Bermuda (State or Other Jurisdiction of Incorporation or Organization) | 98-1120002 (I.R.S. Employer Identification No.) |
Large accelerated filer o | Accelerated filer x | |
Non-accelerated filer o | Smaller reporting company x | |
Emerging growth company x |
Page | ||
PART I - FINANCIAL INFORMATION | ||
Cautionary Statement Regarding Forward-Looking Statements | ||
Item 1. | Financial Statements | |
Consolidated Balance Sheets at September 30, 2018 (unaudited) and December 31, 2017 | ||
Unaudited Consolidated Statements of Loss and Comprehensive Loss for the Three and Nine Months Ended September 30, 2018 and 2017 | ||
Unaudited Consolidated Statements of Changes in Shareholders' Equity for the Nine Months Ended September 30, 2018 and 2017 | ||
Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017 | ||
Notes to the Unaudited Consolidated Financial Statements | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
Item 4. | Controls and Procedures | |
PART II - OTHER INFORMATION | ||
Item 1. | Legal Proceedings | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 3. | Defaults Upon Senior Securities | |
Item 4. | Mine Safety Disclosures | |
Item 5. | Other Information | |
Item 6. | Exhibits | |
SIGNATURES |
• | the fact that we have limited operating history; |
• | the possibility of severe or unanticipated losses from natural and man-made catastrophes, including those that may result from changes in climate conditions, including global temperatures and expected sea levels; |
• | the effectiveness of our loss limitation methods; |
• | our dependence on our Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), both of whom are not our direct employees, and our service providers including Blue Capital Management Ltd. (the "Manager") which provides various underwriting, investment and administrative services; |
• | our ability to effectively execute our business plan and any new ventures that we may enter into; |
• | continued acceptance of our business strategy, security and financial condition by regulators, brokers and insureds; |
• | failure by any service provider to carry out its obligations to us in accordance with the terms of its appointment; |
• | conflicts of interest that could result from our relationships and potential overlaps in business with related parties, including Sompo International Holdings Ltd. (a wholly owned subsidiary of Sompo Holdings, Inc.) ("Sompo International") and its subsidiaries; |
• | the cyclical nature of the property catastrophe insurance and reinsurance industry; |
• | the availability of capital and financing, including our ability to raise more equity capital and our ability to release capital from existing obligations to redeploy annually; |
• | the levels of new and renewal business achieved; |
• | the availability of opportunities to increase writings within our property and catastrophe lines of business and our ability to capitalize on those opportunities; |
• | the inherent uncertainty of our risk management process, which is subject to, among other things, industry loss estimates and estimates generated by modeling techniques; |
• | the inherent uncertainties in establishing loss and loss adjustment expense ("LAE") reserves and unanticipated adjustments to premium estimates; |
• | changes in the availability, cost or quality of reinsurance or retrocessional coverage; |
• | general economic and market conditions, including inflation, volatility in the credit and capital markets and conditions specific to the insurance and reinsurance markets in which we operate; |
• | changes in and the impact of governmental legislation or regulation, including changes in tax laws in the jurisdictions where we conduct business; |
