2013

O I L C A S U A L T Y I N S U R A N C E L T D .
Contents
 ANNUAL REPORT 2013 PG. 1

2 President’s Message
6 Operations Review
12 Investment Review
16 Ten-Year Financial History
18 Consolidated Balance Sheets
19 Consolidated Statements of Operations
20 Consolidated Statements of Changes in Shareholders’ Equity
21 Consolidated Statements of Cash Flows
22 Notes to Consolidated Financial Statements

50 Independent Auditors’ Report to the Shareholders

51 Management Responsibility for the Financial Statements
52 Shareholders
54 Board of Directors
56 Executive Staff
57 Underwriting and Claims Teams
59 Committees of the Board
60 Subsidiary Company

O I L C A S U A LT Y I N S U R A N C E , LT D.
 President’s Message
Strategic plan execution, which included product line diversification,
has been the pillar of Oil Casualty Insurance, Ltd.’s methodical approach
to growth. 2013 was a record setting year for OCIL in both premiums
written and shareholders’ equity. The Company continued to expand
and develop its core businesses, with unceasing focus and dedication
to the energy industry remaining at the forefront.

Robert D. Stauffer
PRESIDENT & CHIEF EXECUTIVE OFFICER
 ANNUAL REPORT 2013 PG. 3

Seven years ago, OCIL developed a strategic

business plan to achieve greater diversification
and scale. As I reflect on 2013, it is gratifying to
witness the individual building blocks of OCIL’s
strategic business plan come together – meeting
our goals and objectives while celebrating our
accomplishments.

O I L C A S U A LT Y I N S U R A N C E , LT D.

Throughout 2013, OCIL concentrated on product
line diversification and expansion; making great
strides in developing the business operations
through effective sales and marketing. All product
lines experienced revenue growth, particularly
the new excess property book.
The number of excess liability insureds continued
to grow, reaching a record total of 120 as at No-
vember 30, 2013. Combine this with the addition
of 43 new, direct property accounts and it is easy
to see why we feel so positive about OCIL’s future.
Due to the Company’s growth, particularly in
non-shareholder business, OCIL was required to
amend its license from a Class 3 to a Class 3B
insurer with the Bermuda Monetary Authority
(BMA), effective January 1, 2013. Class 3B insur-
ers are defined by the BMA as large commercial
insurers whose percentage of unrelated business
represents 50% or more, of net premiums written
or net loss and loss expense provisions and where
the unrelated business premiums are more than
$50 million.
With growth comes added complexity and new
challenges. Effectively managing these challenges
is paramount to the future success of OCIL.
Enterprise Risk Management (ERM) practices
within OCIL continued to expand in 2013, which
have created a more robust framework for evalu-
ating and analyzing various risks assumed by
the Company. The ERM process ensures that the
Company is positioned appropriately to achieve
its strategic goals.
As OCIL continues to diversify its operations,
the use of more proficient systems becomes
imperative. Due in part to this, OCIL created an
IT strategic plan in early 2013 and has been
executing on its various initiatives.
ANNUAL REPORT 2013 PG. 5
OCIL’s strategic building blocks have united
to provide the Company with a broader profile;
greater scale and diversification. As we embark
upon another year of strategic development, OCIL
remains committed to our shareholders and
non-shareholder insureds around the globe.
In closing, I wish to express my thanks to the
Board of Directors for their guidance and to our
shareholders and non-shareholder insureds for
their continued support. I would like to acknowl-
edge the dedication and hard work of OCIL’s
management team and staff and thank them
for their contributions to the success of the
Company in 2013.
Robert D. Stauffer
PRESIDENT & CHIEF EXECUTIVE OFFICER
Operations Review
OCIL made great strides in 2013. Continued execution of strategic
initiatives contributed to revenue growth and greater spread of business.
The Company, as of fiscal year end November 30, 2013 reached record
shareholders’ equity, written premium and number of insureds.

