016 and 2015, and for the years ended December 31, 2015, 2014 and 2013. See “—Non-GAAP Financial Measures” for reconciliations of non-GAAP measures to the closest GAAP measure.


	March 31, 2016		December 31,
	March 31, 2016		2015		2014
Book value per ordinary share (1)	$	14.66	$	13.98	$	13.60
Diluted book value per ordinary share (1)	$	14.66	$	13.98	$	13.10

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	Three Months Ended March 31,						Year Ended December 31,
	2016			2015			2015			2014			2013
	(dollars in thousands, except per share data)
Net operating income (2)	$	45,547		$	43,832		$	152,365		$	68,319		$	175,211
Net operating income per diluted share (2)	$	0.32		$	0.31		$	1.07		$	0.49		$	1.27
Combined ratio (3)		88.1	%		92.0	%		93.7	%		97.9	%		89.1	%
Operating return on average shareholders’ equity (2)(4)		9.0	%		9.4	%		8.0	%		3.8	%		10.4	%

(1)

Book value per ordinary share is calculated by dividing total shareholders’ equity less non-controlling interest by our basic ordinary shares outstanding at each respective period end. Diluted book value per ordinary share is calculated by dividing total shareholders’ equity less non-controlling interest by our diluted ordinary shares outstanding determined using the treasury stock method at each respective period end.

(2)

Net operating income and net operating income per diluted share are non-GAAP financial measures. We define net operating income as net income attributable to Ironshore Inc., excluding after tax net realized and unrealized investment gains or losses, transaction expenses and net foreign exchange gain or loss. We define net operating income per diluted share as net operating income divided by the average of our diluted ordinary shares outstanding during the period. We use net operating income as an internal performance measure in the management of our operations because it excludes factors that are heavily influenced by and fluctuate in part according to the availability of market opportunities and other factors. We believe that showing net operating income enables investors, analysts, rating agencies and other users of our financial information to more easily analyze our results of operations and our underlying business performance. Net operating income should not be viewed as a substitute for net income attributable to Ironshore Inc. calculated in accordance with GAAP. See “—Non-GAAP Financial Measures” for a reconciliation of net operating income and net operating income per diluted share to the closest financial measures under GAAP.

(3)

Combined ratio is calculated by dividing the sum of net losses and loss adjustment expenses (“LAE”), acquisition expenses and general and administrative expenses less other income, by net premiums earned for our operating segments. Corporate general and administrative expenses, transaction expenses and corporate other income are not included in the calculation.

(4)

Operating return on average shareholders’ equity is calculated by dividing net operating income by average shareholders’ equity (determined using the average shareholders’ equity balances for the quarter or year as the case may be). See “—Non-GAAP Financial Measures” for a reconciliation of operating return on average shareholders’ equity to the closest financial measure under GAAP.

As of December 31, 2015, our diluted book value per ordinary share increased by 6.7% compared to such value as of December 31, 2014. The increase was principally due to positive operating results partially offset by unrealized losses on our investment portfolio.

Our net operating income and combined ratio for the year ended December 31, 2015 improved by $84.0 million and 4.2 percentage points, respectively, compared with the prior year as all of our operating segments reported improved results. Our 2014 net operating income and combined ratio were impacted by net unfavorable development of prior year loss reserves of $52.8 million, principally in our casualty line of business within our U.S. segment.

Our net operating income and combined ratio for the three months ended March 31, 2016 improved by $1.7 million and 3.9 percentage points, respectively, compared with the corresponding period in 2015, principally due to a gain of $40.2 million from the sale of renewal rights, as described below, partially offset by an increase in general and administrative expenses resulting from the continued expansion of our business platforms and product offerings.

For 2015, our operating return on average shareholders’ equity (“operating ROE”) was 8.0%. We target a combined ratio percentage in the high 80% to low 90% range for all lines combined through all insurance market cycles.

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These are forward-looking statements based on significant assumptions and we cannot assure you that our actual results will not differ materially and adversely from the targets above or those contained in, or implied by, any forward-looking statement. We strongly caution investors not to place undue reliance on any of these targets and their related assumptions. We are not under any obligation (and expressly disclaim any obligation) to update or alter any assumptions, goals, targets, projections or other related statements that we may make. You should consider the factors described in “Risk Factors,” which could have adverse effects on our financial condition and results of operations and cause our actual results to differ materially from our expected results, including our operating ROE and combined ratio targets.

Drivers of Profitability

Revenues

We derive our operating revenues from premiums from our insurance business. Additionally, we recognize income from our investment portfolio.

Insurance premiums are a function of the amount and type of policies written, as well as prevailing market prices and conditions. Property and casualty premiums are earned over the terms of the underlying coverage. Each of our insurance policies contains different pricing, terms and conditions and expected profit margins. Therefore, the amount of premiums is not necessarily an accurate indicator of our anticipated profitability. Premium estimates are based upon information in underlying policies, data received from insureds and from premium audits. These estimates change over time as additional information regarding the underlying business volume of our insureds is obtained. There is often a delay in the receipt of updated premium information from insureds due to the time lag in preparing and reporting the data to us. After review by our underwriters and finance staff, we increase or decrease premium estimates as updated information from our insureds is received.

Net premiums earned is a byproduct of the earning of gross premiums written and reinsurance premiums ceded over several fiscal quarters, and therefore, changes in net premiums earned generally lag changes in gross premiums written and reinsurance premiums ceded. As a result, changes in net premiums earned tend to be less volatile than gross premiums written and reinsurance premiums ceded.

Our net investment income is a function of the average invested assets and the average yield that we earn on those invested assets. The investment yield on our fixed maturities investments is a function of market interest rates as well as the credit quality and duration of our fixed maturities portfolio. As of March 31, 2016, the industry continues to operate in a low interest rate environment, which makes it more difficult to generate significant investment income growth. Our net realized and unrealized gains or losses on investments include realized and unrealized gains and losses on our fixed maturity investments and equity securities which are classified as trading securities and other investments, and realized gains and losses on our fixed maturity investments and equity securities which are classified as available for sale. We recognize the realized gains and losses at the time of sale, and unrealized gains and losses on changes in fair value at each reporting period. Changes in fair value of our trading securities reflect the results of changing market values and conditions, including changes in market interest rates and changes in the market’s perception of the credit quality of our fixed maturities holdings.

Other income is principally comprised of fee income from underwriting activities where we provide underwriting expertise on risks insured wholly or in part by other insurers and income from strategic underwriting investments.

Expenses

Our principal expenses are losses and LAE, acquisition expenses, interest expense and general and administrative expenses. Losses for a particular reporting period are based on the amount and type of insurance

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policies written by us during that reporting period and information received from brokers and insureds during the current reporting period pertaining to policies written in prior periods. We record losses based on estimates of the expected losses and LAE to be incurred on each policy written, utilizing a variety of actuarial methods. The ultimate losses depend on the actual costs to settle these liabilities. We increase or decrease loss estimates as actual claim reports are received. Our ability to make reasonable estimates of losses at the time of pricing our policies is a critical factor in determining profitability.

Acquisition expenses consist principally of commissions paid to brokers for the cost of placing insurance policies with us. These typically represent a negotiated percentage of the premiums on insurance policies written. Acquisition expenses are stated net of ceding commissions associated with premiums ceded to our reinsurers. These ceding commissions are designed to compensate us for the costs of producing the portfolio of risks ceded to our reinsurers. We defer and amortize acquisition costs associated with the successful acquisition of new or renewal policies over the period in which the related premiums are earned.

Interest expense reflects interest on our Senior Notes and other debt facilities.

General and administrative expenses are principally employee salaries, incentive compensation and related personnel costs, office rent, amortization of leasehold improvements, information technology expenditures, costs for the outsourcing of certain of our operations and other operating costs. These costs are not generally based on the amount of premiums written.

Business Segments

The Company conducts its operations worldwide through three reportable operating segments (U.S., International and Bermuda) and one corporate function, which have been determined under FASB Accounting Standards Codification (“ASC”) Topic 280 “Segment Reporting.” The Company’s operating segments are strategic business units that offer different policies. Each business segment is led by the chief executive officer of that segment, who manages a team of underwriters and other professionals. Each segment and its lines of business and products may, at times, be subject to underwriting cycles that differ from the underwriting cycles of the other segments.

The U.S. segment offers a wide array of property and casualty coverage on an admitted and excess and surplus lines basis. The primary lines of business are IronPro, IronHealth, Specialty Casualty, Environmental, U.S. Property, Political Risk & Surety and Aviation. The U.S. segment is managed by the chief executive officer of our U.S. Operations.

The International segment operates principally through Lloyd’s of London Syndicate 4000 and IEL. The primary lines of business are Liability, Marine, International Property, Personal Accident & Specialty Short Tail lines. The International segment is managed by the chief executive officer of Ironshore International Ltd. (“Ironshore International”).

The Bermuda segment provides property insurance on a worldwide basis and also offers catastrophe excess liability, financial lines and healthcare liability insurance through Iron-Starr Agency. The Bermuda segment is managed by the chief executive officer of Ironshore Insurance. We also report certain other business (primarily global property opportunities which are managed separately from the Bermuda Property line of business) within this segment as “Corporate Deals.”

The corporate function includes the activities of the parent company and activities of certain key executives, such as the Chief Executive Officer, Chief Operations Officer and Chief Financial Officer of Ironshore. The corporate function includes revenue earned on the Company’s investment portfolio and costs associated with parent company activities.

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We monitor the performance of all of our segments primarily on the basis of underwriting income, loss ratio, acquisition cost ratio, general and administrative expense ratio and combined ratio.

The Company does not manage its assets by segment and therefore total assets, investments and investment income are not allocated to the segments.

CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements are prepared in accordance with GAAP, which requires management to make estimates and assumptions. We believe that the following accounting policies affect the significant judgments and estimates used in the preparation of our consolidated financial statements.

Reserves for Losses and Loss Adjustment Expenses

The liability for property and casualty losses is the largest and most complex estimate in our consolidated balance sheet. We establish loss reserves in accordance with GAAP to cover the estimated liability for the payment of all losses and LAE incurred on the policies written. These reserves are balance sheet liabilities representing estimates of losses and LAE required to pay for insured claims that have occurred as of or before the balance sheet date. As a result, it is likely that the ultimate liability will differ from such estimates. Such estimates are not precise in that, among other things, they are based on predictions of future developments and estimates of future trends in loss severity and frequency and other variable factors such as inflation. During the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward. Even after such adjustments, ultimate liability may exceed or be less than the revised estimates. The reserves are estimated on an undiscounted basis.

We utilize a variety of standard actuarial methods to estimate our reserves. Although these actuarial methods have been developed over time, assumptions about anticipated size of loss and loss emergence patterns are subject to fluctuations.

We conduct comprehensive reassessments of loss reserving assumptions for all underwriting segments on a quarterly basis. Additionally, variances in actual results are compared to expectations. Businesses are categorized into homogenous groups, and we apply historical insured data and industry standards to develop loss development expectations and incorporate pricing expectations and reserving for each line of business. Newly reported loss information from insureds, including an analysis of actual to expected loss emergence, is the principal contributor to adjustments to our loss reserve estimates. These adjustments are recognized in the period in which they are determined, and therefore can impact that period’s results either favorably (when reserve estimates established in prior periods are reduced) or adversely (when reserve estimates established in prior periods are increased).

The Company’s loss reserves are estimated by our internal actuaries and management’s reserving committee. Our reserving committee reviews the actuarial assessment of our reserves at a line of business level. The committee considers both qualitative and quantitative information in its review and determines any additional adjustments needed to the loss reserves. In addition, we retain independent external actuaries to complete their own independent validation of our approach and reserve levels on an annual basis. The external actuaries issue Statements of Actuarial Opinion and are not involved in the establishment and recording of our loss reserves.

Reserve Types

We categorize our reserves for losses and LAE into two types: case reserves and reserves for incurred but not yet reported losses (“IBNR”).

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Case Reserves. Case reserves are established for individual claims that have been reported to us.

We are generally notified of insured losses by our insureds and/or their brokers. Based on this information, we establish case reserves by estimating the expected ultimate losses from the claim. Our claims personnel use their knowledge of the specific claim along with internal and external experts, including underwriters, actuaries and legal counsel, to estimate the expected ultimate losses.

IBNR. IBNR reserves are reserves that are statistically estimated for losses that have occurred but have not yet been reported to us, and also include development on case reserves, future case reserves on claims that are reported but not yet reserved and re-opened case reserves. Consistent with industry practice, we utilize a variety of standard actuarial methods together with management judgment to estimate IBNR. The loss reserve selection from these methods is based on the loss development characteristics of the specific line of business and policies, which take into consideration coverage terms, type of business, maturity of loss data, reported claims and paid claims. We do not necessarily utilize the same actuarial method or group of actuarial methods for all policies within a line of business or segment as variations between policies result in a number of different methods or groups of methods being appropriate.

There is normally a time lag between when a loss event occurs and when it is actually reported to us. The actuarial methods that we use to estimate losses have been designed to address the lag in loss reporting as well as the delay in obtaining information that would allow us to more accurately estimate future payments. Based on the experience of our actuaries and management, we select loss development factors and trending techniques to mitigate the uncertainty caused by reporting lags. We regularly evaluate and update our loss development and trending factor selections using company specific and industry data.

Actuarial Methods

The principal actuarial methods we use to perform our quarterly loss reserve analysis may include one or more of the following methods:

Initial Expected Loss Ratio Method. To estimate ultimate losses under the expected loss ratio method, we multiply earned premiums by an expected loss ratio. The expected loss ratio is selected utilizing industry data, historical insured data, frequency-severity and rate level forecasts and professional judgment. This method is often useful when there is limited historical data due to few losses being incurred.

Paid Loss Development Method. This method estimates ultimate losses by calculating past paid loss development factors and applying them to exposure periods with further expected paid loss development. The paid loss development method assumes that losses are paid at a rate consistent with the historical rate of payment. It provides an objective test of reported loss projections because paid losses contain no reserve estimates. For many lines of business, claim payments are made slowly and it may take many years for claims to be fully reported and settled.

Reported Loss Development Method. This method estimates ultimate losses by using past reported loss development factors and applying them to exposure periods with further expected reported loss development. Since reported losses include payments and case reserves, changes in both of these amounts are incorporated in this method. This approach provides a larger volume of data to estimate ultimate losses than paid loss methods. Thus, reported loss patterns may be less varied than paid loss patterns, especially for coverages that have historically been paid out over a long period of time but for which claims are reported relatively early and case loss reserve estimates established.

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Bornhuetter-Ferguson Paid and Reported Loss Methods. These methods are a weighted average of the initial expected loss ratio and the relevant loss development factor method. The weighting between the two methods depends on the maturity of the business. This means that for the more recent years a greater weight is placed on the initial expected loss ratio, while for the more mature years a greater weight is placed on the loss development factor methods. These methods avoid some of the distortions that could result from a large loss development factor being applied to a small base of paid or reported losses to calculate ultimate losses. This method will react more slowly than the loss development methods if actual paid or reported loss experience develops differently than historical paid or reported loss experience because of major changes in rate levels, retentions or deductibles, the forms and conditions of coverage, the types of risks covered or a variety of other factors.

Outstanding to IBNR Ratio Method. This method is used in selected cases typically for very mature years that still have open claims. This method assumes that the estimated future loss development is indicated by the current level of case reserves.

Frequency-Severity Method. This method is based on assumptions about the number of claims that will impact a policy and the average ultimate size of those claims. On excess policies, reported claims in lower layers provide insight to the expected number of claims that will likely impact the upper layers.

The selection of appropriate actuarial methods to establish reserves may change over time as the underlying loss information becomes more seasoned. Our actuarial projections are based upon an assessment of known facts and circumstances, historical data, estimates of future trends in claims severity and frequency, changes in social attitudes, political and economic conditions, including the effects of inflation, and judicial theories of liability factors, including the actions of third parties, which are beyond our control.

Our reserving methodologies use a loss reserving model that calculates a point estimate for our ultimate losses. Although we believe that our assumptions and methodologies are reasonable, our ultimate payments may vary, potentially materially, from the estimates we have made.

