Audited Financial Statements

Ariel Reinsurance Ltd.

For the year ended December 31 , 2015, and the period from June I 0, 20 I 0 (date of incorporation) to December 31 , 2014

Ariel Reinsurance Ltd.

CONTENTS

Independent auditors' report ............................... ........ .................................................... ........... ...... ........................ .

Statements of financial position . .. .. .... .. .. .. .. . .. .. .. .. . .. . .. .. .. . . .. .. . . .. . .. .. .. .. .. .. . .. .. . .. .. . . .. .. . .. .. .. .. .. . .. .. .. . . .. . .. . .. .. .. .. . .. . .. . .. . . .. .. .. . . 2

Statement of income........ .. .. .......... ... .. .. ... .... ............ ................ .......... ..... .......... ... .... .... .... ... .. ..... ...... .......... ... ... ......... 3

Statements of changes in equity.......................... .......... ...... ......... ..... ............. ........ .. .. ............ ....... ......... ... .. .. .. ...... ... 4

Statements of cash flows........................................... ... ............... ......... .................. ...... ............................................ 5

Notes to the financial statements .. . . ... .. . .. . .. . .. .. .. . .. . . .. . .. . .. . .... .. .. .. .. .... . . ... .. .. . .. .. . . .. .. .. . .. . .. .. .. .. .. . .. .. .. .. .. ... . .. .. .. . .. .. .. . .. . .. .. . 6

Buildinq a better worlling world

Ernst & Young Ltd . 3 Bennudiana Road Hamilton HM 08, Bermuda P.O. Box '1u3 Hamilton liM BX. Bermuda

Tel: + 1 441 29':> 7000 Fax: q 441295 5193 1'11'11'/.ey.corn/ bermuda

Independent Auditors' Report

The Directors Ariel Reinsurance Ltd.

Report on the financial statements

We have audited the accompanying financial statements of Ariel Reinsurance Ltd., which comprise the statement of financial position as at 31 December, 2015, and statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether clue to fraud or error.

Auditors' responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether clue to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity' s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. ·

BuildinCJ a l>etter working world

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of Ariel Reinsurance Ltd. as at 31 December, 2015, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

April 29, 2016

2

Ariel Reinsurance Ltd. Statements of financial position As at December 31, 2015 (Expressed in United States Dollars)

Assets Cash and cash equivalents Insurance balances receivable Prepaid expenses Deposits and other receivables

Total assets

Current liabilities Accounts payable and accrued expenses Amounts due to affiliates

Current liabilities

Equity and reserves Share capital Retained earnings (loss)

Total equity and reserves attributable to owners

Total liabilities, equity and reserves

Note

4

7 5

10

The accompanying notes should be read In conjunction with these financial statements.

Name : Director

Name : Nf:L:

Director

December 31, 2015

$

165,825,11 9 17,301,220

123,265 255,206

183,504,810

86,480 21,351,000

21,437,480

150,000,000 12,067,330

162,067,330

183,504,810

Date

Date

December 31, 2014

$

149,919,670

35,980 2,438

149,958,088

457,014 1,000

458,014

150,000,000 (499,926)

149,500,074

149,958,088

2

Ariel Reinsurance Ltd. Statements of income For the year ended December 31, 2015, and for the period from June 10, 2010 (date of incorporation) to December 31, 2014 (Expressed in United States Dollars)

Revenue Net premiums assumed and earned Other operating revenue Investment income

Total revenue

Expenses Losses incurred Commissions Other underwriting expenses General and administrative expenses

Total expenses

Profit (loss) for the year

The accompanying notes should be read in conjunction with these financial statements.

Note

12

Year ended

December 31, 2015

$

75,472,481 913,761 176,130

76,562,372

17,817,478 19,1 30,857 21,222,926 2,029,378

60,200,639

16,361,733

Period Ended

December 31, 2014

s

74,583

74,583

574,509

574,509

(499,926)

3

Ariel Reinsurance Ltd. Statements of changes in equity For the year ended December 31, 2015, and for the period from June 10, 2010 (date of incorporation) to December 31, 2014 (Expressed in United States Dollars)