• | statutory or regulatory developments, including those involving tax policy, reinsurance and other regulatory matters that could adversely affect Bermuda-headquartered companies or Bermuda-based insurers or reinsurers; |
• | potential treatment of us as an investment company, a controlled foreign corporation or a passive foreign investment company for purposes of U.S. securities laws or U.S. federal taxation, respectively; |
• | the impact of the United Kingdom's June 2016 referendum on European Union membership and the expected withdrawal of the United Kingdom from the European Union; |
• | the amount and timing of reinsurance recoveries; |
• | the effects of competitors' pricing policies, and of changes in laws and regulations on competition, industry consolidation and development of competing financial products; |
• | the overall level of competition, and the related supply and demand dynamics in our markets relating to growing capital levels in our industry; |
• | actions by our competitors, many of which are larger or have greater financial resources than we do; |
• | declining demand due to increased retentions by cedants and other factors; |
• | acts of terrorism, political unrest, outbreak of war and other hostilities or other non-forecasted and unpredictable events; |
• | unexpected developments concerning the small number of insurance and reinsurance brokers upon whom we rely for a large portion of revenues; |
• | the ability of the counterparty institutions with which we conduct business to continue to meet their obligations to us; |
• | operational risks, including the risk of fraud and any errors and omissions, as well as technology breaches or failures; |
• | changes in tax regulations or laws applicable to us, our subsidiaries, brokers or customers; |
• | our dependence as a holding company upon dividends or distributions from our operating subsidiaries; and |
• | changes in accounting principles or the application of such principles by regulators. |
September 30, | December 31, | |||||||
(In millions of U.S. dollars, except per share amounts) | 2018 | 2017 | ||||||
Assets | (Unaudited) | |||||||
Cash and cash equivalents | $ | 0.1 | $ | 6.0 | ||||
Reinsurance premiums receivable | 6.5 | 11.1 | ||||||
Deferred reinsurance acquisition costs | 0.5 | 0.1 | ||||||
Funds held by ceding companies | 153.5 | 164.8 | ||||||
Other assets | 1.2 | 0.2 | ||||||
Total Assets | $ | 161.8 | $ | 182.2 | ||||
Liabilities | ||||||||
Loss and loss adjustment expense reserves | $ | 34.7 | $ | 43.4 | ||||
Unearned reinsurance premiums | 3.8 | 1.0 | ||||||
Reinsurance balances payable | 3.8 | 10.1 | ||||||
Other liabilities (See Note 8) | 4.0 | 0.6 | ||||||
Total Liabilities | 46.3 | 55.1 | ||||||
Commitments and contingent liabilities (See Note 9) | — | — | ||||||
Shareholders' Equity | ||||||||
Common Shares, at par value - 8,767,165 shares issued and outstanding (2017 - 8,761,229) | 8.8 | 8.8 | ||||||
Additional paid-in capital | 165.6 | 165.6 | ||||||
Retained deficit | (58.9 | ) | (47.3 | ) | ||||
Total Shareholders' Equity | 115.5 | 127.1 | ||||||
Total Liabilities and Shareholders' Equity | $ | 161.8 | $ | 182.2 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In millions of U.S. dollars, except per share amounts) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Revenues | |||||||||||||||
Reinsurance premiums written | $ | 4.2 | $ | 10.3 | $ | 24.1 | $ | 39.4 | |||||||
Change in net unearned reinsurance premiums | 2.3 | 5.3 | (2.8 | ) | (3.3 | ) | |||||||||
Net reinsurance premiums earned | 6.5 | 15.6 | 21.3 | 36.1 | |||||||||||
Net gain from derivative instruments | — | 3.1 | — | 2.5 | |||||||||||