Our provisions for losses are an estimate and could potentially be settled for a significantly greater or lesser amount. These estimates are reviewed regularly and any adjustments to the estimates are recorded in the period in which they are determined. See “Risk Factors—Risks Related to Our Business—If actual claims exceed our loss reserves, our financial condition and results of operations could be adversely affected.”

Long Tail vs. Short Tail Losses

The type of coverage and source of premiums are often classified based on how long an insurer may have exposure to the risks covered by the policy. Casualty losses are generally long tailed, which means that there can be a significant delay between the occurrence of a loss and the time it is settled by the insurer. These losses are also more susceptible to litigation and can be significantly affected by changing policy interpretations and a changing legal environment. In 2015, 60.5% of Ironshore’s gross premiums written were generated from casualty lines of business, while the remainder were generated from short tail lines of businesses, including property lines and other short tail lines. In addition, the casualty business generally has a longer reporting lag and payment pattern than property and specialty short tail business. Due to these factors, the estimation of loss reserves for casualty business generally involves a higher degree of judgment than for property and specialty short tail business. Insurance policies are also classified as either claims-made or occurrence-based policies. Claims-made policies cover liabilities only when a claim is made during the policy period, while occurrence-based policies cover liabilities if an event occurs during the term of policy, irrespective of when a claim was made (i.e., reported). As of December 31, 2015, 59.5% of our casualty loss reserves were for policies written on a claims-made basis. These policies are advantageous from a reserving standpoint because they have a limited reporting lag.

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Property and specialty short tail losses are generally short tailed and are usually known and paid within a relatively short period of time after the underlying loss event has occurred. Our estimates for losses resulting from catastrophic events are based upon a combination of internal and external catastrophe models, as well as insured- and location-specific assessments and reports, where available. These estimates are developed immediately after the loss event, and the loss estimates are subsequently refined based on broker advices and insured notifications.

Casualty includes our following lines of business: Iron-Starr Excess, IronPro, IronHealth, Environmental, Specialty Casualty and Liability. Property includes: U.S. Property, International Property, Bermuda Property and Corporate Deals. Specialty short tail includes: Political Risk & Surety, Aviation, Personal Accident and Marine.

Losses Recoverable from Reinsurers

We reinsure portions of certain risks for which we have accepted liability. In these transactions, we cede to a counterparty reinsurer all or part of the risk we have assumed. This purchase of reinsurance does not legally discharge our liability with respect to the obligations that we have insured.

The determination of the amount of losses recoverable from reinsurers requires an estimate of the amount of loss reserves ceded to our reinsurers. This consists of recoverable amounts related to both our case and IBNR reserves. The reinsurance recoveries are estimated by applying the terms of any applicable reinsurance coverage to our reserve estimates.

We evaluate and monitor the financial strength of each of our counterparties. Most of our reinsurers have financial strength ratings from A.M. Best of “A” or higher. Some reinsurance agreements give us the right to receive collateral or additional collateral or to terminate the agreement in the event of deterioration in the financial strength of the counterparty.

Disputes

In connection with our ongoing analysis of our loss reserves, we review loss notifications and reports received from our insureds and brokers to confirm that submitted claims are covered under the policy terms. Disputes with insureds arise in the ordinary course of business due to coverage issues, such as classes of business covered and interpretation of policy wording. We typically resolve any disputes through negotiations that could vary from a simple exchange of email correspondence to arbitration with a panel of experts. Our policies generally provide for dispute resolution through arbitration. We are not currently involved in any coverage disputes that we believe would, individually or in the aggregate, have a material adverse effect on our business or results of operations.

Historical Reserves

We commenced operations in 2007 with no legacy reserve exposure. On November 1, 2007, we purchased Stockbridge from a subsidiary of White Mountains Re Ltd. and subsequently renamed it Ironshore Indemnity Inc. On January 2, 2008, we acquired TIG from a subsidiary of Fairfax Financial Holdings Limited and subsequently renamed it Ironshore Specialty Insurance Company. These transactions were structured as “shell acquisitions,” with the sellers assuming responsibility for all known, unknown and contingent liabilities relating to pre-acquisition operations. The related losses and reinsurance recoverables of the same amounts were recorded on the dates of these acquisitions. Ironshore Indemnity and Ironshore Specialty also received guarantees from the parent companies of the respective sellers that would apply in situations where the respective sellers are unable to fulfill their obligations. To the extent the sellers and their parent companies do not meet their obligations under these agreements, for instance as a result of their bankruptcy, Ironshore Indemnity and

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Ironshore Specialty remain liable for these liabilities. As of December 31, 2015 and December 31, 2014, these indemnified legacy loss reserves for Stockbridge and TIG were $25.5 million and $18.8 million, respectively.

On September 9, 2008, we acquired Pembroke JV Limited and its principal subsidiary, PMA. PMA operates within the Lloyd’s insurance market through Syndicate 4000 and underwrites a portfolio of specialist lines products including financial institutions risks, professional liability, marine and other select specialist lines. The former owner of Pembroke JV Limited retained its participations in Syndicate 4000 for 2008 and prior open years of account. We took over participation in Syndicate 4000 commencing with the 2009 underwriting year of account when our wholly owned subsidiary, ICCL, became the sole member of Syndicate 4000.

Reserves for March 31, 2016, December 31, 2015 and December 31, 2014

There were no material changes in reserving assumptions or payout patterns during the three months ended March 31, 2016 or during 2015. Reserve duration has remained largely unchanged from December 31, 2014 through March 31, 2016.

The table below shows our reserves as of March 31, 2016, December 31, 2015 and December 31, 2014 by type and by segment.


	March 31, 2016						December 31,
	March 31, 2016						2015						2014
	Case		IBNR		Total		Case		IBNR		Total		Case		IBNR		Total
	(in thousands)
United States
Casualty	$	328,860	$	1,826,107	$	2,154,967	$	346,102	$	1,738,190	$	2,084,292	$	327,054	$	1,462,851	$	1,789,905
Property		47,598		42,670		90,268		51,409		40,411		91,820		66,279		39,124		105,403
Specialty Short Tail		20,200		96,609		116,809		26,790		91,776		118,566		75,981		61,000		136,981

Total		396,658		1,965,386		2,362,044		424,301		1,870,377		2,294,678		469,314		1,562,975		2,032,289
International
Casualty		76,908		239,820		316,728		72,930		223,209		296,139		40,213		185,108		225,321
Property		31,882		42,801		74,683		37,322		37,474		74,796		33,386		28,703		62,089
Specialty Short Tail		84,775		202,661		287,436		84,138		207,037		291,175		94,398		191,038		285,436

Total		193,565		485,282		678,847		194,390		467,720		662,110		167,997		404,849		572,846
Bermuda
Casualty		14,267		134,737		149,004		22,687		127,757		150,444		10,165		116,237		126,402
Property		54,588		41,906		96,494		50,757		39,552		90,309		59,278		47,343		106,621
Specialty Short Tail		—		—		—		—		—		—		—		—		—

Total		68,855		176,643		245,498		73,444		167,309		240,753		69,443		163,580		233,023

Consolidated	$	659,078	$	2,627,311	$	3,286,389	$	692,135	$	2,505,406	$	3,197,541	$	706,754	$	2,131,404	$	2,838,158


Casualty	$	420,035	$	2,200,664	$	2,620,699	$	441,719	$	2,089,156	$	2,530,875	$	377,342	$	1,764,196	$	2,141,628
Property		134,068		127,377		261,445		139,488		117,437		256,925		158,943		115,170		274,113
Specialty Short Tail		104,975		299,270		404,245		110,928		298,813		409,741		170,379		252,038		422,417

Consolidated	$	659,078	$	2,627,311	$	3,286,389	$	692,135	$	2,505,406	$	3,197,541	$	706,754	$	2,131,404	$	2,838,158

The overall proportion of IBNR to total reserves was 79.9% for the three months ended March 31, 2016, 78.4% for the year ended December 31, 2015, and 75.1% for the year ended December 31, 2014. The increase in IBNR was principally due to our casualty lines of business.

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Our favorable (unfavorable) development of prior period loss reserves, net of reinsurance, and reserve development as a percentage of opening net property and casualty loss reserves, have been as follows for the three months ended March 31, 2016 and 2015 and the years ended December 31, 2015, 2014 and 2013:


	Three Months Ended March 31,						Year Ended December 31,
	2016			2015			2015			2014			2013
	(dollars in millions)
Casualty	$	(10.7	)		(7.8	)		(10.7	)	$	(62.1	)	$	11.2
Property		0.9			6.7			11.2			16.4			(4.8	)
Specialty Short Tail		(3.4	)		(1.6	)		(10.4	)		(7.1	)		2.9

Total	$	(13.2	)		(2.7	)		(9.9	)	$	(52.8	)	$	9.3

Reserve Development as a percentage of opening net property and casualty loss reserves		(0.5	)%		(0.1	)%		(0.5	)%		(3.3	)%		0.8	%

Our favorable (unfavorable) development of prior period loss reserves, net of reinsurance, as a percentage of beginning-of-year net loss reserves, has been (0.5)%, (3.3)%, 0.8%, 2.0% and 2.0% for the years ended December 31, 2015, 2014, 2013, 2012 and 2011, respectively, and an average of 1.7% (absolute value) over the years 2011 through 2015. The uncertainty and degree of judgment used in our estimate of loss reserves varies depending on the nature of the policy and the line of business. Our recorded reserves as of March 31, 2016 represent management’s best estimate as of such date; however, future changes to our ultimate liabilities are possible.

Based on an evaluation of our prior period reserve development for the past five years, we believe it is reasonably likely that our March 31, 2016 reported net loss reserves could change by a range of 0.5% to 3.3%. A change in our March 31, 2016 reported net loss reserves of 0.5% and 3.3% would impact shareholders’ equity, favorably or unfavorably, by $11.6 million and $76.5 million (net of tax), respectively.

Reserve Development

The following table presents the development of balance sheet property and casualty loss reserves calculated in accordance with GAAP, as of December 31 in each of the years 2007 through 2015. This table does not present accident or policy year development data. The top line of the table shows the gross reserves as of December 31 for each of the indicated years and is reconciled to the net reserve by adjusting for reinsurance recoverables. This represents the estimated amount of net loss and LAE arising in the current year and all prior years that are unpaid at the balance sheet date, including IBNR reserves. The table also shows the re-estimated amount of the previously recorded reserves as adjusted for new information received as of the end of each succeeding year.

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The estimates change as more information becomes known about the frequency and severity of claims for individual years. The “net cumulative redundancy (deficiency)” represents the aggregate change to date from the original estimate on the third line of the table, “reserves for property and casualty losses, originally stated, net of reinsurance.” The “gross cumulative redundancy (deficiency)” represents the aggregate change to date from the original estimate on the top line of the table, “gross reserves for property and casualty losses.” The table also shows the cumulative net paid amounts as of successive years with respect to the net reserve liability.


(In thousands)	2007			2008			2009			2010			2011			2012			2013			2014			2015
Gross reserves for property and casualty losses	$	121,984		$	433,955		$	499,778		$	899,038		$	1,432,403		$	1,856,759		$	2,181,812		$	2,838,158		$	3,197,541
Reinsurance recoverable		(80,099	)		(253,231	)		(233,289	)		(365,861	)		(515,207	)		(621,965	)		(601,352	)		(693,298	)		(776,787	)

Reserves for property and casualty losses originally stated, net of reinsurance		41,885			180,724			266,489			533,177			917,196			1,234,794			1,580,460			2,144,860			2,420,754
Cumulative net paid losses,
1 year later		14,016			65,463			85,160			128,679			248,079			293,621			358,467			562,368
2 years later		17,828			110,874			125,611			227,899			440,288			517,337			708,583
3 years later		23,789			125,812			146,658			326,804			576,999			732,597
4 years later		25,895			136,000			198,869			390,157			687,228
5 years later		25,221			161,842			221,189			433,078
6 years later		30,777			163,783			234,665
7 years later		31,267			165,710
8 years later		31,950
Net reserves re-estimated as of
1 year later		30,262			165,165			270,636			522,481			899,069			1,225,532			1,633,226			2,154,760
2 years later		23,557			173,892			257,664			517,196			902,192			1,258,144			1,630,352
3 years later		32,038			168,569			247,376			527,875			920,619			1,247,055
4 years later		31,414			162,332			259,417			524,620			915,647
5 years later		28,535			166,002			253,331			512,102
6 years later		33,144			166,704			250,706
7 years later		33,681			168,205
8 years later		34,097
Net cumulative redundancy (deficiency)		7,789			12,519			15,783			21,075			1,549			(12,261	)		(49,892	)		(9,900	)

Net reserves for losses and loss adjustment expenses re- estimated		34,097			168,205			250,706			512,102			915,647			1,247,055			1,630,352			2,154,760
Reinsurance recoverable re- estimated		84,199			239,735			225,319			343,923			485,148			579,113			579,280			682,787

Gross reserves for losses and loss adjustment expenses re-estimated	$	118,296		$	407,940		$	476,025		$	856,025		$	1,400,795		$	1,826,168		$	2,209,632		$	2,837,547

Gross cumulative redundancy (deficiency)	$	3,688		$	26,015		$	23,753		$	43,013		$	31,608		$	30,591		$	(27,820	)	$	611

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Newly reported case loss information from insureds, including an analysis of actual to expected loss emergence, is the principal contributor to adjustments to our loss reserve estimates. Adjustments to prior year loss reserves are recognized in the period in which they are determined, and therefore can impact that period’s results either favorably (when reserve estimates established in prior periods are reduced) or adversely (when reserve estimates established in prior periods are increased).

Our balance sheet reserves, re-estimated as of December 31, 2015, compared to the originally stated reserves on a net of reinsurance basis, are redundant for years 2007 through 2011, reflecting favorable prior year loss development, and deficient for the years 2012 to 2014, reflecting unfavorable prior year loss development.

During 2015, our re-estimated balance sheet net reserves for 2014 increased as a result of unfavorable loss reserve development of $9.9 million, or 0.5% of the beginning-of-year net loss reserves. No material changes in loss reserve assumptions for the current and prior accident years caused by newly reported case losses were warranted for the year ended December 31, 2015 and the three months ended March 31, 2016 as compared with assumptions used in prior years.

The underlying reasons for prior year unfavorable development of $9.9 million for the year ended December 31, 2015 included:

•

Net unfavorable loss reserve development for our U.S. segment of $7.8 million, of which $13.2 million was recognized in our IronPro line of business, primarily on the 2013 and 2014 accident years, and $12.8 million in our aviation line of business, primarily on the 2013 and 2014 accident years, due to higher than expected reported claim activity. This was partially offset by favorable loss reserve development due to better than expected reported claim activity in the following lines of business and accident years: $11.3 million in our U.S. property line of business (2013 and 2014 accident years) and $10.4 million in our environmental line of business (2012 and 2013 accident years); and

•

Net unfavorable loss reserve development for our Bermuda segment of $1.4 million, of which $6.2 million was recognized in our Bermuda property line of business, primarily on the 2013 and 2014 accident years, due to higher than expected reported claim activity. This was partially offset by favorable development due to better than expected reported claim activity of $4.7 million in our Corporate Deals line of business, primarily on the 2013 and 2014 accident years.

During 2014, our re-estimated balance sheet net reserves for 2013 increased as a result of unfavorable loss reserve development of $52.8 million, or 3.3% of the beginning-of-year net loss reserves. Changes in loss reserve assumptions for the current and prior accident years caused by newly reported case losses, were warranted for the year ended December 31, 2014 as compared with assumptions used in prior years.

The underlying reasons for prior year unfavorable development of $52.8 million for the year ended December 31, 2014 included:

•

Net unfavorable loss reserve development for our U.S. segment of $43.7 million, of which $74.7 million was recognized in our Specialty Casualty line of business, primarily on the 2009 to 2013 accident years, due to higher than expected reported claim activity. This was partially offset by favorable loss reserve development due to better than expected reported claim activity in the following lines of business and accident years: $11.6 million in our U.S. property line of business (2011 to 2013 accident years), $9.7 million in our political risk line of business (2011 to 2013 accident years), $4.0 million in our IronPro line of business (2009 and 2010 accident years), and $3.2 million in our IronHealth line of business (2011 accident year);

•

During 2014, actual reported claims activity in our Specialty Casualty business was higher than expected on the 2009 to 2013 accident years, principally in our transactional non construction lines

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of business. Our claims and actuarial teams completed a thorough review of these trends. The review performed resulted in an increase in losses incurred by $94.7 million, of which $74.7 million was recorded as prior year development and $20.0 million was recorded as current accident year losses, due to an increase in our current accident year loss ratio; and

•

Net unfavorable loss reserve development for our International segment of $9.4 million, of which $14.0 million was recognized in our marine line of business due to higher than expected reported claim activity, primarily on the 2010 to 2012 accident years. This was partially offset by favorable loss reserve development due to better than expected reported claim activity of $4.7 million in our liability line of business primarily on the 2009 and 2011 accident years.

