RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2022

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

A member of the Company’s Board of Directors, Mr. Charles Davis, is the Chief Executive Officer of Stone Point Capital, LLC ("Stone Point"). In the ordinary course of business, the Company engages SKY Harbor Capital Management, LLC, an affiliate of Stone Point, to provide asset management services for certain high yield debt portfolios. For the year ended December 31, 2022, total fees paid to SKY Harbor Capital Management, LLC, were $2 million (2021: $2 million; 2020: $3 million).

In addition, the Company has an investment of $39 million in the Freedom Consumer Credit Fund, LLC - Series B. The manager of this fund is Freedom Financial Asset Management, LLC ("Freedom") which is an indirect subsidiary of Pantheon Partners, LLC ("Pantheon"). Investment funds managed by Stone Point own approximately 14.5% of Pantheon. For the year ended December 31, 2022, fees paid to Freedom were $2 million (2021: $3 million; 2020: $2 million).

The Company has an investment of $82 million in Stone Point's private equity fund, Trident VIII L.P. ("Trident VIII") and co-investments of $26 million with Trident VIII. For the year ended December 31, 2022, fees paid to Stone Point in relation to Trident VIII were $2 million (2021: $4 million; 2020: $1 million).

The Company has an investment of $9 million in Stone Point's private equity fund, Trident IX L.P. ("Trident IX"). For the year ended December 31, 2022, fees paid to Stone Point in relation to Trident IX were $1 million (2021: $nil; 2020: $nil).

The Company has an investment of $40 million with Rialto Real Estate IV-Property ("Rialto") and co-investments of $17 million with Rialto, a fund managed by a portfolio company of Stone Point's private equity fund, Trident VII L.P. For the year ended December 31, 2022, fees paid to Rialto were $2 million (2021: $1 million; 2020: $nil).

The Company has an investment of $18 million in Stone Point Credit Corporation. For the year ended December 31, 2022, fees paid to Stone Point in relation to Stone Point Credit Corporation were $0.3 million (2021: $nil; 2020: $nil).

The Company has an investment of $17 million in Stone Point Credit Corporation bonds. For the year ended December 31, 2022, the Company earned income of $0.6 million in relation to this bond.

The Company has an investment of $6 million in a syndicated accounts receivable loan for which Sound Point Capital Management LP ("Sound Point"), an affiliate of Stone Point, is the lead originator. For the year ended December 31, 2022, the Company has not paid any fees to Sound Point.

The Company has co-investments of $24 million with Gordon Brothers, an affiliate of Stone Point. For the year ended December 31, 2022, the Company has not paid any fees to Gordon Brothers.

During his tenure as the Company's Chair, Mr. Butt received consulting fees for the year ended December 31, 2020 of $0.4 million pursuant to the terms of a consulting agreement between Mr. Butt and the Company which terminated on December 31, 2020.

The Company's investment portfolio includes certain investments where it is considered to have the ability to exercise significant influence over the operating and financial policies of the investee. Significant influence is generally deemed to exist where the Company has an investment of 20% or more in the common stock of a corporation or an investment greater than 3% to 5% in closed end funds, limited partnerships, LLCs or similar investment vehicles. At December 31, 2022, the Company has $462 million (2021: $555 million) of investments where it is deemed to have the ability to exercise such significant influence. The Company generally pays management and performance fees to the investment managers of these investments. The Company considers all fees paid to the investment managers to be at market rates consistent with negotiated arms-length contracts.

Harrington and Harrington Re commenced operations in 2016 (refer to Note 5 'Investments'). The Company has the ability to exercise significant influence over the operating and financial policies of Harrington and Harrington Re. In the normal course of business, the Company enters into certain reinsurance transactions with Harrington Re. For the year ended December 31, 2022, the Company ceded reinsurance premiums of $324 million (2021: $283 million; 2020: $256 million) and ceded losses of $234 million (2021: $188 million; 2020: $187 million) to Harrington Re. In addition, Harrington Re paid certain acquisition costs and administrative fees to the Company. At December 31, 2022, the amount of reinsurance recoverable on unpaid and paid losses was $819 million (2021: $717 million) and the amount of ceded reinsurance payable included in

insurance and reinsurance balances payable was $220 million (2021: $189 million) in the consolidated balance sheets. All transactions were conducted at market rates consistent with negotiated arms-length contracts.

On June 29, 2021, the Company invested $10 million in 7.25% fixed to floating rate, senior unsecured notes due 2031, issued by Harrington.