Year ended Period Ended

December 31, December 31, 2015 2014

Note s s

Share capital Balance at beginning of period 150,000,000

Transactions with owners in their capacity of owners: Issuance of 150,000 shares at $1,000 par value 150,000,000 Share repurchased, 75,000 at $1,000 par value 10 (75,000,000) Issuance of 75,000 shares at $1 ,000 par value 10 75,000,000

Balance at end of period 150,000,000 150,000,000

Contributed surplus (deficit) Balance at beginning of period

Transactions with owners in their capacity of owners: Arising from repurchase of 75,000 shares at $1,000 par value 10 2,146,700 Contributed deficit arising from the issuance of 75,000 shares 10 (2, 146, 700)

Balance at end of period

Retained earnings (deficit) Balance at beginning of period (499,926) Net profit (loss) for the period 16,361,733 (499,926) Dividends paid 12 (3,794,477)

Balance at end of period 12,067,330 (499,926)

Total equity and reserves attributable to owners 162,067,330 149,500,074

Tile accompanying notes should be read in conjunction with these financial statements

4

Ariel Reinsurance Ltd. Statements of cash flows For the year ended December 31, 2015 and for the period from June 10, 2010 (date of incorporation) to December 31, 2014 (Expressed in United States Dollars)

Cash flows from operating activities

Profit (loss) for the period Adjustments for: Insurance balances receivable Prepaid expenses Deposits and other receivables Accounts payable and accrued expenses Amounts due to affiliates

Net cash from (used} in operating activities

Cash flows from financing activities: Net proceeds from share issuance Repurchase of shares Dividends paid

Net cash (used} from financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Tire accompanying notes slrou/d be read in conjunction wltlr tlrese financial statements.

Year Ended December 31,

2015 $

16,361,733

(17,301,220) (87,285)

(252,768) (370,534)

21,350,000

19,699,926

72,853,300 (72,853,300) (3,794 ,4 77)

(3,794,477)

15,905,449

149,919,670

165,825,119

Period Ended December 31,

2014

$

(499,926)

(35,980) (2,438)

457,014 1,000

(80,330)

150,000,000

150,000,000

149,919,670

149,919,670

5

Ariel Reinsurance Ltd. Notes to the financial statements For the year ended December 31, 2015 and for the period from June 10, 2010 (date of incorporation) to December 31, 2014

Organization and nature of business

Ariel Reinsurance Ltd., formerly BTG Re Ltd. (the "Company" or "Ariel") is a Bermuda exempt company incorporated on June 10, 2010 and its registered office is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. The Company is a wholly owned subsidiary of Maybrooke Holdings S.A. ("Maybrooke" or "the Parent") and is licensed as a Class 3B insurer under the Bermuda Insurance Act 1978 and Related Regulations as amended (the "Act"). Maybrooke is a Luxemburg holding company which is 50% owned by each of BTG Pactual Holdings International SA and Stanhope Investments.

BTG Pactual Holdings International SA is a wholly owned subsidiary of Banco BTG Pactual SA. Stanhope Investments is a Cayman Island limited liability company which is wholly owned by the Abu Dhabi Investment Council, the investment arm of the government of Abu Dhabi.

Ariel's operations are principally focused on catastrophe exposed property and specialty reinsurance. During the year ended 2015, the Company's sole reinsurance contract was a limited liability quota share cover (the "QS Agreement") reinsuring a percentage of the overall results of Ariel Corporate Member Limited's (the "Ceding Reinsurer") membership in Ariel Syndicate 1910. The Ceding Reinsurer is an affiliated company and a Lloyd's corporate member. The QS Agreement, which expired on December 31 , 2015, specifies a maximum aggregate limit of liability and the Company is required to provide collateral to secure the maximum exposure. Accordingly the Company has secured letters of credit ("LOC") and established a Funds at Lloyd's ("FAL") account to secure its potential exposures under the QS Agreement.

The financial statements were approved by the Board on _, 2016.

2 Basis of preparation and adoption of IFRS

Statement of compliance

The accompanying financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") adopted by the International Accounting Standards Board ("IASB"), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB and are denominated in United States dollars. Those standards require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue earned and expenses incurred during the reporting period. Actual results could differ from those estimates. The Company has complied with I FRS applicable in the period and at December 31, 2015.

Basis of measurement

The financial statements are presented in U.S dollars, which is the Company's functional currency. They are completed on a going concern basis. The financial statements are prepared under the historical cost convention modified to include the measurement at fair value of cash and cash equivalents.