Changes in loss estimates principally arise from changes in underlying reported, incurred and paid claims data on policies. Other assumptions used in our process, such as inflation, change infrequently in the reserving process and we do not perform a sensitivity analysis of changes in these assumptions. Given the variety of assumptions and judgments involved in establishing reserves for losses and LAE, we have not designed and maintained a system to capture and quantify the financial impact of changes in each of our underlying individual assumptions and judgments.

For additional information on our reserves, including a reconciliation of losses and LAE reserves for the years ended December 31, 2015, 2014 and 2013, refer to Note 9 of the notes to our audited consolidated financial statements included herein.

Valuation of Investments

We invest in a trading portfolio of fixed maturities and equity securities, and commencing in 2016, an available-for-sale portfolio of fixed maturities and equity securities. We record the trading and available-for-sale portfolios at fair value on our balance sheet. For our trading portfolio, the unrealized gain or loss associated with the difference between the fair value and the amortized cost of the investments is recorded in net income. For our available-for-sale portfolio, the unrealized gain or loss (absent credit losses) is recorded in accumulated other comprehensive income in the shareholders’ equity section of our consolidated balance sheet.

For our available-for-sale portfolio, we perform quarterly reviews and utilize a process that considers numerous indicators in order to identify investments that are showing signs of potential (other than temporary) impairments. These indicators include the length of time and extent of the unrealized loss, any specific adverse conditions, historic and implied volatility of the security, failure of the issuer of the security to make scheduled interest payments, expected cash flow analysis, and significant rating changes. The consideration of these indicators and the estimation of credit losses involve significant management judgment. Any other-than-temporary impairment, or OTTI, related to a credit loss is recognized in earnings, and the amount of the OTTI related to other factors (e.g., interest rates, market conditions, etc.) is recorded as a component of other comprehensive income. If no credit loss exists but either we have the intent to sell the fixed maturity or equity security or it is more likely than not that we will be required to sell the fixed maturity or equity security before its anticipated recovery, then the entire unrealized loss is recognized in earnings. In periods after the recognition of an OTTI loss on fixed maturity investments, we account for such securities as if they had been purchased on the measurement date of the OTTI at an amortized cost basis equal to the previous amortized cost basis less the net impairment loss recognized in earnings. For the three months ended March 31, 2016, the Company does not consider its available-for-sale securities to be other-than-temporarily impaired.

We measure fair value in accordance with ASC 820, Fair Value Measurements. The guidance dictates a framework for measuring fair value and a fair value hierarchy based on the quality of inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1—Quoted prices in active markets for identical instruments;

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Level 2—Indirect observable inputs including quoted prices for similar assets/liabilities (adjusted) and market corroborated inputs; and

Level 3—Unobservable inputs that reflect the underlying entity’s interpretation of risk assumptions used by market participants.

When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. Thus, a Level 3 fair value measurement may include inputs that are observable (Level 1 and 2) and unobservable (Level 3).

The use of valuation techniques may require a significant amount of judgment. During periods of financial market disruption, including periods of rapidly widening credit spreads or illiquidity, it may be difficult to value certain of our securities if trading becomes less frequent or market data becomes less observable.

The Company validates the prices provided by its investment accounting service provider and/or investment managers through a process that includes, but is not limited to:

•

Comparison of prices between two independent sources, with significant differences identified and investigated;

•

Evaluation of the methodologies used by outside parties to calculate fair value;

•

Comparison of the fair value estimates to the Company’s knowledge of the current investment market; and

•

Quantitative analysis (e.g., comparing the quarterly return for each managed portfolio to its target benchmark, with significant differences identified and investigated).

Fixed Maturities

Fixed maturities are subject to fluctuations in fair value due to changes in interest rates, changes in issuer specific circumstances, such as credit rating, and changes in industry specific circumstances, such as movements in credit spreads based on the market’s perception of industry risks. As a result of these potential fluctuations, it is possible to have significant unrealized gains or losses on a security.

Fair value prices for substantially all securities in our fixed maturities portfolios are independently provided by our investment accounting service provider and/or our investment managers, which each utilize internationally recognized independent pricing services, except for certain middle-market bank loan assets, which are priced using discounted cash flow analysis. We record the unadjusted price provided by the investment accounting service provider or investment manager. The independent pricing services used by our investment accounting service provider and investment managers obtain actual transaction prices for securities that have quoted prices in active markets. Each pricing service has its own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of “matrix pricing” in which the independent pricing service uses observable market inputs, including reported trades, benchmark yields, broker/dealer quotes, interest rates, prepayment speeds, default rates and such other inputs as are available from market sources to determine a reasonable fair value. In addition, pricing services use valuation models, such as an Option Adjusted Spread model, to develop prepayment and interest rate scenarios. The Option Adjusted Spread model is commonly used to estimate fair value for securities such as mortgage-backed and asset-backed securities. The ability to obtain quoted market prices is reduced in periods of decreasing liquidity, which

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generally increases the use of matrix pricing methods and generally increases the uncertainty surrounding the fair value estimates. This could result in the reclassification of a security between levels of the hierarchy.

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets and liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the date of the actual transfer.

Premium Recognition

Premiums. Direct insurance and assumed facultative reinsurance premiums are recognized as earned on a pro rata basis over the applicable policy or contract periods. For assumed treaty reinsurance written on a losses occurring basis, premiums written are earned on a pro rata basis over the risk period. For assumed treaty reinsurance written on a risks attaching basis, premiums written are earned on a pro rata basis over the periods of the underlying policies. Premiums may include estimates based on information received from brokers, ceding insurers and insureds, and any subsequent differences from such estimates are recorded in the period in which they are determined. In each case, the portions of the premiums written applicable to the unexpired terms are recorded as unearned premiums.

Assumed Reinsurance. In 2015, 2014 and 2013, we earned $384.8 million, $379.8 million and $384.3 million of premium on assumed reinsurance, respectively, representing approximately 17.8%, 18.1% and 21.7% of our gross earned premium for such years, respectively. The bulk of the assumed reinsurance premium pertained to facultative risks, which were individually underwritten by our underwriters similar to our direct insurance business or by managing agents similar to our program business. Generally, we write facultative reinsurance where regulatory requirements outside the U.S. require a local fronting insurer or one of our clients requests that we reinsure its captive insurer. The balance in each year pertained to treaty reinsurance business, where the underlying insurance policies were underwritten by the ceding insurers. The principal lines of business in which we wrote treaty reinsurance during this period were marine, property catastrophe and surety.

Ceded Reinsurance. In the normal course of business, we may seek to mitigate underwriting risk that could cause unfavorable results by reinsuring certain amounts of risk with reinsurers. Reinsurance does not relieve us of our primary obligation to the insured. The accounting for reinsurance ceded depends on the method of reinsurance. If the reinsurance contract is on a losses occurring basis, reinsurance premiums ceded and associated commissions are expensed on a pro rata basis over the period reinsurance coverage is provided. If the reinsurance contract is on a risk attaching basis, reinsurance premiums ceded and associated commissions are expensed in line with gross premiums earned to which the risk attaching policy relates. Prepaid reinsurance premiums represent the portion of premiums ceded on the unexpired terms of the policies purchased. Reinsurance commissions that will be earned in the future are deferred and recorded as deferred acquisition costs on the balance sheets. Reinsurance recoverable is presented on the balance sheets net of any reserves for uncollectible reinsurance. The method of determining the reinsurance recoverable on unpaid losses and LAE involves actuarial estimates that are determined in a manner consistent with the determination of unpaid losses and LAE.

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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015

The following is a discussion and analysis of our consolidated results of operations for the three months ended March 31, 2016 and 2015, which are summarized below:


	Three Months Ended March 31,
	2016			2015			% change
	(dollars in thousands)
Gross premiums written	$	530,705		$	515,256			3.0	%
Reinsurance premiums ceded		(169,280	)		(161,495	)		4.8	%

Net premiums written		361,425			353,761			2.2	%
Change in unearned premiums		(6,138	)		39,366			n/m

Net premiums earned		355,287			393,127			(9.6	)%
Net investment income		29,204			27,555			6.0	%
Net realized and unrealized gains on investments		43,325			30,661			n/m
Net foreign exchange gains (losses)		6,538			(4,955	)		n/m
Other income		51,034			10,196			400.5	%

Total revenues		485,388			456,584			6.3	%

Losses and loss adjustment expenses		237,159			250,858			(5.5	)%
Acquisition expenses		47,246			57,008			(17.1	)%
General and administrative expenses		92,977			71,636			29.8	%
Transaction expenses (a)		—			7,615			n/m
Interest expense		5,630			5,523			1.9	%

Total losses and expenses		383,012			392,640			(2.5	)%

Income before tax expense		102,376			63,944			60.1	%
Income tax expense		(12,001	)		(2,072	)		n/m

Net income.	$	90,375		$	61,872			46.1	%

Loss ratio (b)		66.8	%		63.8	%
Acquisition cost ratio (c)		13.3	%		14.5	%
General and administrative expense ratio (d)		8.0	%		13.7	%

Combined ratio (e)		88.1	%		92.0	%

(a)	Transaction expenses include fees and expenses associated with the Fosun Acquisition, fees and expenses associated with the Fosun Equity Investment and accelerated vesting of certain share based compensation awards in connection with the Fosun Acquisition.

(b)	The loss ratio is calculated by dividing losses and loss adjustment expenses by net premiums earned.

(c)	The acquisition cost ratio is calculated by dividing acquisition expenses by net premiums earned.

(d)

(e)	The combined ratio is the sum of the loss ratio, acquisition cost ratio and general and administrative expense ratio.

Consolidated Results

Premiums. Gross premiums written for the three months ended March 31, 2016 increased by 3.0% compared to the corresponding period in 2015. The growth in gross premiums written, which was primarily in our casualty lines, was due to increases in our U.S. segment of 3.6% and Bermuda segment of 30.1%, partially offset by a decline in our International segment of 4.5%.

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The ratio of reinsurance premiums ceded to gross premiums written for the three months ended March 31, 2016 was 31.9%, compared to 31.3% for the corresponding period in 2015.

Losses and Loss Adjustment Expenses. Our loss ratio increased for the three months ended March 31, 2016 by 3.0 percentage points compared to the corresponding period in 2015. Significant items impacting the increase were:

•

Net unfavorable development of prior year loss reserves for the three months ended March 31, 2016 of $13.2 million, compared to $2.7 million for the corresponding period in 2015;

•

Net unfavorable prior year loss reserve development of $9.0 million was recognized in our U.S. segment, and $5.4 million was recognized in our International segment, which were partially offset by favorable development of $1.2 million in our Bermuda segment for the three months ended March 31, 2016; and

•

The prior year loss reserve development increased our loss ratio by 3.7 percentage points for the three months ended March 31, 2016, compared to 0.7 percentage points for the corresponding period in 2015. Excluding the impact of net unfavorable prior year loss reserve development, our loss ratio for the three months ended March 31, 2016 was 63.1%, compared to 63.1% for the corresponding period in 2015.

Acquisition Expenses. Changes in the mix of business written and earned and the amount or type of reinsurance purchased impact our acquisition cost ratio from period to period. Acquisition costs are presented net of ceding commission income associated with reinsurance premiums ceded. These ceding commissions compensate us for the costs of producing the portfolio of risks ceded to our reinsurers. Our acquisition cost ratio for the three months ended March 31, 2016 decreased by 1.2 percentage points compared to the corresponding period in 2015. The decrease in the acquisition cost ratio was due to an increase in ceding commission income from higher ceding commission rates and an increase in reinsurance purchases.

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2016 increased by $21.3 million, or 29.8%, compared to the corresponding period in 2015. The increase was principally due to higher compensation costs as a result of the hiring of additional employees to support the continued expansion of our business platforms and product offerings, and the prior year period had comparatively lower incentive-based compensation expense. For the three months ended March 31, 2016, our general and administrative expense ratio decreased by 5.7 percentage points, to 8.0% from 13.7% for the corresponding period in 2015, principally due to a gain of $40.2 million from the sale of renewal rights recorded in other income, which reduced our general and administrative expense ratio by 11.4 percentage points.

Other Income. Other income is principally comprised of fee income from underwriting activities where we provide underwriting expertise on risks insured wholly or in part by other insurers and income from strategic underwriting investments. Other income for the three months ended March 31, 2016 was $51.0 million compared to $10.2 million for the corresponding period in 2015. The increase was principally due to a gain of $40.2 million from the sale of renewal rights. On January 15, 2016, we sold to a third party our existing rights to underwrite certain insurance business of a managing general agent, principally insurance of antique and collectable automobiles. As consideration for the sale, the buyer repaid in full the $41.8 million loan that the Company had advanced (see Note 19 of the notes to our audited consolidated financial statements for further details on the loan) and paid an additional $45.2 million, for total consideration of $87.0 million. Also in conjunction with the sale, we entered into a quota share reinsurance contract with the buyer, whereby effective January 1, 2017 for a term of ten years, we will assume 45% of the buyer’s net retained liability on business generated by such renewal rights. The 45% quota share is subject to reduction in the event that such business exceeds certain projections, and we have the right to terminate the contract on a run-off basis effective on January 1 of any year commencing January 1, 2019.

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Net Investment Income. Net investment income for the three months ended March 31, 2016 increased by 6.0% compared to the corresponding period in 2015. The increase was principally due to higher levels of invested assets.

Net Realized and Unrealized Gains (Losses) on Investments. Our fixed maturities and equity securities trading portfolios and other investments are recorded at fair value with unrealized gains and losses recorded in net income. Realized gains and losses on our trading and available-for-sale investment portfolios are recorded in net income. As a result, net realized and unrealized gains and losses on investments may vary significantly from period to period. The three months ended March 31, 2016 included net unrealized gains of $44.6 million compared to $35.1 million in the corresponding period in 2015. The unrealized gains for the three months ended March 31, 2016 were principally due to a decline in interest rates. Realized losses for the three months ended March 31, 2016 were $1.3 million compared to $4.4 million in the corresponding period in 2015.

Net Foreign Exchange Gains (Losses). The three months ended March 31, 2016 included net foreign exchange gains of $6.5 million compared to foreign exchange losses of $5.0 million in the corresponding period in 2015. The foreign exchange gains for the three months ended March 31, 2016 were principally due to a weakening of the U.S. dollar against the pound sterling and the Canadian dollar.

Interest Expense. Interest expense reflects interest on our Senior Notes and other debt facilities.

Income Tax Expense. Corporate income tax expense is generated through our operations in taxable jurisdictions, principally in the U.S. and Europe. Our effective tax rate was 11.7% for the three months ended March 31, 2016 compared to 3.2% for the corresponding period in 2015. Our effective income tax rate, which we calculate as income tax expense or benefit divided by income or loss before income taxes, may fluctuate from period to period depending on the geographic distribution of pre-tax income or loss in any given period. The geographic distribution of pre-tax income or loss can vary significantly between periods principally due to the mix of business written and earned during the period, net losses and LAE incurred, investment income and realized and unrealized investment gains and losses.

The Company’s income before taxes, income tax expense and effective income tax rate for the three months ended March 31, 2016 and 2015 were:


	Three Months Ended March 31,
	2016			2015
	(dollars in thousands)
Income before tax expense	$	102,376		$	63,944
Income tax expense		(12,001	)		(2,072	)
Effective income tax rate		11.7	%		3.2	%

Our effective tax rate and our tax expense for the three months ended March 31, 2016 was attributable to higher taxable income in the United States, principally due to a gain of $40.2 million from the sale of renewal rights, partially offset by a tax benefit due to a reduction of $11.6 million of our deferred tax valuation allowance. During the three months ended March 31, 2016, the Company reassessed its estimate of deferred tax assets that are more likely than not to be realized, resulting in a reduction of the valuation allowance.

