(11 ) Commitments and Contingencies Catastrophe and Large Loss Exposure We have exposure to catastrophic losses caused by natural perils (such as hurricanes , earthquakes , floods, tsunamis and tornados ), as well as from man-made events (such as terrorist attacks). The incidence , timing and se verity of catastrophe losses are unpredictable. We assess our exposures in areas most vulnerable to natural catastrophes and apply procedures to ascertain our probable maximum loss from a single event. We maintain reinsurance protection that we believe is sufficient to limit our exposure to a foreseeable event . Following a catastrophic loss, we often incur additional cost s for reinstatement premium to continue our reinsurance coverage for future loss events. Our pretax catastrophe losses were $ 22.7 million gross and $ 20.3 million net (after reinsurance and reinsta tement premium) in the first nine months of 2012 and $ 1 68.0 million gross and $ 107.9 million net in the same period of 2011. Litigation We are a party to lawsuits, arbitrations and other proceedings that arise in the normal course of our business. Many of such lawsuits, arbitrations and other proceedings involve claims under policies that we underwrite as an insurer or reinsurer, the liabilities for which, we believe, have been adequately included in our loss reserves. Also, from time to time, we are a party to lawsuits, arbitrations and other proceedings that relate to disputes with third parties, or that involve alleged errors and omissions on the part of our subsidiaries. We have provided accruals for these items to the extent we deem the losses probable and reasonably estimable. Although the ultimate outcome of these matters cannot be determined at this time, based on present information, the availability of insurance coverage and advice received from our outside legal counsel, we believe the resolution of any such matters will not , individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of ope