3 Summary of significant accounting policies

The following are the significant accounting policies adopted by the Company:

Underwriting activities

Contracts that transfer significant insurance risk are considered insurance contracts while contracts without significant insurance risk are classified as investment contracts. Under the terms of the QS Agreement the Ceding

6

Ariel Reinsurance Ltd. Notes to the financial statements For the year ended December 31, 2015, and for the period from June 10, 2010 (date of incorporation) to December 31, 2014

3 Summary of significant accounting policies (continued)

Reinsurer provides a monthly cession report comprising an income statement and a calculation of a preliminary ultimate result of the reinsurance (the "Agreed Result").

The Agreed Result is based on information calculated in accordance with UK generally accepted accounting principles and is the net result for all relevant underwriting years of the Ceding Reinsurer for the period of the reinsurance before taking into account any amounts ceded to a Special Purpose Syndicate. The Company relies on the cession report to book the revenues and expenses under the QS Agreement. Reinsurance premiums assumed are recorded on an earned basis and are stated before the deductions for brokerage, commissions and taxes. The Agreed Result is reported as "Insurance balances receivable" on the statement of financial position and will be finalized and settled based on the 2015 audited accounts of the Ceding Reinsurer.

Acquisition expenses comprising mainly commissions, brokerage and allocated operating expenses related to the QS Agreement, are based on amounts reported in the monthly cession reports.

Loss incurred are recorded when advised by the Ceding Reinsurer. The Company does not carry separate loss reserves on the statement of financial position as outstanding losses and IBNR provisions estimated by the Ceding Reinsurer are included in the calculation of the Agreed Result.

Offsetting

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liability simultaneously. Income and expense is not offset in the statement of income unless required or permitted by any accounting standard or interpretation.

Estimation and uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

Agreed Result

Cession reports provided by the Ceding Reinsurer necessarily include estimates and assumptions made by the Ceding Reinsurer concerning the ultimate claims expenses and premium revenues included in the Agreed Result. The Agreed Result will be finalized and settled based on the 2015 audited accounts of the Ceding Reinsurer.

Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents comprise cash in hand and other short­term, highly liquid investments which are believed to be subject to insignificant risk of change in fair value.

Investment income

Investment income is recognized on the accruals basis.

7

Ariel Reinsurance Ltd. Notes to the financial statements For the year ended December 31, 2015, and for the period from June 10, 2010 (date of incorporation) to December 31 , 2014

3 Summary of significant accounting policies (continued)

Standards, amendments to existing standards effective January 1, 2016

There are no standards, interpretations or amendments to existing standards that are effective on or after January 1, 2016 that are expected to have a material impact on the Company.

4 Cash and cash equivalents

At December 31, 2015, and December 31 , 2014, cash and cash equivalents are comprised of:

Balances held in operating accounts Deposits held as collateral for Letters of Credit Deposits held in F AL Accounts Other deposits held in interest bearing accounts

Total

December 31, 2015

$

15,623,944 60,000,000 69,234,767 20,966,408

165,825,119

December 31, 201 4

$

74,845,087

75,074,583

149,919,670

The balances in operating accounts were held at HSBC Bank Bermuda Limited, a subsidiary of HSBC pic with a Moody's credit rating of Aa3.

The Company entered into a $60m collateralized LOC arrangement with Lloyd's Bank PLC. Under the terms of the agreement the Company is required to post collateral in the amount of $60m with the bank.

In accordance with the terms of the QS Agreement the Company is required to maintain certain deposits in a FAL account at Lloyd's to meet potential reinsurance obligations. The level of FAL deposit is adjusted based on estimated future expected claims under the reinsurance agreement.

The interest bearing deposit of $20,966,408 (2014: $75,074,583) is held at Banco BTG Pactual SA, Grand Cayman Branch, a subsidiary of Banco BTG Pactual SA with a Moody's credit rating of Baa3. Banco BTG Pactual SA is an affiliate of the Company.

5 Related party transactions

The Company is an affiliate, related through common control with the Ceding Reinsurer, the sole source of insurance business written by the Company during the year.

The Company held a deposit with BTG Pactual, Cayman Branch, and during the year ended December 31, 2015, earned interest of $50,750 (2014: $74,583).