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U.S. Segment Results


	Three Months Ended March 31,
	2016			2015			% change
	(dollars in thousands)
Gross premiums written	$	335,705		$	324,126			3.6	%
Reinsurance premiums ceded		(101,605	)		(99,776	)		1.8	%

Net premiums written		234,100			224,350			4.3	%
Change in unearned premiums		2,333			34,149			n/m

Net premiums earned		236,433			258,499			(8.5	)%
Losses and loss adjustment expenses		174,074			177,919			(2.5	)%
Acquisition expenses		23,344			32,219			(27.5	)%
General and administrative expenses		50,581			38,736			30.6	%
Other income		45,069			2,881			n/m
Underwriting income	$	33,503		$	12,506			167.9	%

Loss ratio		73.6	%		68.8	%
Acquisition cost ratio		9.9	%		12.5	%
General and administrative expense ratio (a)		2.3	%		13.9	%

Combined ratio		85.8	%		95.2	%

(a)

The general and administrative expense ratio is calculated by dividing general and administrative expenses less other income by net premiums earned. Corporate general and administrative expenses, transaction expenses and corporate other income are not included in the calculation.

The following table sets forth our gross premiums written by line and type of business in the U.S. segment:


	Three Months Ended March 31,
	2016								2015
	Gross Premiums Written (GPW)		% of Total U.S. Segment GPW			% Ceded to Reinsurers			Gross Premiums Written (GPW)		% of Total U.S. Segment GPW			% Ceded to Reinsurers
	(dollars in thousands)
Aviation	$	1,766		0.5	%		65.2	%	$	10,473		3.2	%		12.1	%
Environmental		40,050		11.9	%		18.5	%		37,097		11.4	%		23.3	%
IronHealth		124,109		37.0	%		22.8	%		103,561		32.0	%		22.6	%
IronPro		51,153		15.2	%		26.3	%		62,448		19.3	%		26.3	%
Political Risk & Surety		21,545		6.4	%		44.2	%		22,807		7.1	%		39.3	%
Specialty Casualty		59,970		17.9	%		30.4	%		52,961		16.3	%		27.3	%
U.S. Property		37,112		11.1	%		63.6	%		34,779		10.7	%		76.4	%

	$	335,705		100.0	%		30.3	%	$	324,126		100.0	%		30.8	%

Casualty	$	275,282		82.0	%		24.5	%	$	256,067		79.0	%		24.6	%
Property		37,112		11.1	%		63.6	%		34,779		10.7	%		76.4	%
Specialty Short Tail		23,311		6.9	%		45.8	%		33,280		10.3	%		30.7	%

	$	335,705		100.0	%		30.3	%	$	324,126		100.0	%		30.8	%

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Premiums. Gross premiums written for the three months ended March 31, 2016 increased by 3.6% compared to the corresponding period in 2015. Significant factors affecting first quarter 2016 gross premiums written were:

•

IronHealth increased by 19.8% due to new business from our medical stop loss product line and higher submission activity;

•

Specialty Casualty increased by 13.2% principally due to growth in programs business;

•

IronPro decreased by 18.1% due to planned reductions in certain professional liability product lines; and

•

Aviation decreased by 83.1% due to unfavorable revisions to prior year premium estimates on assumed treaties as a result of new information received.

The ratio of reinsurance premiums ceded to gross premiums written for the three months ended March 31, 2016 was 30.3%, compared to 30.8% for the corresponding period in 2015.

Losses and Loss Adjustment Expenses. Our loss ratio increased for the three months ended March 31, 2016 by 4.8 percentage points compared to the corresponding period in 2015. The net favorable and (unfavorable) development of prior year loss reserves for the three months ended March 31, 2016 and 2015 by line of business was as follows:


	Three Months Ended March 31,
	2016			2015
	(in millions)
Aviation	$	(0.7	)	$	(1.0	)
Environmental		—			—
IronHealth		—			0.8
IronPro		0.1			(4.0	)
Political Risk & Surety		0.4			—
Specialty Casualty		(9.8	)		(1.3	)
U.S. Property		1.0			4.3

	$	(9.0	)	$	(1.2	)

Significant items impacting the loss ratio for the three months ended March 31, 2016 were:

•

Net unfavorable development of prior year loss reserves for the three months ended March 31, 2016 of $9.0 million, compared to $1.2 million for the corresponding period in 2015;

•

Net unfavorable prior year loss reserve development of $9.0 million for the three months ended March 31, 2016 reflected higher than expected reported claims activity in our Specialty Casualty line of business of $9.8 million, primarily on the 2013 accident year; and

•

The prior year loss reserve development increased our loss ratio by 3.8 percentage points for the three months ended March 31, 2016, compared to 0.5 percentage points for the corresponding period in 2015. Excluding the impact of net prior year loss reserve development, our loss ratio for the three months ended March 31, 2016 was 69.8%, compared to 68.3% for the corresponding period in 2015. The increase in our loss ratio for the three months ended March 31, 2016 compared to the corresponding period in 2015 was principally due to an increase in our aviation loss ratio from the decline in net premiums earned.

-65-

Acquisition Expenses. Our acquisition cost ratio decreased by 2.6 percentage points for the three months ended March 31, 2016, compared to the corresponding period in 2015. The decrease in the acquisition cost ratio was due to an increase in ceding commission income from higher ceding commission rates and an increase in reinsurance purchases.

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2016 increased by 30.6% compared to the corresponding period in 2015. The increase was principally due to higher compensation costs as a result of the hiring of additional employees to support the continued expansion of our business platforms and product offerings, and the corresponding period in the prior year had comparatively lower incentive-based compensation expense. For the three months ended March 31, 2016, our general and administrative expense ratio declined by 11.6 percentage points, to 2.3% from 13.9% for the corresponding period in 2015, primarily due to a gain of $40.2 million from the sale of our renewal rights recorded in other income, which reduced our general and administrative expense ratio by 17.1 percentage points.

International Segment Results


	Three Months Ended March 31,
	2016			2015			% change
	(dollars in thousands)
Gross premiums written	$	148,043		$	155,028			(4.5	)%
Reinsurance premiums ceded		(45,445	)		(44,321	)		2.5	%

Net premiums written		102,598			110,707			(7.3	)%
Change in unearned premiums		(2,491	)		2,373			n/m

Net premiums earned		100,107			113,080			(11.5	)%
Losses and loss adjustment expenses		54,206			63,634			(14.8	)%
Acquisition expenses		23,414			25,241			(7.2	)%
General and administrative expenses		23,083			19,589			17.8	%
Other income		4,553			5,471			(16.8	)%

Underwriting income	$	3,957		$	10,087			(60.8	)%

Loss ratio		54.1	%		56.3	%
Acquisition cost ratio		23.4	%		22.3	%
General and administrative expense ratio (a)		18.5	%		12.5	%

Combined ratio		96.0	%		91.1	%

(a)

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The following table sets forth our gross premiums written by line and type of business in the International segment:


	Three Months Ended March 31,
	2016								2015
	Gross Premiums Written (GPW)		% of Total International Segment GPW			% Ceded to Reinsurers			Gross Premiums Written (GPW)		% of Total International Segment GPW			% Ceded to Reinsurers
	(dollars in thousands)
International Property	$	29,978		20.2	%		47.5	%	$	30,504		19.7	%		34.4	%
Liability		41,104		27.8	%		19.0	%		37,994		24.5	%		12.7	%
Marine		31,238		21.1	%		54.1	%		45,454		29.3	%		49.7	%
Personal Accident		15,431		10.4	%		25.8	%		18,323		11.8	%		19.3	%
Specialty Short Tail		30,292		20.5	%		8.3	%		22,753		14.7	%		12.8	%

	$	148,043		100.0	%		30.7	%	$	155,028		100.0	%		28.6	%

Casualty.	$	41,104		27.8	%		19.0	%	$	37,994		24.5	%		12.7	%
Property		29,978		20.2	%		47.5	%		30,504		19.7	%		34.4	%
Specialty Short Tail		76,961		52.0	%		30.4	%		86,530		55.8	%		33.5	%

	$	148,043		100.0	%		30.7	%	$	155,028		100.0	%		28.6	%

Premiums. Gross premiums written for the three months ended March 31, 2016 decreased by 4.5% compared to the corresponding period in 2015. Significant factors affecting gross premiums written for the three months ended March 31, 2016 were:

•

Marine decreased by 31.3% principally due to a reduction in participation on certain marine treaties; and

•

Specialty Short Tail increased by 33.1% due to growth in all product lines (Select Specialty Lines, Agriculture, Product Recall and Surety).

The ratio of reinsurance premiums ceded to gross premiums written for the three months ended March 31, 2016 was 30.7% compared to 28.6% in the corresponding period in 2015. The increase in the percentage of reinsurance premiums ceded was due primarily to change in the mix of business written.

Losses and Loss Adjustment Expenses. Our loss ratio for the three months ended March 31, 2016 decreased by 2.2 percentage points compared to the corresponding period in 2015. The net favorable and (unfavorable) development of prior year loss reserves for the three months ended March 31, 2016 and 2015 by line of business was as follows:


	Three Months Ended March 31,
	2016			2015
	(in millions)
International Property	$	(1.3	)	$	0.4
Liability		(1.0	)		(3.3	)
Marine		(4.8	)		1.6
Personal Accident		1.7			0.7
Specialty Short Tail		—			(2.9	)

	$	(5.4	)	$	(3.5	)

Significant items impacting the loss ratio for the three months ended March 31, 2016 were:

•

Net unfavorable development of prior year loss reserves for the three months ended March 31, 2016 of $5.4 million, compared to $3.5 million for the corresponding period in 2015;

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•

Net unfavorable prior year loss reserve development of $5.4 million for the three months ended March 31, 2016 reflected higher than expected reported claim activity of $4.8 million in our Marine line of business (2013 to 2015 accident years) and $1.3 million in our International Property lines of business (2015 accident year). This was partially offset by favorable loss reserve development of $1.7 million in our personal accident line of business (2013 and 2015 accident years) due to lower than expected reported claim activity; and

•

The prior year loss reserve development increased our loss ratio by 5.4 percentage points for the three months ended March 31, 2016, compared to 3.1 percentage points for the corresponding period in 2015. Excluding the impact of net prior year loss reserve development, our loss ratio for the three months ended March 31, 2016 was 48.7%, compared to 53.2% for the corresponding period in 2015. The decrease in our loss ratio for the three months ended March 31, 2016 compared to the corresponding period in 2015 was principally due to improved results in our marine and international property lines of business.

Acquisition Expenses. Our acquisition cost ratio increased by 1.1 percentage points for the three months ended March 31, 2016, compared to the corresponding period in 2015 primarily due to a change in the mix of business earned.

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2016 increased by 17.8% compared to the corresponding period in 2015. The increase was principally due to higher compensation costs as a result of the hiring of additional employees to support the continued expansion of our business platforms and product offerings, and the prior year period had comparatively lower incentive-based compensation expense. For the three months ended March 31, 2016, our general and administrative expense ratio increased by 6.0 percentage points, to 18.5% from 12.5% for the corresponding period in 2015.

Bermuda Segment Results


	Three Months Ended March 31,
	2016			2015			% change
	(dollars in thousands)
Gross premiums written	$	46,957		$	36,102			30.1	%
Reinsurance premiums ceded		(22,230	)		(17,398	)		27.8	%

Net premiums written		24,727			18,704			32.2	%
Change in unearned premiums		(5,980	)		2,844			n/m

Net premiums earned		18,747			21,548			(13.0	)%
Losses and loss adjustment expenses		8,879			9,305			(4.6	)%
Acquisition expenses		488			(452	)		208.0	%
General and administrative expenses		5,895			5,233			12.7	%
Other income		1,412			1,389			1.7	%

Underwriting income	$	4,897		$	8,851			(44.7	)%

Loss ratio		47.4	%		43.2	%
Acquisition cost ratio		2.6	%		(2.1	)%
General and administrative expense ratio (a)		23.9	%		17.8	%

Combined ratio		73.9	%		58.9	%

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(a)

The following table sets forth our gross premiums written by line and type of business in the Bermuda segment:


	Three Months Ended March 31,
	2016								2015
	Gross Premiums Written (GPW)		% of Total Bermuda Segment GPW			% Ceded to Reinsurers			Gross Premiums Written (GPW)		% of Total Bermuda Segment GPW			% Ceded to Reinsurers
	(dollars in thousands)
Bermuda Property	$	19,509		41.5	%		69.0	%	$	20,118		55.7	%		61.3	%
Corporate Deals		16,146		34.4	%		0.0	%		9,073		25.2	%		0.0	%
Iron-Starr Excess		11,302		24.1	%		77.5	%		6,911		19.1	%		73.4	%

	$	46,957		100.0	%		47.3	%	$	36,102		100.0	%		48.2	%

Casualty	$	11,302		24.1	%		77.5	%	$	6,911		19.1	%		73.4	%
Property		35,655		75.9	%		37.8	%		29,191		80.9	%		42.2	%
Specialty Short Tail		—		—			—			—		—			—

	$	46,957		100.0	%		47.3	%	$	36,102		100.0	%		48.2	%

Premiums. Gross premiums written for the three months ended March 31, 2016 increased by 30.1% compared to the corresponding period in 2015. Significant factors affecting gross premiums written for the three months ended March 31, 2016 were:

•

Corporate Deals increased by 78.0% principally due to two new assumed treaty participations; and

•

Iron-Starr Excess increased by 63.5% principally due to increases in financial lines business.

The ratio of reinsurance premiums ceded to gross premiums written for the three months ended March 31, 2016 was 47.3%, compared to 48.2% in the corresponding period in 2015.

Losses and Loss Adjustment Expenses. Our loss ratio increased by 4.2 percentage points for the three months ended March 31, 2016 compared to the corresponding period in 2015. The net favorable and (unfavorable) development of prior year loss reserves for the three months ended March 31, 2016 and 2015 by line of business was as follows:


	Three Months Ended March 31,
	2016		2015
	(in millions)
Bermuda Property	$	1.2	$	(1.0	)
Corporate Deals		—		3.0
Iron-Starr Excess		—		—

	$	1.2	$	2.0

Significant items impacting the loss ratio for the three months ended March 31, 2016 were:

•

Net favorable development of prior year loss reserves of $1.2 million for the three months ended March 31, 2016, compared to $2.0 million for the corresponding period in 2015;

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•

Net favorable prior year loss reserve development of $1.2 million for the three months ended March 31, 2016 reflected better than expected reported claims activity in our Bermuda Property line of business, primarily on the 2015 accident year; and

•

The prior year loss reserve development decreased our loss ratio by 6.4 percentage points for the three months ended March 31, 2016, compared to a decrease of 9.3 percentage points for the corresponding period in 2015. Excluding the impact of net prior year loss reserve development, our loss ratio for the three months ended March 31, 2016 was 53.8%, compared to 52.5% for the corresponding period in 2015. The increase in our loss ratio for the three months ended March 31, 2016 compared to the corresponding period in 2015 was principally due to an increase in property losses.

Acquisition Expenses. Our acquisition cost ratio increased by 4.7 percentage points for the three months ended March 31, 2016 compared to the corresponding period in 2015 due to the non-renewal of several large policies with comparatively lower acquisition costs.

General and Administrative Expenses. General and administrative expenses in this segment increased by 12.7% in the three months ended March 31, 2016 compared to the corresponding period in 2015, mainly because the prior year period had comparatively lower incentive-based compensation expense. For the three months ended March 31, 2016, our general and administrative expense ratio increased by 6.1 percentage points, to 23.9% from 17.8% for the corresponding period in 2015 due to the decline in net premiums earned.

Investing Activities

The results of investing activities discussed below include net investment income and net realized and unrealized gains (losses) on investments recorded in net income.