Net investment income | 0.6 | 0.4 | 1.5 | 0.7 | |||||||||||
Total revenues | 7.1 | 19.1 | 22.8 | 39.3 | |||||||||||
Expenses | |||||||||||||||
Loss and loss adjustment expenses | 10.6 | 68.1 | 17.3 | 71.7 | |||||||||||
Reinsurance acquisition costs | 2.0 | 1.6 | 5.9 | 6.8 | |||||||||||
General and administrative expenses | 1.2 | 1.3 | 3.3 | 4.0 | |||||||||||
Total expenses | 13.8 | 71.0 | 26.5 | 82.5 | |||||||||||
Net loss and comprehensive loss | $ | (6.7 | ) | $ | (51.9 | ) | $ | (3.7 | ) | $ | (43.2 | ) | |||
Per share amounts: | |||||||||||||||
Basic and diluted losses per Common Share | $ | (0.76 | ) | $ | (5.93 | ) | $ | (0.42 | ) | $ | (4.94 | ) | |||
Dividends declared per Common Share and RSU | 0.30 | 0.30 | 0.90 | 1.49 |
Total shareholders' equity | Common Shares, at par value | Additional paid-in capital | Retained deficit | |||||||||||||
(In millions of U.S. dollars) | ||||||||||||||||
Balance at January 1, 2018 | $ | 127.1 | $ | 8.8 | $ | 165.6 | $ | (47.3 | ) | |||||||
Net loss | (3.7 | ) | — | — | (3.7 | ) | ||||||||||
Dividends declared - Common Shares and RSUs | (7.9 | ) | — | — | (7.9 | ) | ||||||||||
Balance at September 30, 2018 | $ | 115.5 | $ | 8.8 | $ | 165.6 | $ | (58.9 | ) |
Total shareholders' equity | Common Shares, at par value | Additional paid-in capital | Retained earnings (deficit) | |||||||||||||
(In millions of U.S. dollars) | ||||||||||||||||
Balance at January 1, 2017 | $ | 183.3 | $ | 8.8 | $ | 165.5 | $ | 9.0 | ||||||||
Net loss | (43.2 | ) | — | — | (43.2 | ) | ||||||||||
Dividends declared - Common Shares and RSUs | (13.1 | ) | — | — | (13.1 | ) | ||||||||||
Balance at September 30, 2017 | $ | 127.0 | $ | 8.8 | $ | 165.5 | $ | (47.3 | ) |
Nine Months Ended September 30, | ||||||||
(In millions of U.S. dollars) | 2018 | 2017 | ||||||
Cash flows (used in) provided by operating activities: | ||||||||
Net loss | $ | (3.7 | ) | $ | (43.2 | ) | ||
Net change in: | ||||||||
Loss and loss adjustment expense reserves | (8.7 | ) | 57.0 | |||||
Unearned reinsurance premiums | 2.8 | 3.3 | ||||||
Reinsurance balances payable | (6.3 | ) | 2.6 | |||||
Deferred reinsurance acquisition costs | (0.4 | ) | (0.5 | ) | ||||
Reinsurance premiums receivable | 4.6 | (15.4 | ) | |||||
Funds held by ceding companies | 11.3 | 11.4 | ||||||
Other liabilities | 0.8 | (1.2 | ) | |||||
Other assets | (1.0 | ) | (4.1 | ) | ||||
Net cash and cash equivalents (used in) provided by operating activities | (0.6 | ) | 9.9 | |||||
Net cash and cash equivalents provided by investing activities | — | — | ||||||
Cash flows used in financing activities: | ||||||||
Dividends paid - Common Shares and RSUs | (5.3 | ) | (10.5 | ) | ||||
Net cash and cash equivalents used in financing activities | (5.3 | ) | (10.5 | ) | ||||
Net decrease in cash and cash equivalents during the period | (5.9 | ) | (0.6 | ) | ||||
Cash and cash equivalents - beginning of period | 6.0 | 4.7 | ||||||
Cash and cash equivalents - end of period | $ | 0.1 | $ | 4.1 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Gross and net unpaid loss and LAE reserves- beginning | $ | 29.9 | $ | 11.2 | $ | 43.4 | $ | 11.1 | ||||||||
Losses and LAE incurred: | ||||||||||||||||
Current year losses | 4.2 | 67.8 | 5.6 | 70.4 | ||||||||||||
Prior year losses | 6.4 | 0.3 | 11.7 | 1.3 | ||||||||||||
Total incurred losses and LAE | 10.6 | 68.1 | 17.3 | 71.7 | ||||||||||||
Losses and LAE paid and approved for payment: | ||||||||||||||||
Current year losses | 0.3 | 9.4 | 0.4 | 9.3 | ||||||||||||
Prior year losses | 5.5 | 1.8 | 25.6 | 5.4 | ||||||||||||
Total losses and LAE paid and approved for payment | 5.8 | 11.2 | 26.0 | 14.7 | ||||||||||||