OCIL’s financial strength ratings of A- (Stable) and
BBB+ (Stable) were reaffirmed by A.M. Best and
Standard & Poor’s, respectively.
Early in the year, the Company embarked on a
review of its information technology systems
and developed a long term strategic plan with
the objectives of improving business process
efficiencies, system integration and supporting
enterprise risk management practices.
Jerry Rivers
SENIOR VICE PRESIDENT & CHIEF OPERATING OFFICER
O I L C A S U A LT Y I N S U R A N C E , LT D.
Insurance Operations:
The execution of OCIL’s strategic business plan
has achieved greater diversification and scale
by growing its direct business. The Company
provides excess liability and excess property
insurance and reinsurance to companies with
operations in mining, chemical, petrochemical,
oil and gas exploration (onshore and offshore),
refining and marketing, electrical and gas
utilities, and pipelines.
ANNUAL REPORT 2013 PG. 7
The newest product line, excess property, finished
its first full year and performed in line with OCIL’s
business plan. The chart on page 10 illustrates the
diversification of the property book of business.
On the excess liability side, written premium
increased slightly from $59 million to $61 million,
primarily due to the increased number of policies
written. There were several claims paid on losses
reported and reserved in prior years. The excess
liability book increased its policy count to
120 from 113 a year earlier. Of the 120 policies
as at November 30, 2013, 53 were issued to
shareholders and 67 were issued to non-
shareholder insureds.
Assumed Reinsurance:
OCIL began writing assumed reinsurance in
2009 with the objective being to access additional
distribution and production sources to obtain
greater scale and diversification. The growth of
OCIL’s assumed reinsurance business continues
to increase the Company’s geographic distribution
by partnering with other energy market insurers.
This has resulted in greater scale and spread of
risk together with increased revenue.
OCIL continues to carefully monitor its risk
on a per-insured and aggregate basis to ensure
that OCIL remains within its acceptable risk
tolerance levels. The assumed reinsurance
business continues to grow and has been
performing as expected.
Combined, the insurance and reinsurance
operations generated gross premiums written
during the year totaling $153 million, an increase
of approximately 5% over the prior year. Net
underwriting income was $25 million compared
to a loss of $33 million in the prior year.
Ceded Reinsurance:
The Company purchased various types of
reinsurance contracts intended to mitigate
underwriting losses assumed in both the
insurance and reinsurance operations. During
fiscal year 2013, ceded reinsurance premium
increased 14% to $45 million from the prior year.
The increase, was primarily due to reinsurance
premium increases as a result of excess liability
losses in the prior year and the purchase of
excess of loss reinsurance on the Company’s
property portfolio. Reinsurance is purchased
from reinsurers rated A- or above by either
A.M. Best or Standard & Poor’s.
In Closing:
OCIL continues to focus on creating a well-
balanced and diversified underwriting platform
while at the same time, staying within the
Company’s tolerance levels of risk accumulation
geographically as well as risk correlation within
our insurance and reinsurance operations.
The construction of a more robust and diversified
business model has resulted in growth in OCIL’s
revenue, capital and prominence in the energy
insurance industry. I am very grateful for the sup-
port of the brokerage community, our reinsurance
partners, shareholders, non-shareholder insureds,
directors and employees.
Jerry Rivers
SENIOR VICE PRESIDENT AND CHIEF OPERATING OFFICER
 ANNUAL REPORT 2013 PG. 9

Gross Written Premiums

EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS AS OF NOVEMBER 30, 2013

152,720
145,870

90,858
82,105
77,231
76,635

56,708
49,028 51,125
44,009

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

O I L C A S U A LT Y I N S U R A N C E , LT D.
Industry Segment

*
Membership Geography – number of insureds
INSURANCE OPERATIONS

Property
CANADA

7%
5% 2% Mining 33% 13
Refining & Marketing 19%
33%
9% Petrochemicals 16%
Pipelines 9%
9% E&P Onshore 9% UNITED STATES
E&P Offshore
E&P On/Offshore
7%
5%
106
16% 19%
Utility 2%
SOUTH
AMERICA

2
Liability

% 1% Utility 24%
4% 2
7% Exploration & Production 21%
24%
Pipeline 16%
11% Refining & Marketing 14%
Integrated Oil 11%
Petrochemical 7%
14%
21% Chemical 4%
Mining 2%
16% Other 1%

*Includes property and liability insureds, not policies written.