	Three Months Ended March 31,
	2016			2015			% change
	(dollars in thousands)
Net investment income	$	29,204		$	27,555			6.0	%
Net investment income yield on average cash and investments		2.2	%		2.3	%
Net realized losses on trading and available-for-sale securities	$	(1,261	)	$	(4,416	)		n/m
Net unrealized gains on trading securities and other investments		44,586			35,077			n/m

Net realized and unrealized gains on investments	$	43,325		$	30,661			n/m

Net Investment Income. Net investment income for the three months ended March 31, 2016 increased by 6.0% compared to the corresponding period in 2015. The increase was due to higher levels of invested assets.

Net Realized and Unrealized Gains (Losses) on Investments. Our fixed maturities and equity securities trading portfolios and other investments are recorded at fair value with unrealized gains and losses recorded in net income. Realized gains and losses on our trading and available-for-sale investment portfolios are recorded in net income.

Net realized and unrealized gains on our investments for the three months ended March 31, 2016 were $43.3 million compared to $30.7 million for the corresponding period in 2015. The unrealized gains for the three months ended March 31, 2016 were principally due to a decrease in interest rates. We did not record any credit impairments in our investment portfolio for the three months ended March 31, 2016 or 2015.

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RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The following is a discussion and analysis of our consolidated results of operations for the years ended December 31, 2015, 2014 and 2013, which are summarized below:


	Year Ended December 31,
	2015			% change			2014			% change			2013
	(dollars in thousands)
Gross premiums written	$	2,163,852			(2.1	)%	$	2,210,554			10.9	%	$	1,993,123
Reinsurance premiums ceded		(684,028	)		15.7	%		(591,734	)		10.5	%		(535,404	)

Net premiums written		1,479,824			(8.6	)%		1,619,180			11.1	%		1,457,719
Change in unearned premiums		63,427			n/m			(92,184	)		n/m			(203,396	)

Net premiums earned		1,543,251			1.1	%		1,526,996			21.7	%		1,254,323
Net investment income		113,300			16.8	%		97,043			15.0	%		84,372
Net realized and unrealized gains (losses) on investments		(48,351	)		n/m			28,039			n/m			(70,462	)
Net foreign exchange losses		(11,054	)		n/m			(5,283	)		n/m			(2,989	)
Other income		50,413			50.2	%		33,566			13.6	%		29,554

Total revenues		1,647,559			(2.0	)%		1,680,361			29.8	%		1,294,798

Losses and loss adjustment expenses		1,010,218			(6.2	)%		1,077,274			44.6	%		745,173
Acquisition expenses		210,053			(2.2	)%		214,708			23.4	%		174,052
General and administrative expenses		322,728			15.6	%		279,101			11.4	%		250,643
Transaction expenses (a)		39,529			n/m			—			—			—
Interest expense		22,169			1.2	%		21,906			1.1	%		21,663

Total losses and expenses		1,604,697			0.7	%		1,592,989			33.7	%		1,191,531

Income before tax expense		42,862			(50.9	)%		87,372			(15.4	)%		103,267
Income tax benefit (expense)		14,941			n/m			(2,906	)		(49.2	)%		(5,723	)

Net income		57,803			(31.6	)%		84,466			(13.4	)%		97,544

Net income (loss) attributable to non-controlling interest		—			—			(11	)		n/m			177

Net income attributable to Ironshore Inc.	$	57,803			(31.6	)%	$	84,477			(13.2	)%	$	97,367

Loss ratio		65.5	%					70.5	%					59.4	%
Acquisition cost ratio		13.6	%					14.1	%					13.9	%
General and administrative expense ratio (b)		14.6	%					13.3	%					15.8	%

Combined ratio		93.7	%					97.9	%					89.1	%

(a)	Transaction expenses include fees and expenses associated with the Fosun Acquisition, fees and expenses associated with the Fosun Equity Investment and accelerated vesting of certain share based compensation awards in connection with the Fosun Acquisition.

(b)

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Consolidated Results

Premiums. Gross premiums written for the year ended December 31, 2015 decreased by 2.1% compared to the prior year. The decline in gross premiums written was due to decreases in our U.S. segment of 2.4% and Bermuda segment of 17.3%, partially offset by an increase of 4.0% in our International segment. The decrease in our U.S. segment was primarily in our casualty and aviation lines of business, which we have deliberately reduced due to the rate environment. The decline in our Bermuda segment was principally in our property line of business. The increase in our International segment was due principally to strong growth in our specialty short tail lines of business.

Gross premiums written for the year ended December 31, 2014 increased by 10.9% compared to the year ended December 31, 2013. The increase was principally due to growth in our U.S. segment of 16.4%. The increase in the U.S. segment was principally in our casualty lines of business due to organic growth through new and existing products.

The ratio of reinsurance premiums ceded to gross premiums written for the year ended December 31, 2015 was 31.6%, compared to 26.8% for the prior year. The increase in the percentage of reinsurance premiums ceded compared to the prior year was principally due to additional reinsurance purchases in our casualty, IronPro and surety lines of business.

The ratio of reinsurance premiums ceded to gross premiums written for the year ended December 31, 2014 was 26.8%, compared to 26.9% for the year ended December 31, 2013. The slight decline in the percentage of reinsurance premiums ceded compared to the prior year was principally due to decreased reinsurance ceded under the Acapella program (described below under “—International Segment Results”) within our International segment. This was mostly offset by the addition of our 8% whole account quota share treaty with Transatlantic Reinsurance Company (6%) and Partner Reinsurance Company of the U.S. (2%) (the “Whole Account Treaty”), effective as of January 1, 2014.

Losses and Loss Adjustment Expenses. Our loss ratio decreased for the year ended December 31, 2015 by 5.0 percentage points compared to the prior year. Significant items impacting the 2015 loss ratio were:

•

Net unfavorable development of prior year loss reserves for the year ended December 31, 2015 of $9.9 million, compared to $52.8 million for the year ended December 31, 2014;

•

Net unfavorable prior year loss reserve development of $7.8 million was recognized in our U.S. segment, $1.4 million in our Bermuda segment and $0.7 million in our International segment for the year ended December 31, 2015; and

•

The prior year loss reserve development increased our loss ratio by 0.6 percentage points for the year ended December 31, 2015, compared to 3.5 percentage points for the year ended December 31, 2014. Excluding the impact of net unfavorable prior year loss reserve development, our loss ratio for the year ended December 31, 2015 was 64.9%, compared to 67.0% for the year ended December 31, 2014. The decrease in our loss ratio for the year ended December 31, 2015 compared to the prior year was principally due to a decrease in our property loss ratio. For the year ended December 31, 2015, our results included $7.5 million of property losses attributable to natural catastrophes, compared to $29.0 million for the year ended December 31, 2014.

Our loss ratio increased by 11.1 percentage points for the year ended December 31, 2014 compared to the year ended December 31, 2013. Significant items affecting the 2014 loss ratio were:

•

Net unfavorable development of prior year loss reserves for the year ended December 31, 2014 of $52.8 million, compared to favorable development of $9.3 million for the year ended December 31, 2013;

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•

Net unfavorable loss reserve development of $43.7 million was recognized in our U.S. segment and $9.4 million in our International segment for the year ended December 31, 2014; and

•

The prior year loss reserve development increased our loss ratio by 3.5 percentage points for the year ended December 31, 2014, compared to a decrease of 0.7 percentage points for the year ended December 31, 2013. Excluding the impact of prior year loss reserve development, our loss ratio for the year ended December 31, 2014 was 67.0%, compared to 60.1% for the year ended December 31, 2013. The increase in our loss ratio for the year ended December 31, 2014 compared to the prior year was principally due to an increase in our property, aviation and casualty loss ratios. For the year ended December 31, 2014, our results included $29.0 million of property losses attributable to natural catastrophes, $27.5 million of losses from the Malaysian airlines loss events of March 2014 and November 2014, and $20.0 million of losses due to a higher current accident year loss ratio for our Specialty Casualty line of business. For the year ended December 31, 2013, our results included $12.5 million of property losses attributable to natural catastrophes.

Acquisition Expenses. Changes in the mix of business written and earned and the amount or type of reinsurance purchased will impact our acquisition cost ratio from period to period. Acquisition expenses are presented net of ceding commission income associated with reinsurance premiums ceded. These ceding commissions compensate us for the costs of producing the portfolio of risks ceded to our reinsurers. Our acquisition cost ratio for the year ended December 31, 2015 decreased by 0.5 percentage points compared to the prior year. The decrease was due to higher ceding commissions from increased reinsurance purchases. Our acquisition cost ratio for the year ended December 31, 2014 increased slightly by 0.2 percentage points compared to the year ended December 31, 2013.

General and Administrative Expenses. General and administrative expenses for the year ended December 31, 2015 increased by $43.6 million, or 15.6%, compared to the prior year. The increase was principally due to higher compensation costs as a result of the hiring of additional employees to support the continued expansion of our business platforms and product offerings, and expenses for 2014 were lower due to a reduction in our incentive-based compensation. For the year ended December 31, 2015, our general and administrative expense ratio increased by 1.3 percentage points, to 14.6%, compared to 13.3% for 2014.

General and administrative expenses for the year ended December 31, 2014 increased by $28.5 million, or 11.4%, compared to the year ended December 31, 2013. The increase was principally due to higher compensation costs as a result of the hiring of additional employees to support our continued business growth, partially offset by lower incentive-based compensation due to the decline in operating income. For the year ended December 31, 2014, our general and administrative expense ratio declined by 2.5 percentage points, to 13.3% compared to 15.8% for 2013.

Other income for the year ended December 31, 2014 was $33.6 million, compared to $29.6 million for the year ended December 31, 2013. The increase is due principally to organic growth through new and existing products.

Transaction expenses. Transaction expenses for the year ended December 31, 2015 include costs incurred associated with the Fosun Acquisition of $22.1 million, $7.6 million of costs associated with the Fosun Equity Investment, and $9.8 million due to the accelerated vesting of certain share based compensation awards pursuant to the merger agreement. See Notes 3 and 4 to the consolidated financial statements for further information.

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Net Investment Income. Net investment income for the year ended December 31, 2015 increased by 16.8% compared to the prior year. Net investment income for the year ended December 31, 2014 increased by 15.0% compared to the year ended December 31, 2013. The increases were principally due to higher levels of cash and invested assets from the growth in premiums, and a higher yield on new investments.

Net Realized and Unrealized Gains (Losses) on Investments. Our fixed maturities and equity securities trading portfolios and other investments are recorded at fair value with unrealized gains and losses recorded in net income. As a result, net realized and unrealized gains and losses on investments may vary significantly from period to period. The year ended December 31, 2015 included net unrealized losses of $39.1 million, compared to $9.4 million of net unrealized gains in the prior year. The unrealized losses in 2015 were primarily attributable to an increase in interest rates. Realized losses for the year ended December 31, 2015 were $9.2 million, compared to $18.6 million of realized gains in the prior year.

The year ended December 31, 2014 included net unrealized gains of $9.4 million, compared to $80.1 million of net unrealized losses for the year ended December 31, 2013. Realized gains for the year ended December 31, 2014 were $18.6 million, compared to $9.7 million for the year ended December 31, 2013.

Interest Expense. Interest expense reflects interest on our Senior Notes and other debt facilities.

Income Tax Expense. Corporate income tax expense is generated through our operations in taxable jurisdictions, principally in the U.S. and Europe. Our effective tax rate was (34.9)% for the year ended December 31, 2015, compared to 3.3% for the year ended December 31, 2014 and 5.5% for the year ended December 31, 2013. Our effective income tax rate, which we calculate as income tax expense or benefit divided by income or loss before income taxes, may fluctuate from period to period depending on the geographic distribution of pre-tax income or loss in any given period. The geographic distribution of pre-tax income or loss can vary significantly between periods principally due to the mix of business written and earned during the period, net losses and LAE incurred, investment income and realized and unrealized investment gains and losses.

The Company’s income before taxes, income tax (expense) benefit, and effective income tax rate for the years ended December 31, 2015, 2014 and 2013 were:


	Year Ended December 31,
	2015			2014			2013
	(dollars in thousands)
Income before tax expense	$	42,862		$	87,372		$	103,267
Income tax benefit (expense)	$	14,941		$	(2,906	)	$	(5,723	)
Effective income tax rate		(34.9	)%		3.3	%		5.5	%

Our effective tax rate and our tax expense decreased for the year ended December 31, 2015 compared to the prior year principally due to a reduction of $21.0 million of our deferred tax valuation allowance. During the year, the Company reassessed its estimate of deferred tax assets that are more likely than not to be realized, resulting in a reduction of the valuation allowance.

Our effective rate for the year ended December 31, 2014 was lower by 2.2 percentage points compared to the year ended December 31, 2013 due to a decrease in taxable income in the United Kingdom.

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U.S. Segment Results


	Year Ended December 31,
	2015			% change			2014			% change			2013
	(dollars in thousands)
Gross premiums written	$	1,402,484			(2.4	)%	$	1,437,684			16.4	%	$	1,234,920
Reinsurance premiums ceded		(456,879	)		28.1	%		(356,614	)		22.5	%		(291,195	)

Net premiums written		945,605			(12.5	)%		1,081,070			14.6	%		943,725
Change in unearned premiums		65,590			n/m			(71,448	)		n/m			(129,155	)

Net premiums earned		1,011,195			0.2	%		1,009,622			23.9	%		814,570
Losses and loss adjustment expenses		729,863			(3.8	)%		758,447			44.8	%		523,868
Acquisition expenses		105,971			(8.6	)%		115,993			31.6	%		88,152
General and administrative expenses		166,528			16.8	%		142,566			5.0	%		135,795
Other income		25,733			92.3	%		13,383			10.0	%		12,164

Underwriting income	$	34,566			476.2	%	$	5,999			(92.4	)%	$	78,919

Loss ratio		72.2	%					75.1	%					64.3	%
Acquisition cost ratio		10.5	%					11.5	%					10.8	%
General and administrative expense ratio (a)		13.9	%					12.8	%					15.2	%

Combined ratio		96.6	%					99.4	%					90.3	%

(a)	The general and administrative expense ratio is calculated by dividing general and administrative expenses less other income by net premiums earned. Corporate general and administrative expenses, transaction expenses and corporate other income are not included in the calculation.

The following table sets forth our gross premiums written by line and type of business in the U.S. segment:


	Year Ended December 31,
	2015								2014								2013
	Gross Premiums Written (GPW)		% of Total U.S. Segment GPW			% Ceded to Reinsurers			Gross Premiums Written (GPW)		% of Total U.S. Segment GPW			% Ceded to Reinsurers			Gross Premiums Written (GPW)		% of Total U.S. Segment GPW			% Ceded to Reinsurers
	(dollars in thousands)
Aviation	$	56,059		4.0	%		16.3	%	$	74,768		5.2	%		20.3	%	$	86,411		7.0	%		11.3	%
Environmental		181,094		12.9	%		23.5	%		170,952		11.9	%		24.6	%		145,403		11.8	%		26.1	%
IronHealth		309,153		22.1	%		27.1	%		300,310		20.9	%		24.4	%		228,555		18.5	%		23.2	%
IronPro		262,703		18.7	%		26.2	%		272,849		19.0	%		12.0	%		246,814		20.0	%		20.5	%
Political Risk & Surety		99,016		7.1	%		44.9	%		97,907		6.8	%		25.5	%		78,173		6.3	%		20.9	%
Specialty Casualty		326,882		23.3	%		29.2	%		349,808		24.3	%		15.9	%		280,334		22.7	%		11.2	%
U.S. Property		167,577		11.9	%		67.4	%		171,090		11.9	%		65.9	%		169,230		13.7	%		54.6	%

	$	1,402,484		100.0	%		32.6	%	$	1,437,684		100.0	%		24.8	%	$	1,234,920		100.0	%		23.6	%

Casualty	$	1,079,832		77.0	%		26.9	%	$	1,093,919		76.1	%		18.6	%	$	901,106		73.0	%		19.2	%
Property		167,577		11.9	%		67.4	%		171,090		11.9	%		65.9	%		169,230		13.7	%		54.6	%
Specialty Short Tail		155,075		11.1	%		34.6	%		172,675		12.0	%		23.2	%		164,584		13.3	%		15.9	%

	$	1,402,484		100.0	%		32.6	%	$	1,437,684		100.0	%		24.8	%	$	1,234,920		100.0	%		23.6	%

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Premiums. Gross premiums written for the year ended December 31, 2015 decreased by 2.4% compared to the prior year. Significant factors affecting 2015 gross premiums written included the following:

•

Specialty Casualty declined by 6.6% principally due to a decrease in construction and energy business and the non-renewal of several retail accounts. These declines were partially offset by growth in our Programs business;

•

Aviation decreased by 25.0% due to reduction in airlines premium resulting from significant pressure on pricing, and a reduction in assumed treaty lines;

•

IronPro decreased by 3.7%, principally due to planned reductions in certain professional liability product lines;

•

Environmental increased by 5.9% due to several large new accounts; and

•

IronHealth increased by 2.9% due to growth in our transactional and long-term care professional liability product lines, partially offset by the non-renewal of two large contracts.

