Third party reinsurance

12 Months Ended

Dec. 31, 2021

14. Third party reinsurance

In the normal course of business, the Company seeks to protect its businesses from losses due to concentration of risk and losses arising from catastrophic events by reinsuring with third-party reinsurers. Additionally, retrocession can be used as a mechanism to share the risks and rewards of business written and therefore can be used as a tool to align the Company’s interests with those of its counterparties. The Company remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts.

The following tables provide a breakdown of the Company’s written and earned premiums and loss and loss adjustment expenses from direct business, reinsurance assumed and reinsurance ceded for the years ended December 31, 2021, 2020 and 2019:


	2021		2020		2019
Written premiums:
Direct	$	718.0	$	19.0	$	—
Assumed	1,518.5		569.5		668.4
Gross premiums written	2,236.5		588.5		668.4
Ceded	(502.3)		(46.3)		(11.4)
Net premiums written	$	1,734.2	$	542.2	$	657.0


	2021		2020		2019
Premiums earned:
Direct	$	600.8	$	1.0	$	—
Assumed	1,598.5		638.8		710.0
Gross premiums earned	2,199.3		639.8		710.0
Ceded	(482.3)		(29.0)		(9.9)
Net premiums earned	$	1,717.0	$	610.8	$	700.1


	2021		2020		2019
Loss and loss adjustment expense:
Direct	$	349.3	$	0.8	$	—
Assumed	1,506.1		483.2		407.5
Loss and loss adjustment expense incurred	1,855.4		484.0		407.5
Ceded	(528.9)		(18.7)		(4.0)
Loss and loss adjustment expense incurred, net	$	1,326.5	$	465.3	$	403.5

Because retrocessional reinsurance contracts do not relieve the Company of its obligation to its insureds, the collectability of balances due from the Company's reinsurers is important to its financial strength. The Company monitors the financial strength and ratings of retrocessionaires on an ongoing basis. As of December 31, 2021, the Company had loss and loss adjustment expenses recoverable of $1,215.3 million (December 31, 2020 - $14.4 million). Loss and loss adjustment expenses recoverable from the retrocessionaire are recorded as assets.

The following tables provide a listing of the Company’s loss and loss adjustment expenses recoverable by the reinsurer's S&P rating and the percentage of total recoverables as of December 31, 2021 and 2020. With certain reinsurers if S&P's rating was not available, an equivalent AM Best rating was used.


	December 31, 2021
Rating (1) (2)	Gross		Collateral		Net		% of Net Total

AA	$	149.5	$	1.7	$	147.8	22.6	%
A	360.8		16.0		344.8		52.6	%
BBB or lower	212.3		130.5		81.8		12.5	%
Not rated	492.7		412.0		80.7		12.3	%
Total	$	1,215.3	$	560.2	$	655.1	100.0	%


	December 31, 2020
Rating (1) (2)	Gross		Collateral		Net		% of Net Total
AAA	$	0.2	$	—	$	0.2	2.8	%
AA	0.3		—		0.3		4.2	%
A	2.5		—		2.5		34.7	%

Not rated	11.4		7.2		4.2		58.3	%
Total	$	14.4	$	7.2	$	7.2	100.0	%

(1) S&P’s ratings as detailed above are: "AAA" (Extremely Strong), "AA" (Very strong), "A" (Strong) and "BBB" (Adequate).

(2) Not rated represents reinsurers who are not rated by either S&P or AM. Best. Included in the “Not rated” category as of December 31, 2021 is $355.9 million related to Pallas Reinsurance Ltd. as a result of the LPT, amount is fully collateralized.

The following tables provide a listing of the five highest loss and loss adjustment expenses recoverable by reinsurer, along with percentage of total recoverable amount, the reinsurer's S&P's reinsurer rating and the percentage that the recoverable is collateralized as of December 31, 2021 and 2020:


	December 31, 2021
	Balance		% of Total		S&P rating	% Collateralized
Reinsurer:
Pallas Reinsurance Company Ltd.	$	355.9	29.3	%	Not rated	100.0	%
General Insurance Corporation of India (1)	140.9		11.6	%	BBB	89.4	%
Swiss Reinsurance Company, Ltd.	34.8		2.9	%	AA-	13.4	%
Argo Capital Group Ltd.	28.6		2.4	%	Not rated	100.0	%
Lloyd’s of London	$	27.4	2.3	%	A+	51.8	%

(1) Reflects an AM Best rating of "B++" (Good).


	December 31, 2020
	Balance		% of Total		S&P rating	% Collateralized
Reinsurer:
WestCongress Reinsurance Company, Ltd	$	8.6	59.7	%	Not Rated	84.4	%
RH Solutions Insurance (Cayman) Ltd.	2.8		19.4	%	Not Rated	—	%
Ascot Reinsurance Company Limited	2.4		16.7	%	A	—	%
Arch Reinsurance Ltd	0.2		1.4	%	AA-	—	%
National Indemnity Company	$	0.2	1.4	%	AAA	—	%