Gross and net unpaid loss and LAE reserves- ending | $ | 34.7 | $ | 68.1 | $ | 34.7 | $ | 68.1 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Worldwide(1) | $ | 4.0 | 96 | % | $ | 9.6 | 93 | % | $ | 17.6 | 73 | % | $ | 27.4 | 69 | % | ||||||||||||
USA: | ||||||||||||||||||||||||||||
Nationwide | — | — | % | — | — | % | 0.8 | 3 | % | 3.4 | 9 | % | ||||||||||||||||
Florida | — | — | % | — | — | % | 4.1 | 17 | % | 6.1 | 15 | % | ||||||||||||||||
Gulf region | 0.2 | 4 | % | 0.4 | 4 | % | 0.5 | 2 | % | 0.8 | 2 | % | ||||||||||||||||
California | — | — | % | — | — | % | — | — | % | 0.3 | 1 | % | ||||||||||||||||
Midwest region and other | — | — | % | — | — | % | 0.5 | 2 | % | 0.3 | 1 | % | ||||||||||||||||
Northeast | — | — | % | 0.3 | 3 | % | — | — | % | 0.3 | 1 | % | ||||||||||||||||
Mid-Atlantic region | — | — | % | — | — | % | — | — | % | 0.3 | 1 | % | ||||||||||||||||
Worldwide, excluding U.S.(2) | — | — | % | — | — | % | 0.6 | 3 | % | 0.5 | 1 | % | ||||||||||||||||
Total premiums written | $ | 4.2 | 100 | % | $ | 10.3 | 100 | % | $ | 24.1 | 100 | % | $ | 39.4 | 100 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Worldwide(1) | $ | 4.9 | 75 | % | $ | 10.0 | 63 | % | $ | 16.8 | 80 | % | $ | 25.9 | 71 | % | ||||||||||||
USA: | ||||||||||||||||||||||||||||
Nationwide | 0.2 | 3 | % | 1.4 | 9 | % | 0.6 | 3 | % | 2.9 | 8 | % | ||||||||||||||||
Florida | 1.0 | 15 | % | 3.1 | 20 | % | 2.6 | 11 | % | 5.4 | 15 | % | ||||||||||||||||
Gulf region | 0.1 | 2 | % | 0.5 | 3 | % | 0.3 | 1 | % | 0.6 | 2 | % | ||||||||||||||||
California | — | — | % | 0.1 | 1 | % | — | — | % | 0.3 | 1 | % | ||||||||||||||||
Midwest region and other | 0.1 | 2 | % | 0.1 | 1 | % | 0.3 | 1 | % | 0.2 | 1 | % | ||||||||||||||||
Northeast | — | — | % | 0.1 | 1 | % | 0.1 | 1 | % | 0.1 | — | % | ||||||||||||||||
Mid-Atlantic region | — | — | % | 0.1 | 1 | % | — | — | % | 0.3 | 1 | % | ||||||||||||||||
Worldwide, excluding U.S.(2) | 0.2 | 3 | % | 0.2 | 1 | % | 0.6 | 3 | % | 0.4 | 1 | % | ||||||||||||||||
Total net premiums earned | $ | 6.5 | 100 | % | $ | 15.6 | 100 | % | $ | 21.3 | 100 | % | $ | 36.1 | 100 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net loss | $ | (6.7 | ) | $ | (51.9 | ) | $ | (3.7 | ) | $ | (43.2 | ) | |||
Less: net earnings allocated to participating securities(1) | — | — | — | — | |||||||||||
Earnings per Common Share numerator | $ | (6.7 | ) | $ | (51.9 | ) | $ | (3.7 | ) | $ | (43.2 | ) | |||
Average Common Shares outstanding (in thousands of shares) | 8,767 | 8,761 | 8,764 | 8,758 | |||||||||||
Basic and diluted losses per Common Share | $ | (0.76 | ) | $ | (5.93 | ) | $ | (0.42 | ) | $ | (4.94 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | ||||||||||||||||
Reinsurance premiums written | $ | 4.2 | $ | 10.3 | $ | 24.1 | $ | 39.4 | ||||||||
Change in net unearned reinsurance premiums | 2.3 | 5.3 | (2.8 | ) | (3.3 | ) | ||||||||||
Net reinsurance premiums earned | 6.5 | 15.6 | 21.3 | 36.1 | ||||||||||||
Net gain from derivative instruments | — | 3.1 | — | 2.5 | ||||||||||||
Net investment income | 0.6 | 0.4 | 1.5 | 0.7 | ||||||||||||
Total revenues | 7.1 | 19.1 | 22.8 | 39.3 | ||||||||||||
Expenses | ||||||||||||||||
Loss and LAE - current year losses | 4.2 | 67.8 | 5.6 | 70.4 | ||||||||||||
Loss and LAE - prior year losses | 6.4 | 0.3 | 11.7 | 1.3 | ||||||||||||
Reinsurance acquisition costs | 2.0 | 1.6 | 5.9 | 6.8 | ||||||||||||
General and administrative expenses | 1.2 | 1.3 | 3.3 | 4.0 | ||||||||||||
Total expenses | 13.8 | 71.0 | 26.5 | 82.5 | ||||||||||||
Net loss and comprehensive loss | $ | (6.7 | ) | $ | (51.9 | ) | $ | (3.7 | ) | $ | (43.2 | ) | ||||
Loss and LAE ratio | 164.3 | % | 437.5 | % | 81.6 | % | 198.8 | % | ||||||||
Reinsurance acquisition cost ratio | 30.2 | % | 10.1 | % | 27.4 | % | 18.9 | % | ||||||||