Gross premiums written for the year ended December 31, 2014 increased by 16.4% compared to the year ended December 31, 2013. Significant factors affecting 2014 gross premiums written were:

•

IronHealth increased by 31.4%, including $32.0 million attributable to medical stop loss business, and growth in medical stop loss and life sciences product lines;

•

Specialty Casualty increased by 24.8% due to growth in Programs and construction business;

•

IronPro increased by 10.5% due to higher submissions and new business along with growth in E&O business;

•

Environmental increased by 17.6% due to the renewal of a multi–year policy and new business growth;

•

Political Risk & Surety increased by 25.2%, principally due to the addition of surety business; and

•

Aviation decreased by 13.5% due to deterioration in rates and reduced line sizes on airline business.

The ratio of reinsurance premiums ceded to gross premiums written for the year ended December 31, 2015 was 32.6% compared to 24.8% for the year ended December 31, 2014 and 23.6% for the year ended December 31, 2013. The increase in the percentage of reinsurance premiums ceded compared to the prior year was principally due to additional reinsurance purchases in our Specialty Casualty, IronPro and surety lines of business. The increase in the percentage of reinsurance premiums ceded in 2014 compared to the prior year was due mainly to the addition of our Whole Account Treaty, effective as of January 1, 2014.

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Losses and Loss Adjustment Expenses. Our loss ratio decreased for the year ended December 31, 2015 by 2.9 percentage points compared to the prior year. The net favorable and (unfavorable) development of prior year loss reserves for the years ended December 31, 2015, 2014 and 2013 by line of business was as follows:


	Year Ended December 31,
	2015			2014			2013
	(in millions)
Aviation	$	(12.8	)	$	0.4		$	1.4
Environmental		10.4			2.1			—
IronHealth		0.8			3.2			2.1
IronPro		(13.2	)		4.0			6.1
Political Risk & Surety		(1.3	)		9.7			7.3
Specialty Casualty		(3.0	)		(74.7	)		(7.5	)
U.S. Property		11.3			11.6			2.3

	$	(7.8	)	$	(43.7	)	$	11.7

Significant items impacting the 2015 loss ratio were:

•

Net unfavorable development of prior year loss reserves for the year ended December 31, 2015 of $7.8 million compared to $43.7 million for the year ended December 31, 2014;

•

Net unfavorable prior year loss reserve development of $7.8 million for the year ended December 31, 2015 reflected higher than expected reported claims activity in the following lines of business and accident years: $13.2 million in a small product line in our IronPro business on the 2013 and 2014 accident years, and $12.8 million in our aviation line of business, primarily on the 2013 and 2014 accident years. This was partially offset by favorable loss reserve development due to better than expected reported claim activity in the following lines of business and accident years: $11.3 million in our U.S. property line of business (2013 and 2014 accident years) and $10.4 million in our environmental line of business (2012 and 2013 accident years); and

•

The prior year loss reserve development increased our loss ratio by 0.8 percentage points for the year ended December 31, 2015, compared to 4.3 percentage points for the year ended December 31, 2014. Excluding the impact of net prior year loss reserve development, our loss ratio for the year ended December 31, 2015 was 71.4%, compared to 70.8% for the year ended December 31, 2014.

Our loss ratio increased by 10.8 percentage points for the year ended December 31, 2014 compared to the year ended December 31, 2013. Significant items affecting the 2014 loss ratio were:

•

Net unfavorable development of prior year loss reserves for the year ended December 31, 2014 of $43.7 million, compared to favorable development of $11.7 million for the year ended December 31, 2013;

•

Net unfavorable prior year loss reserve development of $43.7 million for the year ended December 31, 2014 reflected higher than expected reported claims activity of $74.7 million in our casualty line of business, primarily on the 2009 to 2013 accident years. This was partially offset by favorable loss reserve development due to better than expected reported claim activity in the following lines of business and accident years: $11.6 million in our U.S. property line of business (2011 to 2013 accident years), $9.7 million in our political risk line of business (2011 to 2013 accident years), $4.0 million in our IronPro line of business (2009 and 2010 accident years), and $3.2 million in our IronHealth line of business (2011 accident year); and

•

The prior year loss reserve development increased our loss ratio by 4.3 percentage points for the year ended December 31, 2014, compared to a decrease of 1.4 percentage points for the year ended

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December 31, 2013. Excluding the impact of net prior year loss reserve development, our loss ratio for the year ended December 31, 2014 was 70.8%, compared to 65.7% for the year ended December 31, 2013. The increase in our loss ratio for the year ended December 31, 2014 compared to the prior year was principally due to an increase in our aviation and casualty loss ratios. For the year ended December 31, 2014, our results included $18.0 million of losses from the Malaysian airlines loss events of March 2014 and November 2014, and $20.0 million of losses due to a higher current accident year loss ratio for our Specialty Casualty line of business.

Acquisition Expenses. Our acquisition cost ratio decreased by 1.0 percentage point for the year ended December 31, 2015 compared to the prior year. The decrease was due to higher ceding commissions from reinsurance purchases and lower profit commissions. Our acquisition cost ratio increased by 0.7 percentage points for the year ended December 31, 2014 compared to the year ended December 31, 2013. In 2014, we wrote a higher volume of program business, which carries higher acquisition costs as compared to broker sourced business.

General and Administrative Expenses. General and administrative expenses for the year ended December 31, 2015 increased by 16.8% compared to the prior year. The increase was principally due to higher compensation costs as a result of the hiring of additional employees to support the continued expansion of our business platforms and product offerings, and expenses for 2014 were lower due to a reduction in incentive-based compensation. For the year ended December 31, 2015, our general and administrative expense ratio increased by 1.1 percentage points, to 13.9% compared to 12.8% for 2014.

General and administrative expenses for the year ended December 31, 2014 increased by 5.0% compared to the year ended December 31, 2013. The increase was principally due to higher compensation costs as a result of the hiring of additional employees to support our continued business growth, partially offset by lower incentive-based compensation due to the decline in operating income. For the year ended December 31, 2014, our general and administrative expense ratio declined by 2.4 percentage points, to 12.8% compared to 15.2% for 2013.

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International Segment Results


	Year Ended December 31,
	2015			% change			2014			% change			2013
	(dollars in thousands)
Gross premiums written	$	597,228			4.0	%	$	574,327			1.4	%	$	566,233
Reinsurance premiums ceded		(139,517	)		8.4	%		(128,749	)		(21.8	)%		(164,680	)

Net premiums written		457,711			2.7	%		445,578			11.0	%		401,553
Change in unearned premiums		(8,528	)		n/m			(35,105	)		n/m			(79,339	)

Net premiums earned		449,183			9.4	%		410,473			27.4	%		322,214
Losses and loss adjustment expenses		240,388			(4.5	)%		251,621			57.7	%		159,562
Acquisition expenses		105,416			7.9	%		97,738			25.3	%		78,012
General and administrative expenses		85,199			21.3	%		70,250			20.5	%		58,316
Other income		15,622			25.4	%		12,460			205.5	%		4,079

Underwriting income	$	33,802			916.9	%	$	3,324			(89.1	)%	$	30,403

Loss ratio		53.5	%					61.3	%					49.5	%
Acquisition cost ratio		23.5	%					23.8	%					24.2	%
General and administrative expense ratio (a)		15.5	%					14.1	%					16.8	%

Combined ratio		92.5	%					99.2	%					90.5	%

(a)	The general and administrative expense ratio is calculated by dividing general and administrative expenses less other income by net premiums earned. Corporate general and administrative expenses, transaction expenses and corporate other income are not included in the calculation.

The following table sets forth our gross premiums written by line and type of business in the International segment:


	Year Ended December 31
	2015								2014								2013
	Gross Premiums Written (GPW)		% of Total International Segment GPW			% Ceded to Reinsurers			Gross Premiums Written (GPW)		% of Total International Segment GPW			% Ceded to Reinsurers			Gross Premiums Written (GPW)		% of Total International Segment GPW			% Ceded to Reinsurers
	(dollars in thousands)
International Property	$	121,220		20.3	%		42.9	%	$	109,656		19.1	%		42.4	%	$	113,271		20.0	%		56.3	%
Liability		188,215		31.5	%		14.0	%		197,130		34.3	%		15.3	%		160,338		28.3	%		15.9	%
Marine		170,349		28.5	%		29.0	%		163,591		28.5	%		22.4	%		172,825		30.5	%		25.3	%
Personal Accident		48,893		8.2	%		6.5	%		58,063		10.1	%		6.8	%		78,431		13.9	%		11.8	%
Specialty Short Tail		68,551		11.5	%		12.6	%		45,887		8.0	%		24.9	%		41,368		7.3	%		54.4	%

	$	597,228		100.0	%		23.4	%	$	574,327		100.0	%		22.4	%	$	566,233		100.0	%		29.1	%

Casualty.	$	188,215		31.5	%		14.0	%	$	197,130		34.3	%		15.3	%	$	160,338		28.3	%		15.9	%
Property		121,220		20.3	%		42.9	%		109,656		19.1	%		42.4	%		113,271		20.0	%		56.3	%
Specialty Short Tail		287,793		48.2	%		21.3	%		267,541		46.6	%		19.5	%		292,624		51.7	%		25.8	%

	$	597,228		100.0	%		23.4	%	$	574,327		100.0	%		22.4	%	$	566,233		100.0	%		29.1	%

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Premiums. Gross premiums written for the year ended December 31, 2015 increased by 4.0% compared to the prior year. Significant factors affecting 2015 gross premiums written were:

•

Specialty Short Tail increased by 49.4% due to growth in select specialty lines, political risk and agriculture products;

•

International Property increased by 10.5% due to growth in offshore and onshore energy lines of business;

•

Marine increased by 4.1% due to growth in high value cargo products;

•

Liability decreased by 4.5% principally due to changes in our warranty & indemnity underwriting team; and

•

Personal Accident decreased by 15.8% due to adverse market conditions.

Gross premiums written for the year ended December 31, 2014 increased by 1.4% compared to the year ended December 31, 2013. Significant factors affecting 2014 gross premiums written were:

•

Liability increased by 22.9% due to growth in warranty & indemnity business following the addition of new underwriting teams in London and Australia;

•

Specialty Short Tail increased by 10.9% due to growth in our surety and agriculture product lines;

•

Personal accident decreased by 26.0% due to the non-renewal of program business;

•

Marine decreased by 5.3% due to reduced participation on a large contract; and

•

Property decreased by 3.2% due to the non-renewal of certain property treaty business. This decrease was partially offset by growth in International Property business.

The ratio of reinsurance premiums ceded to gross premiums written for the year ended December 31, 2015 was 23.4%, compared to 22.4% for the prior year. The increase in the percentage of reinsurance premiums ceded compared to the prior year was due principally to higher premiums ceded in our marine line of business.

The ratio of reinsurance premiums ceded to gross premiums written for the year ended December 31, 2014 was 22.4%, compared to 29.1% for the year ended December 31, 2013. The decrease in the percentage of reinsurance premiums ceded compared to the prior year was due to decrease in premiums ceded under our Acapella program, partially offset by the addition of our Whole Account Treaty, effective as of January 1, 2014. Under the Acapella program, Ironshore wrote property treaty business and ceded a significant portion of it to Special Purpose Syndicate 6110 (a Lloyd’s Syndicate which was previously managed by PMA). In 2014, Syndicate 2014 commenced writing this business directly and Ironshore ceased writing and ceding the business.

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Losses and Loss Adjustment Expenses. Our loss ratio for the year ended December 31, 2015 decreased 7.8 percentage points compared to the prior year. The net favorable and (unfavorable) development of prior year loss reserves for the years ended December 31, 2015, 2014 and 2013 by line of business was as follows:


	Year Ended December 31,
	2015			2014			2013
	(in millions)
International Property	$	1.4		$	3.3		$	1.6
Liability		(5.8	)		4.5			10.5
Marine		8.9			(16.8	)		(5.8	)
Personal Accident		(0.4	)		(0.3	)		(2.6	)
Specialty Short Tail		(4.8	)		(0.1	)		2.6

	$	(0.7	)	$	(9.4	)	$	6.3

Significant items impacting the 2015 loss ratio were:

•

Net unfavorable development of prior year loss reserves for the year ended December 31, 2015 of $0.7 million, compared to $9.4 million for the year ended December 31, 2014;

•

Net unfavorable prior year loss reserve development of $0.7 million for the year ended December 31, 2015 reflected higher than expected reported claim activity of $5.8 million in our liability lines (2014 accident year) and $4.8 million in our specialty short tail lines (2014 accident year). This was partially offset by favorable loss reserve development due to better than expected claim activity of $8.9 million in our marine line of business (2012 and 2014 accident years); and

•

The prior year loss reserve development increased our loss ratio by 0.2 percentage points for the year ended December 31, 2015, compared to 2.3 percentage points for the year ended December 31, 2014. Excluding the impact of net prior year loss reserve development, our loss ratio for the year ended December 31, 2015 was 53.3%, compared to 59.0% for the year ended December 31, 2014. The decrease in our loss ratio for the year ended December 31, 2015 compared to the prior year was principally due to a decrease in our marine loss ratio.

Our loss ratio increased by 11.8 percentage points for the year ended December 31, 2014 compared to the year ended December 31, 2013. Significant items affecting the 2014 loss ratio were:

•

Net unfavorable development of prior year loss reserves for the year ended December 31, 2014 of $9.4 million, compared to favorable development of $6.3 million for the year ended December 31, 2013;

•

Net unfavorable loss reserve development of $9.4 million for the year ended December 31, 2014 reflected higher than expected reported claims activity of $16.8 million in our marine line of business, primarily on the 2011 to 2013 accident years. This was partially offset by favorable loss reserve development due to better than expected reported claim activity of $4.5 million in our liability line of business (2009 and 2011 accident years) and $3.3 million in our International Property line of business (2012 accident year); and

•

The prior year loss reserve development increased our loss ratio by 2.3 percentage points for the year ended December 31, 2014, compared to a decrease of 2.0 percentage points for the year ended December 31, 2013. Excluding the impact of net prior year loss reserve development, our loss ratio for the year ended December 31, 2014 was 59.0%, compared to 51.5% for the year ended December 31, 2013. The increase in our loss ratio for the year ended December 31, 2014 compared to the prior year was principally due to an increase in our marine loss ratio. For the year ended

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December 31, 2014, our results included $9.5 million of losses from the Malaysian airlines loss events of March 2014 and November 2014, and $9.4 million of losses from the Tripoli war event, all of which are recorded in our marine business.

Acquisition Expenses. Our acquisition cost ratio decreased by 0.3 percentage points for the year ended December 31, 2015 compared to the prior year due to change in the mix of business being earned.

Our acquisition cost ratio decreased by 0.4 percentage points for the year ended December 31, 2014 compared to the year ended December 31, 2013 as we wrote less business in higher acquisition cost lines of business compared to the prior year.

General and Administrative Expenses. General and administrative expenses for the year ended December 31, 2015 increased by 21.3% compared to the prior year. The increase was principally due to higher compensation costs as a result of the hiring of additional employees to support our continued business growth, and expenses for 2014 were lower due to a reduction in our incentive-based compensation. For the year ended December 31, 2015, our general and administrative expense ratio increased by 1.4 percentage points, to 15.5% compared to 14.1% for 2014.

General and administrative expenses for the year ended December 31, 2014 increased by 20.5% compared to the year ended December 31, 2013. The increase was principally due to higher compensation costs as a result of the hiring of additional employees to support our continued business growth, partially offset by lower incentive-based compensation due to the decline in operating income. For the year ended December 31, 2014, our general and administrative expense ratio declined by 2.7 percentage points, to 14.1% compared to 16.8% for 2013.

