Consolidated Statements of Cash Flows For the Years Ended December 31, 2008, 2007 and 2006 
| In thousands of U.S.$ | 2008 | 2007 | 2006 | |||
Cash flows provided by operating activities : |
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| Net income | 98,624 | 521,107 | 498,126 | |||
| Adjustments to reconcile net income to net cash | ||||||
| Provided by operating activities: | ||||||
| Amortization of net (discount) premium on investments | (306 | ) | 3,731 | 12,485 | ||
| Amortization of other intangibles and depreciation | 22,594 | 17,045 | 15,809 | |||
| Net realized investment losses | 57,366 | 18,302 | 20,342 | |||
| Deferred taxes | (35,439 | ) | 8,727 | 18,968 | ||
| Stock-based compensation expense | 17,395 | 10,837 | 8,053 | |||
| Equity in loss (earnings) of unconsolidated ventures | 111,570 | (21,286 | ) | (29,073 | ) | |
| Premiums receivable, net | 114,445 | 32,828 | (85,461 | ) | ||
| Deferred acquisition costs | 8,098 | (6,263 | ) | (6,217 | ) | |
| Prepaid reinsurance premiums | (26,997 | ) | 16,197 | (77,926 | ) | |
| Losses recoverable | (370,480 | ) | (7,632 | ) | (26,996 | ) |
| Accrued investment income | 7,671 | 2,214 | (6,958 | ) | ||
| Other assets | (9,371 | ) | (7,105 | ) | 2,549 | |
| Reserve for losses and loss expenses | 343,232 | 48,122 | 98,096 | |||
| Reserve for unearned premiums | 30,403 | (33,386 | ) | 39,573 | ||
| Deposit liabilities | (50,321 | ) | (52,081 | ) | 68,501 | |
| Reinsurance balances payable | 71,159 | (62,909 | ) | 93,576 | ||
| Other liabilities | 89,795 | (7,932 | ) | (13,328 | ) | |
| Net cash provided by operating activities | 479,438 | 480,516 | 630,328 | |||
Cash flows PROVIDED BY (used in) investing activities: |
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| Proceeds from sales of fixed maturity investments | 3,109,607 | 3,112,796 | 1,819,637 | |||
| Proceeds from sales of short term investments | 33,240 | – | – | |||
| Proceeds from maturities and calls on fixed maturity investments | 753,055 | 676,498 | 563,164 | |||
| Proceeds from maturities and calls on short term investments | 132,446 | – | – | |||
| Proceeds from redemptions of other investments | 15,345 | 5,126 | – | |||
| Purchases of fixed maturity investments | (3,430,195 | ) | (3,652,611 | ) | (2,765,056 | ) |
| Purchases of short term investments | (264,320 | ) | (12,646 | ) | – | |
| Purchase of other investments | (53,050 | ) | (88,900 | ) | (62,112 | ) |
| Purchases of fixed assets | (10,275 | ) | (17,734 | ) | (18,294 | ) |
| Change in securities lending collateral received | 60,101 | 53,721 | 181,901 | |||
| Net cash paid in acquisitions | (24,545 | ) | (109,813 | ) | (16,042 | ) |
| Net cash provided by (used in) investing activities | 321,409 | (33,563 | ) | (296,802 | ) | |
Cash flows used in financing activities: |
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| Issuance of common shares | 1,588 | 10,072 | 9,253 | |||
| Repurchase of common shares | (155,463 | ) | (309,503 | ) | (10,008 | ) |
| Change in securities lending collateral | (57,438 | ) | (53,721 | ) | (181,901 | ) |
| Settlement of equity awards | (5,065 | ) | (3,444 | ) | (3,498 | ) |
| Offering and registration costs paid | (1,504 | ) | (715 | ) | (134 | ) |
| Proceeds from bank debt | 784 | – | – | |||
| Bank debt repaid | (2,159 | ) | – | – | ||
| Dividends on preferred shares | (15,500 | ) | (15,500 | ) | (15,500 | ) |
| Dividends on common shares | (58,708 | ) | (64,073 | ) | (66,262 | ) |
| Net cash used in financing activities | (293,465 | ) | (436,884 | ) | (268,050 | ) |
| Effect of exchange rate changes on cash and cash equivalents | (13,213 | ) | 9,984 | 14,281 | ||
| Net increase in cash and cash equivalents | 494,169 | 20,053 | 79,757 | |||
| Cash and cash equivalents, beginning of year | 567,825 | 547,772 | 468,015 | |||
| Cash and cash equivalents, end of year | 1,061,994 | 567,825 | 547,772 | |||
The financial information presented in this report should be reviewed in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 filed with the Securities and Exchange Commission.