General and administrative expense ratio | 18.1 | % | 8.1 | % | 15.7 | % | 11.0 | % | ||||||||
GAAP combined ratio | 212.6 | % | 455.7 | % | 124.7 | % | 228.7 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Loss and LAE incurred - current year | $ | 4.2 | $ | 67.8 | $ | 5.6 | $ | 70.4 | ||||||||
Loss and LAE incurred - prior year | 6.4 | 0.3 | 11.7 | 1.3 | ||||||||||||
Total loss and LAE incurred | $ | 10.6 | $ | 68.1 | $ | 17.3 | $ | 71.7 | ||||||||
Loss and LAE ratio | 164.3 | % | 437.5 | % | 81.6 | % | 198.8 | % |
Event Date | Event | Loss and Loss Adjustment Expenses | ||||||
($ in millions) | Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2018 | ||||||
September 2018 | Typhoon Jebi | $ | 2.0 | $ | 2.0 | |||
September 2018 | Hurricane Florence | $ | 1.3 | $ | 1.3 | |||
$ | 3.3 | $ | 3.3 |
Event Date | Event | Loss and Loss Adjustment Expenses | ||||||
($ in millions) | Three Months Ended September 30, 2017 | Nine Months Ended September 30, 2017 | ||||||
August 2017 | Hurricane Harvey | $ | 4.7 | $ | 4.7 | |||
September 2017 | Hurricane Irma | $ | 35.7 | $ | 35.7 | |||
September 2017 | Hurricane Maria | $ | 5.3 | $ | 5.3 | |||
September 2017 | Aggregate & Second Event Losses Triggered By Catastrophe Events | $ | 19.2 | $ | 19.2 | |||
$ | 64.9 | $ | 64.9 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Commissions, brokerage costs, fronting fees and other | $ | 2.0 | $ | 2.8 | $ | 5.8 | $ | 6.8 | ||||||||
Profit commissions | — | (1.2 | ) | 0.1 | — | |||||||||||
Total reinsurance acquisition costs | $ | 2.0 | $ | 1.6 | $ | 5.9 | $ | 6.8 | ||||||||
Reinsurance acquisition cost ratio | 30.2 | % | 10.1 | % | 27.4 | % | 18.9 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Investment Management Agreement fees | $ | 0.5 | $ | 0.6 | $ | 1.4 | $ | 2.0 | ||||||||
Administrative Services Agreement fees | 0.1 | 0.1 | 0.4 | 0.4 | ||||||||||||
Underwriting and Insurance Management Agreement fees | — | — | — | 0.4 | ||||||||||||
Public company expenses | 0.6 | 0.6 | 1.5 | 1.2 | ||||||||||||
Total general and administrative expenses | $ | 1.2 | $ | 1.3 | $ | 3.3 | $ | 4.0 | ||||||||
General and administrative expense ratio | 18.1 | % | 8.1 | % | 15.7 | % | 11.0 | % |
North America: | Europe: | Rest of World: | ||
U.S. - Northeast | Western Central Europe(1) | Australia | ||
U.S. - Mid-Atlantic | Eastern Europe | New Zealand | ||
U.S. - Florida | Southern Europe | Japan | ||
U.S. - Gulf | Northern Europe, Benelux | South America | ||
U.S. - New Madrid | and Scandinavia | Middle East | ||
U.S. - Midwest | U.K. and Ireland | |||
U.S. - California | ||||
U.S. - Hawaii | ||||
Canada - Eastern | ||||
Canada - Western |
Net Impact (Millions) | Return Period(1) | Percentage of September 30, 2018 Shareholders’ Equity | |||||||
U.S. - Florida hurricane | $ | 37 | 1 in 100 year | 32 | % | ||||
U.S. - California earthquake | 22 | 1 in 250 year | 19 | % | |||||
Japan earthquake | 19 | 1 in 250 year | 17 | % | |||||
All other zones | less than 15% |
Nine Months Ended September 30, | ||||||||
($ in millions) | 2018 | 2017 | ||||||
Net cash (used in) provided by operating activities | $ | (0.6 | ) | $ | 9.9 | |||
Net cash used in financing activities | (5.3 | ) | (10.5 | ) | ||||
Net decrease in cash and cash equivalents | (5.9 | ) | (0.6 | ) | ||||
Cash and cash equivalents, beginning of period | 6.0 | 4.7 | ||||||
Cash and cash equivalents, end of period | $ | 0.1 | $ | 4.1 |
Exhibit | |||
Number | Description of Document | ||
11 | |||
31.1 | |||
31.2 | |||
32 | |||