Other Income. Other income is principally comprised of fee income from underwriting activities where we provide underwriting expertise on risks insured wholly or in part by other insurers. Other income was $15.6 million for the year ended December 31, 2015, $12.5 million for the year ended December 31, 2014 and $4.1 million for the year ended December 31, 2013. The increases in 2015 and 2014 compared to prior years are due principally to an increase in fees earned from various consortia arrangements (including Acapella) and higher expense recoveries from third party underwriting.

Bermuda Segment Results


	Year Ended December 31,
	2015			% change			2014			% change			2013
	(dollars in thousands)
Gross premiums written	$	164,140			(17.3	)%	$	198,543			3.4	%	$	191,970
Reinsurance premiums ceded		(87,632	)		(17.3	)%		(106,011	)		33.3	%		(79,529	)

Net premiums written		76,508			(17.3	)%		92,532			(17.7	)%		112,441
Change in unearned premiums		6,365			n/m			14,369			n/m			5,098

Net premiums earned		82,873			(22.5	)%		106,901			(9.1	)%		117,539
Losses and loss adjustment expenses		39,967			(40.5	)%		67,206			8.8	%		61,743
Acquisition expenses		(1,334	)		(236.5	)%		977			(87.6	)%		7,888
General and administrative expenses		23,497			6.9	%		21,975			(8.5	)%		24,010
Other income		9,058			58.6	%		5,711			38.7	%		4,119

Underwriting income	$	29,801			32.7	%	$	22,454			(19.9	)%	$	28,017

Loss ratio		48.2	%					62.9	%					52.5	%
Acquisition cost ratio		(1.6	)%					0.9	%					6.7	%
General and administrative expense ratio (a)		17.4	%					15.2	%					16.9	%

Combined ratio		64.0	%					79.0	%					76.1	%

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(a)	The general and administrative expense ratio is calculated by dividing general and administrative expenses less other income by net premiums earned. Corporate general and administrative expenses, transaction expenses and corporate other income are not included in the calculation.

The following table sets forth our gross premiums written by line and type of business in the Bermuda segment:


	Year Ended December 31,
	2015								2014								2013
	Gross Premiums Written (GPW)		% of Total Bermuda Segment GPW			% Ceded to Reinsurers			Gross Premiums Written (GPW)		% of Total Bermuda Segment GPW			% Ceded to Reinsurers			Gross Premiums Written (GPW)			% of Total Bermuda Segment GPW			% Ceded to Reinsurers
	(dollars in thousands)
Bermuda Property	$	96,303		58.7	%		61.3	%	$	127,304		64.1	%		59.3	%	$	122,400			63.8	%		47.4	%
Corporate Deals		26,540		16.1	%		0.0	%		22,965		11.6	%		3.3	%		23,664			12.3	%		0.0	%
Iron-Starr Excess		41,297		25.2	%		69.2	%		48,274		24.3	%		61.7	%		45,906			23.9	%		46.8	%

	$	164,140		100.0	%		53.4	%	$	198,543		100.0	%		53.4	%	$	191,970			100.0	%		41.4	%

Casualty	$	41,297		25.2	%		69.2	%	$	48,274		24.3	%		61.7	%	$	45,906			23.9	%		46.8	%
Property		122,843		74.8	%		48.1	%		150,269		75.7	%		50.7	%		152,123			79.2	%		38.2	%
Specialty Short Tail		—		—			—			—		—			—			(6,059	)		(3.1	)%		0.0	%

	$	164,140		100.0	%		53.4	%	$	198,543		100.0	%		53.4	%	$	191,970			100.0	%		41.4	%

Premiums. Gross premiums written for the year ended December 31, 2015 decreased by 17.3% compared to the prior year. Significant factors affecting 2015 gross premiums written were:

•

Bermuda Property decreased by 24.4% principally due to challenging market conditions. Several accounts have renewed at lower premium levels due to declining rates and a large contract was not renewed.

Gross premiums written for the year ended December 31, 2014 increased by 3.4% compared to the year ended December 31, 2013. Significant factors affecting 2014 gross premiums written were:

•

Bermuda Property increased by 4.0% principally due to new business growth in Canada; and

•

Iron-Starr Excess increased by 5.2% principally due to growth in excess casualty and healthcare business, partially offset by Ironshore’s decreased participation due to the addition of another insurance company partner to Iron-Starr Agency.

The ratio of reinsurance premiums ceded to gross premiums written for the year ended December 31, 2015 was 53.4% and was unchanged from the prior year. The ratio of reinsurance premiums ceded to gross premiums written for the year ended December 31, 2014 was 53.4%, compared to 41.4% for the year ended December 31, 2013. The increase in the percentage of reinsurance premiums ceded compared to the prior year was principally due to the addition of our Whole Account Treaty, effective as of January 1, 2014.

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Losses and Loss Adjustment Expenses. Our loss ratio decreased by 14.7 percentage points for the year ended December 31, 2015 compared to the prior year. The net favorable and (unfavorable) development of prior year loss reserves for the years ended December 31, 2015, 2014 and 2013 by line of business was as follows:


	Year Ended December 31,
	2015			2014			2013
	(in millions)
Bermuda Property	$	(6.2	)	$	(1.8	)	$	(9.5	)
Corporate Deals		4.7			3.3			0.8
Iron-Starr Excess		0.1			(1.2	)		—

	$	(1.4	)	$	0.3		$	(8.7	)

Significant items impacting the 2015 loss ratio were:

•

Net unfavorable development of prior year loss reserves for the year ended December 31, 2015 of $1.4 million compared to favorable loss reserve development of $0.3 million for the year ended December 31, 2014;

•

Net unfavorable prior year loss reserve development of $1.4 million for the year ended December 31, 2015 reflected higher than expected reported claims activity of $6.2 million in our Bermuda property line of business, primarily on the 2013 and 2014 accident years, and included losses of $2.6 million attributable to natural catastrophes. This was partially offset by favorable development due to better than expected reported claim activity of $4.7 million in our Corporate Deals line of business, primarily on the 2013 and 2014 accident years; and

•

The prior year loss reserve development increased our loss ratio by 1.7 percentage points for the year ended December 31, 2015, compared to a decrease of 0.3 percentage points for the year ended December 31, 2014. Excluding the impact of net prior year loss reserve development, our loss ratio for the year ended December 31, 2015 was 46.5%, compared to 63.2% for the year ended December 31, 2014. The decrease in our loss ratio for the year ended December 31, 2015 compared to the prior year was principally due to a decrease in our property loss ratio. For the year ended December 31, 2015, our results included $4.0 million of property losses attributable to natural catastrophes, compared to $23.3 million for the year ended December 31, 2014.

Our loss ratio increased by 10.4 percentage points for the year ended December 31, 2014 compared to the year ended December 31, 2013. Significant items affecting the 2014 loss ratio were:

•

Net favorable development of prior year loss reserves for the year ended December 31, 2014 of $0.3 million, compared to unfavorable development of $8.7 million for the year ended December 31, 2013;

•

Net favorable prior year loss reserve development of $0.3 million for the year ended December 31, 2014 reflected better than expected reported claims activity of $3.3 million in our Corporate Deals line of business, primarily on the 2013 accident year. This was partially offset by unfavorable loss reserve development of $1.8 million in our Bermuda Property line of business, primarily on the 2013 accident year; and

•

The prior year loss reserve development decreased our loss ratio by 0.3 percentage points for the year ended December 31, 2014, compared to an increase of 7.4 percentage points for the year ended December 31, 2013. Excluding the impact of net prior year loss reserve development, our loss ratio for the year ended December 31, 2014 was 63.2%, compared to 45.1% for the year ended December 31, 2013. The increase in our loss ratio for the year ended December 31, 2014 compared

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to the prior year was principally due to an increase in our property loss ratio. For the year ended December 31, 2014, our results included $23.3 million of property losses attributable to natural catastrophes, compared to $8.6 million for the year ended December 31, 2013.

Acquisition Expenses. The change in acquisition cost ratio for the year ended December 31, 2015 compared to the prior years was consistent with the change in the mix of gross premiums written, as each line of business has different acquisition costs.

General and Administrative Expenses. General and administrative expenses for the year ended December 31, 2015 increased by 6.9% compared to the prior year. The increase was principally attributable to comparatively lower expenses in 2014 due to a reduction in our incentive-based compensation. For the year ended December 31, 2015, our general and administrative expense ratio increased by 2.2 percentage points, to 17.4% compared to 15.2% for 2014.

General and administrative expenses for the year ended December 31, 2014 decreased by 8.5% compared to the year ended December 31, 2013. The decrease was principally due to lower incentive-based compensation as a result of the decline in operating income. For the year ended December 31, 2014, our general and administrative expense ratio declined by 1.7 percentage points, to 15.2% compared to 16.9% for 2013.

Other Income. Other income is principally comprised of fee income from underwriting activities where we provide underwriting expertise on risks insured wholly or in part by other insurers. Other income for the year ended December 31, 2015 was $9.1 million, $5.7 million for the year ended December 31, 2014 and $4.1 million for the year ended December 31, 2013. The increases in 2015 and 2014 compared to prior years are due principally to higher fee income generated by Iron-Starr Agency due to the strategy to continue to add insurance company partners to the syndicated capacity.

Investing Activities

The results of investing activities discussed below include net investment income and net realized and unrealized gains (losses) on investments recorded in net income.


	Year Ended December 31,
	2015			% change			2014			% change			2013
	(dollars in thousands)
Net investment income	$	113,300			16.8	%	$	97,043			15.0	%	$	84,372
Net investment income yield on average cash and investments		2.3	%					2.2	%					2.3	%
Net realized gains (losses) on trading securities	$	(9,217	)		n/m		$	18,618			n/m		$	9,684
Net unrealized gains (losses) on trading securities and other investments		(39,134	)		n/m			9,421			n/m			(80,146	)

Net realized and unrealized gains (losses) on investments	$	(48,351	)		n/m		$	28,039			n/m		$	(70,462	)

Net Investment Income. Net investment income for the year ended December 31, 2015 increased by 16.8% compared to the prior year. Net investment income for the year ended December 31, 2014 increased by 15.0% compared to the year ended December 31, 2013. The increases in 2015 and 2014 were due to higher levels of cash and invested assets generated by cash flow from the growth in premiums written, and a higher yield on new investments.

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Net realized and unrealized losses on our trading portfolios and other investments for the year ended December 31, 2015 were $48.4 million, compared to net realized and unrealized gains of $28.0 million for the year ended December 31, 2014 and net realized and unrealized losses of $70.5 million for the year ended December 31, 2013. The unrealized losses in the years ended December 31, 2015 and 2013 were principally due to an increase in interest rates. We have not recorded any credit impairments in our investment portfolio during the three year period ended December 31, 2015

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Financial Condition

Invested Assets and Cash. Aggregate invested assets and cash, comprising fixed maturities, equity securities, short term investments, other investments, cash and cash equivalents were $5,304.3 million as of March 31, 2016 and $5,103.1 million as of December 31, 2015. The increase in cash and invested assets resulted principally from the cash flow generated by the growth in premiums and our sale to a third party of our existing renewal rights to underwrite certain insurance business for $87.0 million.

Fixed maturities are subject to fluctuations in fair value due to changes in interest rates, changes in issuer specific circumstances, such as credit rating changes, and changes in industry specific circumstances, such as movements in credit spreads based on the market’s perception of industry risks. As a result of these fluctuations, it is possible to have significant unrealized gains or losses on a security.

As of March 31, 2016 and December 31, 2015, our rated fixed maturities investments had a dollar-weighted average credit rating of AA-. Under our internal fixed maturities investment guidelines, a minimum weighted average credit rating of A+ or its equivalent, must be maintained for our fixed maturities investment portfolio as a whole. Further details of the credit ratings on our fixed maturities investments are included in Note 7 of the notes to our audited consolidated financial statements.

Our portfolio of investment grade fixed maturities includes mortgage-backed and asset-backed securities and collateralized mortgage obligations. These types of securities have cash flows that are backed by the principal and interest payments of a group of underlying mortgages or other receivables, which make estimating the fair value of these securities more uncertain. We obtain fair value estimates from multiple independent pricing sources in an effort to mitigate some of the uncertainty surrounding the fair value estimates. If we need to liquidate these securities within a short period of time, the actual realized proceeds may be significantly different from the fair values estimated as of March 31, 2016.

As of March 31, 2016 and December 31, 2015, we held non-U.S. government securities, which are denominated principally in United States dollars, with fair values of $121.2 million and $118.6 million, respectively. The distribution by country was as follows:


	As of March 31, 2016					As of December 31, 2015
	Fair Value		% of Total			Fair Value		% of Total
	(dollars in thousands)
Canada	$	53,233		43.9	%	$	50,624		42.7	%
Colombia		9,856		8.1	%		8,107		6.8	%
Indonesia		6,029		5.0	%		5,948		5.0	%
Turkey		4,871		4.0	%		4,659		3.9	%
Mexico		4,630		3.8	%		2,064		1.8	%
South Korea		4,497		3.7	%		3,302		2.8	%
Morocco		3,564		2.9	%		3,208		2.7	%
Romania		3,465		2.9	%		3,359		2.8	%
Philippines		3,035		2.5	%		2,578		2.2	%
Kazakhstan		2,727		2.3	%		2,411		2.0	%
All other		25,312		20.9	%		32,389		27.3	%

Total	$	121,219		100.0	%	$	118,649		100.0	%

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As of March 31, 2016 and December 31, 2015, we held non-U.S. corporate securities, which are denominated principally in United States dollars, with fair values of $484.7 million and $478.8 million, respectively. Certain of the non-U.S. corporate securities are issued by foreign subsidiaries of U.S. corporations. The distribution by country was as follows:


Country (Ultimate Parent Company’s Country of Risk)	As of March 31, 2016					As of December 31, 2015
	Fair Value		% of Total			Fair Value		% of Total
	(dollars in thousands)
United Kingdom	$	76,001		15.7	%	$	73,311		15.3	%
Canada		64,491		13.3	%		53,567		11.2	%
Netherlands		37,830		7.8	%		42,092		8.8	%
France		35,223		7.3	%		36,163		7.6	%
Sweden		32,601		6.7	%		35,171		7.3	%
Switzerland		31,147		6.4	%		45,064		9.4	%
Australia		29,992		6.2	%		26,154		5.5	%
United States		29,586		6.1	%		24,569		5.1	%
Germany		25,267		5.2	%		23,430		4.9	%
Norway		22,203		4.6	%		22,040		4.6	%
All other		100,402		20.7	%		97,222		20.3	%

Total	$	484,743		100.0	%	$	478,783		100.0	%

The distribution by credit rating (using the lower of Standard & Poor’s and Moody’s ratings) of non-U.S. corporate securities was as follows:


Rating	As of March 31, 2016					As of December 31, 2015
Rating	Fair Value		% of Total			Fair Value		% of Total
	(dollars in thousands)
AAA	$	50,681		10.5	%	$	36,728		7.7	%
AA		56,446		11.6	%		99,966		20.9	%
A		272,231		56.2	%		228,912		47.8	%
BBB		82,279		17.0	%		96,698		20.2	%
BB		15,782		3.2	%		12,385		2.6	%
B		7,324		1.5	%		4,094		0.8	%

Total	$	484,743		100.0	%	$	478,783		100.0	%

See “Risk Factors—Risks Related to Our Business—The effects of, and uncertainty regarding, the UK’s likely withdrawal from the European Union could negatively impact our investment portfolio, business and results of operations.”

Reinsurance Recoverable on Unpaid Losses and Paid Losses. Reinsurance recoverable on unpaid losses and paid losses recoverable from reinsurers was $850.0 million as of March 31, 2016 and $835.8 million as of December 31, 2015.

As of December 31, 2015, 97.6% of our losses recoverable were with reinsurers rated “A-” or above by A.M. Best Company, 2.3% were with reinsurers rated “B” or “B+”, and the remaining 0.1% were with “NR-not rated” reinsurers. Our losses recoverable from reinsurers are not due for payment until the underlying loss has been paid. As of December 31, 2015, 92.9% of our losses recoverable were not due for payment.