Ariel engaged Horseshoe Management ltd. ("Horseshoe"), a Bermuda based insurance management company, to provide certain management, principal representative, accounting and administrative services to the Company. Two directors of the Company (the "Horseshoe Directors") are also directors of Horseshoe. The Horseshoe Directors serve without a fee. Their services are paid for under the terms of the insurance management agreement with Horseshoe.

8

Ariel Reinsurance Ltd. Notes to the financial statements For the year ended December 31, 2015, and for the period from June 10, 2010 (date of incorporation) to December 31, 2014

5 Related party transactions (continued)

During the year ended December 31, 2015, the Company incurred management fees of $500,000 (2014: $333,333) and an amount of $Nil (2014: $333,333) was payable at year end.

On March 23, 2013, BTG Investments LP, advanced $1,000 to the Company to meet initial operating expenses. The amount carries no interest, is repayable on demand and was still outstanding at December 31, 2015.

On February 2, 2015, the Company entered into a LOC facility and reimbursement agreement with Ariel Indemnity Limited ('Ariel Indemnity") whereby the Company, ACRC Limited and Ariel Indemnity entered into a LOC facility with Lloyd's Bank PLC as the applicants ('the LOC Facility"). Under the LOC Facility, the Company authorized the bank to issue LOCs on behalf of Ariel Indemnity to secure certain obligations under a Loss portfolio Transfer Agreement with a certain third party. The Company is obligated to pay fees under the LOC Facility and in turn recover part of these fees from Ariel Indemnity and other applicants. As at December 31, 2015, the collateral amount received from Ariel Indemnity of $21,350,000 was outstanding and is shown on the statement of financial position under ' Amounts due to affiliates". The Company charged Ariel Indemnity and the other applicants LOC reimbursement fees of $913,761, shown on the income statement under "other operating revenue."

The following table shows amounts attributable to the related parties described above:

Balance sheet Insurance balances receivable Cash and cash equivalents Deposits and other receivables Amounts due to affiliates Accounts payable and accrued expenses

Statement of income Net premiums assumed Other operating income Investment income Losses incurred Commissions Other underwriting expenses General and administrative expenses

6 Statutory requirements

$

$

2015

17,301,220 $ 20,966,408

255,206 21 ,351,000

75,472,481 $ 913,761 50,750

17,817,478 14,300,505 26,053,278

500,000

2014

75,074,583

1,000 333,333

74,583

333,333

The Company is licensed as a Class 38 insurer under the Act, which requires insurance companies to meet and maintain certain minimum levels of solvency and liquidity. In accordance with the Act, the minimum solvency margin required at December 31, 2015, was $11 ,621,000 (2014: $1 ,000,000) and the actual statutory capital and surplus was $161,944,065 (2014: $149,464,095). The Company therefore met the minimum solvency margin at December 31, 2015. In addition, a minimum liquidity ratio must be maintained whereby relevant assets, as defined by the Act, must exceed 75% of relevant liabilities. The ratio was met at December 31, 2015 and 2014.

9

Ariel Reinsurance Ltd. Notes to the financial statements For the year ended December 31, 2015, and for the period from June 10, 2010 (date of incorporation) to December 31, 2014

7 Accounts payable and accrued expenses

The accounts payable balance of $86,480 (2014: $457,014) includes various operating expenses incurred during the year which were outstanding at year-end. The carrying amount disclosed reasonably approximates to the fair value at the reporting date.

8 Risk management

The main risks faced by the Company and the way these risks are mitigated by management are summarized below:

Insurance Risk

Insurance risk includes the risks of inappropriate underwriting, ineffective management of underwriting, inadequate controls over exposure management in relation to catastrophic events and insufficient reserves for losses. To mitigate this risk the Company's aggregate exposure is modelled and tested against different stress scenarios to ensure adherence to the Company's overall risk appetite and alignment with underwriting strategies.

Credit risk analysis

Credit risk is the risk of counterparty default. Financial assets which potentially expose the Company to cred it risk mainly consist of cash and cash equivalents. However since the cash balances are held at financial institutions with a credit rating of at least Baa3, management does not anticipate any material losses from these exposures.

Liquidity risk analysis

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk on an ongoing basis and carefully monitors cash flows due in day-to-day business. All the Company's liabilities are current in nature and will be settled within 12 months of the statement of financial position date.