 ANNUAL REPORT 2013 PG. 11

New Business
WRITTEN IN FISCAL YEAR 2013

EUROPE
Property*
13
4 1
Mining 14
14
7 Exploration & Production 9
Refining & Marketing 8
Petrochemicals 7
Pipelines 4
8 Utility 1
9

Liability*
AFRICA

1 1
1
Exploration & Production 5
5 Refining & Marketing 3
AUSTRALIA Pipeline/Midstream 3
3
3 Integrated Oil 1
Mining 1

*Based on number of insureds.

O I L C A S U A LT Y I N S U R A N C E , LT D.
 Investment
At fiscal year end 2013, the S&P 500 index
generated a 30.3% return which was more than
double its return in 2012. On the international
front, stocks posted a return of 23% as measured
by the MSCI EAFE Index while Emerging Market
stocks struggled, generating negative returns of
2.3%. Rising interest rates in the U.S. put pressure
on emerging market currencies and their equities
as investors found better opportunities on a risk
adjusted basis elsewhere. As for the bond market,
the Barclays U.S. Aggregate index (a proxy for
2013
investment grade government and corporate
bonds) fell 2.02%, its first negative calendar-year
performance since 1999. During 2013, the Federal
Reserve announced that it would begin “tapering”
its bond buying program. This had a significant
impact on U.S. interest rates and the 10-year U.S.
Treasury nearly doubled in yield from 1.6% in May
to 3% by the end of 2013.
Against this backdrop, OCIL’s diversified
investment portfolio benefited from strong
Review
returns in equities and hedge funds as well as
shorter duration positioning within its fixed
income allocation. Throughout 2013 management
focused on the potential for U.S. interest rates
to rise and as such, continued to reduce the
duration of its global fixed income portfolio. This
repositioning occurred at the beginning of May
which was timely, given the impact that the Fed’s
decision to reduce its monthly bond purchases
had on interest rates shortly thereafter. Also,
within the permissible parameters established

Ricky E. Lines
SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
 ANNUAL REPORT 2013 PG. 13

O I L C A S U A LT Y I N S U R A N C E , LT D.
by our investment board, management tactically maintained an overweight
allocation to both global equities and hedge funds, while remaining
Asset
Allocation
underweight to global bonds.

Management’s objective is to provide adequate liquidity to meet claim paying

obligations, while seeking to preserve and enhance the value of its invested
assets. As of fiscal year ended November 30, 2013, OCIL’s cash and invested
assets totaled $949 million compared with $897 million a year earlier. OCIL’s 2%
10%
investment portfolio generated a 4.8% net portfolio return resulting in $28
million of investment income during the year. OCIL’s total invested assets
10%
were allocated to 66% Global Bonds, 10% Global Equities, 12% Funds of Hedge
Funds, 2% Bonds in Trusts and 10% Cash as of November 30, 2013.
12%
OCIL’s liquidity position remains strong. The Company has a $75 million 66%
secured credit facility with the Bank of New York Mellon and a highly liquid
investment portfolio. At year ended November 30, 2013, there were no
outstanding amounts drawn on the credit facility.

OCIL’s many achievements in 2013 were possible because of the valuable

contributions, perseverance and diligence of our employees, management
team and investment board members.
Global Bonds 66%
Funds of Hedge Funds 12%
Cash 10%
Global Equities 10%
Bonds in Trusts 2%

Ricky Lines FISCAL YEAR ENDED NOVEMBER 30, 2013

SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

 ANNUAL REPORT 2013 PG. 15

Strategic
Portfolio Return*
Total
Portfolio Return*

9.7%
9.2%

6.4% 6.5% 6.2% 6.0%

5.1% 4.8%

1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS

FISCAL YEAR ENDED NOVEMBER 30, 2013 FISCAL YEAR ENDED NOVEMBER 30, 2013
*Portfolio returns exclude Cash and Bonds in Trust *Portfolio returns include Cash and Bonds in Trust