Liabilities for Property and Casualty Losses. Property and casualty losses were $3,286.4 million as of March 31, 2016 and $3,197.5 million as of December 31, 2015.

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During the year ended December 31, 2015, we incurred gross losses of $1,324.3 million, and paid $873.3 million of gross losses. Included in gross losses incurred was gross favorable loss reserve development on prior year reserves of $0.6 million. Net of reinsurance, we paid $716.7 million in property and casualty losses during the year ended December 31, 2015.

Debt Obligations. On May 10, 2010, the Company issued $250 million of Senior Notes at an issue price of 99.17%, generating net proceeds, before expenses, of $246.3 million. The Senior Notes bear interest at a rate of 8.5%, payable semi-annually in arrears on May 15 and November 15 of each year. Unless previously redeemed, the Senior Notes will mature on May 15, 2020. The Company may redeem the Senior Notes prior to maturity subject to the payment of a “make-whole” premium. The Senior Notes also include certain interest rate adjustment clauses based on changes in Standard & Poor’s and Moody’s ratings and debt-to-capital ratios. The Company was in compliance with all of the covenants in the Senior Notes as of March 31, 2016. The carrying value of the Senior Notes as of March 31, 2016 was $247.4 million and $247.3 million as of March 31, 2016 and December 31, 2015, respectively. Interest expense on the Senior Notes includes interest payable, amortization of offering discount and amortization of debt offering expenses. The offering discount and the debt issuance costs are amortized over the period of time during which the Senior Notes are outstanding. The unamortized offering discount and debt issuance costs were $2.6 million and $2.7 million as of March 31, 2016 and December 31, 2015, respectively. The Company incurred interest expense on the Senior Notes of $5.4 million and $5.4 million for the three months ended March 31, 2016 and 2015, respectively, and $21.7 million and $21.7 million for the years ended December 31, 2015 and 2014, respectively.

Through Ironshore Specialty, we have an existing arrangement with Federal Home Loan Bank Boston (“FHLB”), which provides us access to FHLB-member loan facilities. Ironshore Specialty is currently a member of FHLB. Effective March 20, 2014, Ironshore Specialty entered into a collateralized advance arrangement with FHLB for short-term low interest rate advances of up to $100.0 million in the aggregate (the “FHLB Facility”). Ironshore Specialty is required to maintain a capital stock investment of $5.4 million with FHLB to support its membership and borrowing activity. As of March 31, 2016, fixed maturity investments and cash and cash equivalents with a fair value of $113.5 million were pledged as collateral for the amounts borrowed under this facility.

Shareholders’ Equity Attributable to Common Shareholders. Shareholders’ equity attributable to common shareholders was $2,062.2 million as of March 31, 2016 and $1,966.6 million as of December 31, 2015. The increase was principally due to net income of $90.4 million for the three months ended March 31, 2016.

Liquidity

We generated $45.3 million of cash from operations during the three months ended March 31, 2016, compared to $187.7 million for the corresponding period in 2015. We generated $440.4 million of cash from operations during the year ended December 31, 2015, compared to $756.6 million for the year ended December 31, 2014. The decreases were principally due to higher loss and LAE payments. The principal factors that impact our operating cash flow are premium collections and payments, the timing of loss and LAE payments and recoveries, and the receipt of interest on our fixed maturities investments.

Our casualty business generally has a long claim-tail. As a result, we expect that we will generate significant operating cash flow as we accumulate property and casualty loss reserves on our balance sheet. Our property business generally has a short claim-tail. Consequently, we expect volatility in our operating cash flow levels as losses are incurred. As of March 31, 2016, we believe that our property and casualty loss reserves have an average duration of approximately 3.3 years. Actual premiums written and collected and losses and LAE paid in any period could vary materially from our expectations and could have a significant and adverse effect on operating cash flow.

As a holding company, Ironshore Inc.’s principal source of funds is from interest income on cash balances and cash dividends from its subsidiaries, principally Ironshore Insurance. The payment of dividends by

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Ironshore Insurance is limited under Bermuda insurance laws. In particular, Ironshore Insurance may not declare or pay any dividends if it is in breach of its minimum solvency or liquidity levels under Bermuda law or if the declaration or payment of the dividends would cause it to fail to meet the minimum solvency or liquidity levels under Bermuda law. As of March 31, 2016, Ironshore Insurance met all minimum solvency and liquidity requirements. For additional information on dividends, see “Business—Regulation.”

In the ordinary course of business, we are required to provide letters of credit or other regulatory approved security to certain of our insureds to meet contractual and regulatory requirements. As of March 31, 2016, we had $55.4 million in letters of credit outstanding under a letter of credit facility. This letter of credit facility requires that we comply with certain financial covenants, which include covenants related to maximum debt to capital ratio, minimum consolidated tangible net worth, minimum insurer financial strength rating and restrictions on the payment of dividends. We were in compliance with all of the financial covenants of our letter of credit facility as of March 31, 2016.

As of March 31, 2016, we provided $378.4 million in required capital for Syndicate 4000, or Funds at Lloyd’s. These amounts are not available for distribution for the payment of dividends. Our Funds at Lloyd’s commitments are met using cash, short-term investments and fixed maturity investments. Our corporate member (ICCL) may also be required to maintain funds under the control of Lloyd’s in excess of its capital requirements and such funds also may not be available for distribution or the payment of dividends.

Capital Resources

Our total shareholders’ equity was $2,062.2 million as of March 31, 2016. We believe that we have sufficient capital resources to meet our foreseeable financial obligations for the next twelve months. In addition, we believe we have access to capital in the form of debt or equity financing.

We purchase reinsurance to limit exposure to potential losses arising from large risks and to provide additional capital and underwriting capacity for growth. Reinsurance is viewed as a capital management tool that also controls volatility and manages peak exposures. See “Business—Reinsurance.”

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as of March 31, 2016. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities, that have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Contractual Obligations

Our contractual obligations as of December 31, 2015 are summarized in the following table.


	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in millions)
Debt obligations	$	347.3	$	100.0		—	$	247.3		—
Operating lease obligations		134.0		6.7		19.0		19.7		88.6
Property and casualty losses		3,197.5		877.8		1,115.2		538.9		665.6
Interest on debt obligations		93.4		21.7		42.5		29.2		—
Outsourcing contract obligations		47.3		15.4		31.9		—		—

Total	$	3,819.5	$	1,021.6	$	1,208.6	$	835.1	$	754.2

The reserves for property and casualty losses represent management’s estimate of the ultimate cost of settling losses. As more fully discussed in “—Critical Accounting Policies—Reserves for Losses and Loss

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Adjustment Expenses” above, the estimation of losses is based on various complex and subjective judgments. Actual losses paid may differ, perhaps significantly, from the reserve estimates reflected in our financial statements. Similarly, the timing of payment of our estimated losses is not fixed and there may be significant changes in actual payment activity. The assumptions used in estimating the likely payments due by period are based on our historical claims payment experience and industry payment patterns, but due to the inherent uncertainty in the process of estimating the timing of such payments, there is a risk that the amounts paid in any such period can be significantly different from the amounts disclosed above.

The amounts in the above table represent our gross estimates of known liabilities as of December 31, 2015 and do not include any allowance for claims for future events within the time period specified. Accordingly, it is highly likely that the total amounts paid out in the time periods shown will be greater than those indicated in the table.

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NON-GAAP FINANCIAL MEASURES

In this prospectus, we have presented net operating income, net operating income per diluted share and operating return on average shareholders’ equity, which are “non-GAAP financial measures” as defined in Regulation G of the Exchange Act. We believe that these non-GAAP financial measures, which may be defined differently by other companies, allow for a more complete understanding of the performance of our business. These measures, however, should not be viewed as a substitute for those determined in accordance with GAAP. A reconciliation of the non-GAAP financial measures to their respective most directly comparable GAAP financial measures is as follows:


	Three Months Ended March 31,						Year Ended December 31,
	2016			2015			2015			2014			2013			2012			2011
	(in thousands, except per share data)
Net income attributable to Ironshore Inc.	$	90,375		$	61,872		$	57,803		$	84,477		$	97,367		$	131,688		$	34,568
Transaction expenses, before tax.		—			7,615			39,529			—			—			—			—
Net realized and unrealized (gains) losses on investments, before tax		(43,325	)		(30,661	)		48,351			(28,039	)		70,462			(48,876	)		(38,535	)
Net foreign exchange (gains) losses, before tax		(6,538	)		4,955			11,054			5,283			2,989			(55	)		275
Tax expense (benefit) on transaction expenses, net realized and unrealized (gains) losses on investments, and net foreign exchange (gains) losses.		5,035			51			(4,372	)		6,598			4,393			379			65

Net operating income	$	45,547		$	43,832		$	152,365		$	68,319		$	175,211		$	83,136		$	(3,627	)

Net income attributable to Ironshore Inc. per diluted share	$	0.64		$	0.44		$	0.41		$	0.61		$	0.71		$	0.96		$	0.26
Transaction expenses, before tax, per diluted share.		—			0.05			0.27			—			—			—			—
Net realized and unrealized (gains) losses on investments, before tax, per diluted share		(0.31	)		(0.21	)		0.34			(0.20	)		0.51			(0.35	)		(0.29	)
Net foreign exchange (gains) losses, before tax, per diluted share		(0.05	)		0.03			0.08			0.04			0.02			—			—
Tax expense (benefit) on transaction expenses, net realized and unrealized (gains) losses on investments, and net foreign exchange (gains) losses, per diluted share		0.04			—			(0.03	)		0.04			0.03			—			—

Net operating income per diluted share	$	0.32		$	0.31		$	1.07		$	0.49		$	1.27		$	0.61		$	(0.03	)

Weighted average ordinary shares outstanding—basic		140,657			135,919			137,195			135,186			134,334			132,916			132,868
Weighted average ordinary shares outstanding—diluted		140,657			142,002			143,107			139,935			137,687			136,753			135,161
Net income attributable to Ironshore Inc.	$	90,375		$	61,872		$	57,803		$	84,477		$	97,367		$	131,688		$	34,568
Net operating income	$	45,547		$	43,832		$	152,365		$	68,319		$	175,211		$	83,136		$	(3,627	)
Total shareholders’ equity attributable to common shareholders		2,062,248			1,906,423			1,966,562			1,839,761			1,742,435			1,640,121			1,501,844
Average shareholders’ equity (a)		2,014,405			1,873,092			1,911,705			1,808,374			1,680,527			1,581,249			1,469,322
Operating return on average shareholders’ equity		9.0	%		9.4	%		8.0	%		3.8	%		10.4	%		5.3	%		(0.2	)%

(a)	Average shareholders’ equity for each period is computed as the average of the shareholders’ equity as of the end of (i) each quarter within such period and (ii) the quarter preceding such period.

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We believe that net operating income provides a better indication of management performance than net income as realized and unrealized gains and losses on investments may fluctuate from period to period and foreign exchange gains and losses are typically outside the control of management. We believe that operating return on average shareholders’ equity allows management to assess how the Company has performed in terms of value generated for our shareholders. We present book value per ordinary share and diluted book value per ordinary share because these metrics are commonly used by investors and analysts.

NEW ACCOUNTING PRONOUNCEMENTS

Amendments to Fair Value Disclosures

In May 2015, the FASB issued Accounting Standards Update 2015-07, Disclosure for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which, as a practical expedient, removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share. However, the reporting entity is still required to disclose information that will help users understand the nature and risk of these investments. This update is effective for public business entities for fiscal years beginning after December 15, 2015 and after December 15, 2016 for all other entities. The amendments should be applied retrospectively for all periods presented. Earlier application is permitted. The Company adopted this pronouncement beginning with the period ended June 30, 2015 and it had no material impact on the consolidated financial statements.

Amendments to the Consolidation Standard

In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-2, Consolidation—Amendments to the Consolidation Analysis, which amends the current consolidation guidance. The main provisions of these amendments may affect consolidation conclusion and include, among others, the following key items:

•

elimination of three of the six conditions for evaluating whether a fee paid to a decision maker or a service provider represents a variable interest;

•

exclusion of some fee arrangements paid to a decision maker on determining primary beneficiary; and

•

reduction in the application of related party guidance on determining primary beneficiary.

This update will be effective for public business entities with annual periods beginning after December 15, 2015 and December 15, 2016 for all other entities. Earlier application is allowed. The Company believes that this guidance has no impact on the consolidated financial statements.

Elimination of Extraordinary Item Concept

In January 2015, the FASB issued Accounting Standard Update No. 2015-01, Income Statement—Extraordinary and Unusual Items, which eliminates the concept of extraordinary items. Preparers and their auditors will no longer need to evaluate whether unusual and/or infrequent items are treated properly. Presentation and disclosure guidance for items that are unusual in nature or infrequent in occurrence will be expanded to include items that have both characteristics. This update will be effective for interim and annual periods beginning after December 15, 2015. Earlier application is allowed. The Company believes that this guidance will have no impact on the consolidated financial statements.

Simplifying the Presentation of Debt Issuance Costs

In April 2015, the FASB issued Accounting Standards Update 2015-03, Simplifying the Presentation of Debt Issuance Costs, requiring entities to present debt issuance costs related to a recognized liability in the

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balance sheet as a direct reduction from that liability rather than as an asset. This will align the presentation of debt issuance costs with that of debt discounts and premiums. The guidance is effective for public business entities for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company early adopted this guidance in 2015 and it did not have a material impact on the consolidated financial statements.

Disclosures about Short Duration Insurance Contracts

In May 2015, the FASB issued Accounting Standards Update 2015-09, Disclosures about Short Duration Insurance Contracts, requiring insurers to make additional disclosures about short-duration contracts (typically a year or less). The disclosures focus on the liability for unpaid claims and claim adjustment expenses. Insurers are required to provide tables showing incurred and paid claims development information by accident year for the number of years claim typically remain outstanding (but not more than 10 years). Insurers will also be required to provide a reconciliation of this information to the statement of financial position. For accident years included in the development tables, insurers will be required to disclose the total of incurred-but-not-reported liabilities and expected development on reported claims plus claims frequency information unless impracticable, and the historical average annual percent of payout incurred claims. These disclosures will be required to be aggregated or disaggregated so that useful information is not obscured. The guidance is effective for public business entities for fiscal years beginning after December 15, 2015 and interim periods the following year. Earlier application is permitted. The Company believes that this guidance has no impact on the consolidated financial statements as it is a change in disclosure only.

Simplifying the Accounting for Measurement Period Adjustments

In September 2015, the FASB issued Accounting Standards Update 2015-16, Simplifying the Accounting for Measurement Period Adjustments, eliminating the requirement that an acquirer in a business combination account for adjustments it makes to the provisional amounts it records for assets and liabilities retrospectively. An acquirer must recognize these measurement-period adjustments during the period in which it determines their amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. The guidance is effective for public business entities for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Earlier application is permitted. The Company believes that this guidance will not have a material impact on the consolidated financial statements.

Amendments to Financial Instrument Standards

On January 5, 2016, FASB issued Accounting Standards Update No. 2016-01, Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. This new update will impact the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The key provisions include:

•

Equity investments (except those accounted under equity or consolidation method) will be required to be measured at fair value with changes in fair value recognized in net income. This will eliminate available-for-sale classification (changes in fair value reported in other comprehensive income) for equity securities.

•

When the fair value option is elected for financial liabilities, changes in fair value due to instrument-specific credit risk will be recognized in other comprehensive income instead of net income.

•

Targeted changes to the presentation in financial assets and liabilities in the balance sheet or the accompanying notes to the financial statements.

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The guidance is effective for public companies for fiscal years beginning after December 15, 2017. The Company believes that this guidance will not have a material impact on the Company’s consolidated financial statements.

Amendment to Leasing Standard

On February 25, 2016, FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842). This new update will impact the accounting for leases by lessees. The lease accounting applied by lessors is largely unchanged from previous GAAP. A lessee will recognize lease expense on straight-line basis for leases classified as operating leases while leases classified as finance leases will be recognized similar to the existing capital lease. The key provisions include:

•

Definition of a lease was modified as those arrangements that convey the right to “control” the use of an “identified asset”;

•

Companies are required to record a right-of-use asset and corresponding liability for all leases although exceptions are made for leases with a term of twelve months or less;

Ironshore Inc. S-1