Capital management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for its shareholder and to maintain an optimal capital structure to reduce the cost of capital.

Legal/regulatory risk

Legal/regulatory risk is the risk that the legal or regulatory environment in which an insurer operates will change and create additional loss costs or expenses not anticipated by the insurer in pricing its products. That is, regulatory initiatives designed to reduce insurer profits or new legal theories may create costs for the insurer beyond those recorded in the financial statements. The Company mitigates this risk through its underwriting and loss adjusting practices which identify and minimize the adverse impact of this risk.

9 Income taxes

Under current Bermuda law, Ariel is not required to pay any Bermuda taxes on its income or capital gains. The Company has received an undertaking from the Minister of Finance in Bermuda that, in the event of any taxes being imposed, the Company will be exempt from taxation in Bermuda until March 2035.

10

Ariel Reinsurance Ltd. Notes to the financial statements For the year ended December 31, 2015, and for the period from June 10, 2010 (date of incorporation) to December 31, 2014

10 Share capital

Authorized share capital:

The authorized share capital of the Company comprises 1 ,600,000 shares designated as follows:

December 31, 2015 December 31, 2014 $ $

1,000,000 Common shares at $1,000 par value 1 ,000,000,000 1,000,000,000 200,000 Non-cumulative preferred shares at $1 ,000 par value 200,000,000 200,000,000 400,000 Tier 2 equity shares at $1 ,000 par value 400,000,000 400,000,000

Total 1 ,600,000,000 1 ,600,000,000

Issued share capital:

Issued and fully paid share capital is comprised as follows:

December 31, 2015 December 31, 2014 $ $

150,000 Common shares at $1 ,000 par value 150,000,000 150,000,000

Total 150,000,000 150,000,000

The Common shares are ordinary common shares with voting rights and entitlements to such dividends as the Board may from time to time declare.

The Non-cumulative preferred equity shares, when issued, entitle holders to, among other rights, an annual dividend only if declared by the Board. These shares do not have a fixed maturity date nor any voting powers and can only be issued to BTG Pactual Holding lnternacional and Stanhope Investments.

The Contingent Exchangeable Equity Shares {the "Tier 2 equity shares"), when issued, shall be perpetual securities with no fixed maturity date. These shares do not have any voting powers and can only be issued to Stanhope Investments at nil paid.

Effective February 2, 2015, the ownership of the Company was restructured (the "Restructuring"). Under the terms of the Restructuring the following transactions were completed:

{i) The Company repurchased and cancelled 75,000 common shares, par value $1 ,000, from the former holding company, Sifr Holdings Ltd . ("Sifr") for $72,853,300.

(ii) The balance of the shares held by Sifr, 75,000 common shares, were transferred to Stanhope Investments then to Maybrooke.

{iii) The Company issued 75,000 common shares, at par value $1,000, to Maybrooke for a total of $72,853,300. (iv) The National Bank of Abu Dhabi, an affiliate of Stanhope Investments, agreed to provide a LOC facility for

the benefit of the Company or obligations of the Company in favor of Lloyd's to be incurred in connection with the reinsurance and financing transaction to be entered into by the Company in an amount up to $400m. Effective May 22, 2015, the bank issued an LOC to the amount of $1OOm under the facility.

II

Ariel Reinsurance Ltd. Notes to the financial statements For the year ended December 31, 2015, and for the period from June 10, 2010 (date of incorporation) to December 31, 2014

11 Dividends paid

At a meeting held on February 10, 2015, the Board of Directors resolved to pay a dividend amounting to $3,794,477.

12 General and administration expenses

The general and administrative expenses for the year ended December 31, 2015, and for the period from June 10, 2010, (date of incorporation) to December 31, 2014 are comprised as follows:

Management fees Government fees, permits and charges Consulting and professional fees Audit fees LOC charges Corporate secretarial and administrative expenses Legal fees Miscellaneous expenses

Total

13 Subsequent events

December 31, 2015 $

500,000 204,710 970,512 45,000

132,908 12,927

159,117 4,204

2,029,378

December 31, 2014

$

333,333 101,710 112,694 25,000

1,772

574,509

There have been no material events between December 31, 2015, and the date of this report which are required to be disclosed.

12