O I L C A S U A LT Y I N S U R A N C E , LT D.
Independent Auditors’ Report to the Shareholders’
We have audited the accompanying consolidated
financial statements of Oil Casualty Insurance,
Ltd. and its subsidiary, which comprise the
consolidated balance sheets as of November
30, 2013 and 2012, and the related consolidated
statements of operations, changes in
shareholders’ equity, and cash flows for the
years then ended, and the related notes to
the consolidated financial statements.
Management’s Responsibility for
the Financial Statements
Management is responsible for the preparation
and fair presentation of these consolidated
financial statements in accordance with U.S.
generally accepted accounting principles; this
includes the design, implementation, and
maintenance of internal control relevant to the
preparation and fair presentation of consolidated
financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on
these consolidated financial statements based
on our audits. We conducted our audits in
accordance with auditing standards generally
accepted in the United States of America. Those
standards require that we plan and perform
the audit to obtain reasonable assurance about
whether the consolidated financial statements
are free from material misstatement.
An audit involves performing procedures to
obtain audit evidence about the amounts
and disclosures in the consolidated financial
statements. The procedures selected depend on
the auditors’ judgment, including the assessment
of the risks of material misstatement of the
consolidated financial statements, whether due 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 consolidated 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. Accordingly, we express
no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used
and the reasonableness of significant
accounting estimates made by management,
as well as evaluating the overall presentation
of the consolidated financial statements.
We believe that the audit evidence we have
obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial
statements referred to above present fairly in
all material respects, the financial position of
Oil Casualty Insurance, Ltd. and its subsidiary as
of November 30, 2013 and 2012, and the results
of their operations and their cash flows for
the years then ended in accordance with U.S.
generally accepted accounting principles.
Chartered Accountants
HAMILTON, BERMUDA
MARCH 3, 2014

Management Responsibility for the Financial Statements
We, Robert D. Stauffer, Chief Executive Officer,
and Ricky E. Lines, Senior Vice President, Chief
Financial Officer and Treasurer, of Oil Casualty
Insurance, Ltd. (the “Company”), certify that we
have reviewed this annual report of Oil Casualty
Insurance, Ltd. and based on our knowledge, this
annual report does not contain any untrue state-
ment of a material fact or omit to state a material
fact. Based on our knowledge, the financial state-
ments, and other financial information included
in this annual report, fairly present in all material
respects the consolidated financial condition,
results of operations and cash flows of the Com-
pany as of, and for, the periods presented in this
annual report. We are responsible for establishing
and maintaining disclosure controls and pro-
cedures and we have: designed such disclosure
controls and procedures to ensure that material
information relating to the Company, including its
O I L C A S U A LT Y I N S U R A N C E , LT D.
ANNUAL REPORT 2013 PG. 51
consolidated subsidiaries, is made known to us by internal controls, or in other factors that could
others within the Company; evaluated the effec- significantly affect internal controls, subsequent
tiveness of the Company’s disclosure controls and to the date of our most recent evaluation.
procedures; and presented in this annual report
our conclusions about the effectiveness of the
disclosure controls and procedures based on our
evaluation. We have disclosed, based on our most
recent evaluation, to our auditors and the audit
committee of our Board of Directors, that there Robert D. Stauffer
are no significant deficiencies in the design or op- PRESIDENT AND CHIEF EXECUTIVE OFFICER
eration of internal controls which could adversely
affect the Company’s ability to record, process,
summarize and report financial data; and have
confirmed to our auditors that there are no mate-
rial weaknesses in internal controls or any fraud,
Ricky E. Lines
whether or not material, that involves manage-
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER
ment or other employees who have a significant AND TREASURER
role in the Company’s internal controls. We also
confirm that there are no significant changes in MARCH 3, 2014
Shareholders*
American Electric Power Company, Inc. Consolidated Edison, Inc.
Air Products and Chemicals, Inc. Delek U.S. Holdings, Inc.
Anadarko Petroleum Corporation The Dow Chemical Company
(Dorintal Reinsurance Limited)
Apache Corporation
Eastman Chemical Company
Ashland Inc.
Energy Future Holdings Corp.
Atmos Energy Corporation
Energy Transfer Partners, L.P.
BG Group plc
(BG Insurance Company (Singapore) Pte Limited) ENI S.p.A.
(ENI Insurance Limited)
BHP Billiton Limited
Enterprise Products Company
Borealis AG
(Borealis Insurance A/S) Exxon Mobil Corporation
CEPSA Group Hess Corporation
(Teide Re, S.A.) (Jamestown Insurance Company Limited)

Chesapeake Energy Corporation Husky Energy Inc.

Chevron Corporation Loop LLC
Chevron Phillips Chemical Company LLC LyondellBasell Industries N.V.
(Lyondell Chemical Company)
ConocoPhillips Company
(Sooner Insurance Company) Maersk Olie og Gas AS
 ANNUAL REPORT 2013 PG. 53

Marathon Oil Corporation Sasol Limited

(Sasol International Insurance Limited)
Motiva Enterprises LLC
Sempra Energy
Murphy Oil Corporation
Spectra Energy Corp
National Fuel Gas Company
Statoil ASA
Nexen Inc.
Suncor Energy Inc.
NextEra Energy, Inc.
Talisman Energy Inc.
NiSource Inc. (Oleum Insurance Company Limited)
NOVA Chemicals Corporation Teck Resources Limited
(Novalta Insurance Ltd.)
Tesoro Corporation
Occidental Petroleum Corporation
(Opcal Insurance Inc.) TOTAL S.A.
(Omnium Insurance and Reinsurance Company)
Ontario Power Generation Inc.
Valero Energy Corporation
PG&E Corporation (Colonnade Vermont Insurance Company)
Repsol YPF WGL Holdings, Inc.
(Greenstone Assurance Ltd.)
The Williams Companies, Inc.
Santos Ltd.
(Sanro Insurance Pte Ltd.)

* THESE ENERGY COMPANIES OR THEIR INSURANCE AFFILIATES (INDICATED IN BRACKETS)

WERE SHAREHOLDERS AT NOVEMBER 30, 2013.

O I L C A S U A LT Y I N S U R A N C E , LT D.
 Board of Directors

Theodore Guidry II James F. Hughes III Anne Chalmers John W. Dumas Ken Holley Trygve Imsland Gregory J. LaSalle
CHAIRMAN CORPORATE INSURANCE VICE PRESIDENT VICE PRESIDENT SENIOR RISK VICE PRESIDENT DIRECTOR
SENIOR VICE PRESIDENT MANAGER RISK & SECURITY CORPORATE INSURANCE ADVISOR INSURANCE PROPERTY INSURANCE
BUSINESS RISK MANAGEMENT CONOCOPHILLIPS COMPANY TECK RESOURCES LIMITED MURPHY OIL CORPORATION APACHE STATOIL ASA OCCIDENTAL PETROLEUM
VALERO ENERGY CORPORATION
CORPORATION
 ANNUAL REPORT 2013 PG. 55

Andre Levey Fabrizio Mastrantonio Gerard E. Modecki Gerard R. Naisse Peter Roueche Robert D. Stauffer Mark F. Wilson
GROUP INSURANCE SENIOR VICE PRESIDENT ASSISTANT TREASURER & VICE PRESIDENT - DIRECTOR PRESIDENT & CEO ASSISTANT TREASURER
MANAGER INSURANCE ACTIVITIES INSURANCE DIRECTOR RISK MANAGEMENT & ENTERPRISE RISK OIL CASUALTY RISK MANAGEMENT &
SANTOS LTD. MANAGEMENT MARATHON OIL INSURANCE & INSURANCE INSURANCE, LTD. INSURANCE
ENI S.P.A. CORPORATION TOTAL S.A. EASTMAN CHEMICAL LYONDELLBASELL
COMPANY INDUSTRIES N.V.

O I L C A S U A LT Y I N S U R A N C E , LT D.
Executive Staff

Robert D. Stauffer Jerry Rivers Ricky E. Lines Ted Henke Rob Foskey Marlene J. Cechini
PRESIDENT & CHIEF SENIOR VICE PRESIDENT & SENIOR VICE PRESIDENT & SENIOR VICE PRESIDENT CHIEF ACTUARY CONTROLLER &
EXECUTIVE OFFICER CHIEF OPERATING OFFICER CHIEF FINANCIAL GENERAL COUNSEL & ASSISTANT SECRETARY
OFFICER SECRETARY
 ANNUAL REPORT 2013 PG. 57

Underwriting Team

Graham Kirk Rolf Fischer Gina Butterfield Raymanda Smith Margaret Jones Duncan Frith
SENIOR LIABILITY SENIOR PROPERTY SENIOR LIABILITY SENIOR LIABILITY LIABILITY ASSISTANT LIABILITY
UNDERWRITER/ UNDERWRITER UNDERWRITER UNDERWRITER UNDERWRITER UNDERWRITER
TEAM LEADER

O I L C A S U A LT Y I N S U R A N C E , LT D.
 Underwriting Team Claims Team

Beverly Adams Wanda Mello Kathy Dowling Jill Burns-Leman Jennifer Thomas Franzetta Parker
ASSISTANT PROPERTY REINSURANCE ANALYST EXECUTIVE ASSISTANT SENIOR CLAIMS ANALYST CLAIMS ANALYST CLAIMS ASSISTANT
UNDERWRITER
 ANNUAL REPORT 2013 PG. 59

Committees of The Board

OIL CASUALTY INSURANCE, LTD.

EXECUTIVE AUDIT COMPENSATION

Theodore Guidry II CHAIRMAN James D. Lyness CHAIRMAN Gerard R. Naisse
Gregory J. LaSalle Gerard R. Naisse Theodore Guidry II
James F. Hughes III Gregory J. LaSalle James F. Hughes III
Fabrizio Mastrantonio
Robert D. Stauffer GOVERNANCE
Ken Holley
Anne Chalmers
Andre Levey

External Service Providers & Consultants

AUDITORS LEGAL COUNSEL

KPMG Audit Limited Conyers, Dill & Pearman
CROWN HOUSE CLARENDON HOUSE
4 PAR-LA-VILLE ROAD 2 CHURCH STREET
HAMILTON HM08 HAMILTON HM11
BERMUDA BERMUDA

O I L C A S U A LT Y I N S U R A N C E , LT D.
Subsidiary Company
OIL CASUALTY INVESTMENT CORPORATION LTD.

BOARD OF DIRECTORS
R. Hartwell Gardner Paul C. Reinbolt Cynthia J. Akagi
CHAIRMAN CHIEF FINANCIAL OFFICER & MANAGER,
TREASURER (RETIRED) EXECUTIVE VICE PRESIDENT (RETIRED) TRUST INVESTMENTS
MOBIL CORPORATION HYPERDYNAMICS CORPORATION CONOCO PHILLIPS COMPANY

Ralph J. Egizi Robert D. Stauffer James D. Lyness

DIRECTOR, BENEFITS PRESIDENT & ASSISTANT TREASURER
FINANCE & INVESTMENTS (RETIRED) CHIEF EXECUTIVE OFFICER INSURANCE (RETIRED)
EASTMAN CHEMICAL COMPANY OIL CASUALTY INSURANCE, LTD. CHEVRON CORPORATION

Ricky E. Lines Tron Vormeland

SENIOR VICE PRESIDENT, VICE PRESIDENT,
CHIEF FINANCIAL OFFICER CORPORATE FINANCING
OIL CASUALTY INSURANCE, LTD. STATOIL ASA

OFFICERS
Ricky E. Lines
PRESIDENT & TREASURER

Marlene J. Cechini
CONTROLLER & ASSISTANT SECRETARY

Andrew Rossiter
VICE PRESIDENT & DIRECTOR OF INVESTMENTS

Ted Henke
SECRETARY
INSIDE
BACK
COVER
3 BERMUDIANA ROAD P.O. BOX HM 1751 TEL: 441-295-0905
HAMILTON HM 08 HAMILTON HM GX FAX: 441-295-0351
BERMUDA BERMUDA WEB: WWW.OCIL.BM

O I L C A S U A L T Y I N S U R A N C E L T D .