101 | The following materials from the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as at September 30, 2018 (unaudited) and December 31, 2017; (ii) the Unaudited Consolidated Statements of Income and Comprehensive Income; (iii) the Unaudited Consolidated Statements of Changes in Shareholders' Equity; (iv) the Unaudited Consolidated Statements of Cash Flows; and (v) the Notes to the Unaudited Consolidated Financial Statements. (*) | ||
BLUE CAPITAL REINSURANCE HOLDINGS LTD. | ||||
By: | /s/ GREG A. GARSIDE | |||
Name: | Greg A. Garside | |||
Title: | Chief Financial Officer | |||
(Principal Financial Officer) |
Date: | November 2, 2018 | By: | /s/ MICHAEL J MCGUIRE | |||
Name: | Michael J. McGuire | |||||
Title: | Chief Executive Officer | |||||
(Principal Executive Officer) |
Date: | November 2, 2018 | By: | /s/ GREG A. GARSIDE | ||
Name: | Greg A. Garside | ||||
Title: | Chief Financial Officer | ||||
(Principal Financial Officer) |
Date: | November 2, 2018 | BY: | /s/ MICHAEL J MCGUIRE | ||
Name: | Michael J. McGuire | ||||
Title: | Chief Executive Officer | ||||
(Principal Executive Officer) |
Date: | November 2, 2018 | BY: | /s/ GREG A. GARSIDE | ||
Name: | Greg A. Garside | ||||
Title: | Chief Financial Officer | ||||
(Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Oct. 29, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | BLUE CAPITAL REINSURANCE HOLDINGS LTD. | |
Entity Central Index Key | 0001582086 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Common Stock, Shares Outstanding | 8,767,165 |
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets | ||
Cash and cash equivalents | $ 0.1 | $ 6.0 |
Reinsurance premiums receivable | 6.5 | 11.1 |
Deferred reinsurance acquisition costs | 0.5 | 0.1 |
Funds held by ceding companies | 153.5 | 164.8 |
Other assets | 1.2 | 0.2 |
Total Assets | 161.8 | 182.2 |
Liabilities | ||
Loss and loss adjustment expense reserves | 34.7 | 43.4 |
Unearned reinsurance premiums | 3.8 | 1.0 |
Reinsurance balances payable | 3.8 | 10.1 |
Other liabilities (See Note 8) | 4.0 | 0.6 |
Total Liabilities | 46.3 | 55.1 |
Commitments and contingent liabilities (See Note 9) | 0.0 | 0.0 |
Shareholders' Equity | ||
Common Shares, at par value - 8,767,165 shares issued and outstanding (2017 - 8,761,229) | 8.8 | 8.8 |
Additional paid-in capital | 165.6 | 165.6 |
Retained deficit | (58.9) | (47.3) |
Total Shareholders' Equity | 115.5 | 127.1 |
Total Liabilities and Shareholders' Equity | $ 161.8 | $ 182.2 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common shares issued (in shares) | 8,767,165 | 8,761,229 |
Common shares outstanding (in shares) | 8,767,165 | 8,761,229 |
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Revenues | ||||
Reinsurance premiums written | $ 4.2 | $ 10.3 | $ 24.1 | $ 39.4 |
Change in net unearned reinsurance premiums | 2.3 | 5.3 | (2.8) | (3.3) |
Net reinsurance premiums earned | 6.5 | 15.6 | 21.3 | 36.1 |
Net gain from derivative instruments | 0.0 | 3.1 | 0.0 | 2.5 |
Net investment income | 0.6 | 0.4 | 1.5 | 0.7 |
Total revenues | 7.1 | 19.1 | 22.8 | 39.3 |
Expenses | ||||
Loss and loss adjustment expenses | 10.6 | 68.1 | 17.3 | 71.7 |
Reinsurance acquisition costs | 2.0 | 1.6 | 5.9 | 6.8 |
General and administrative expenses | 1.2 | 1.3 | 3.3 | 4.0 |
Total expenses | 13.8 | 71.0 | 26.5 | 82.5 |
Net loss | (6.7) | (51.9) | (3.7) | (43.2) |
Comprehensive loss | $ (6.7) | $ (51.9) | $ (3.7) | $ (43.2) |
Per share amounts: | ||||
Basic and diluted losses per Common Share | $ (0.76) | $ (5.93) | $ (0.42) | $ (4.94) |
Dividends declared per Common Share and RSU | $ 0.3 | $ 0.3 | $ 0.9 | $ 1.49 |
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Millions |
Total |
Common Shares, at par value |
Additional paid-in capital |
Retained (deficit) earnings |
---|---|---|---|---|
Balance at the start of the period at Dec. 31, 2016 | $ 183.3 | $ 8.8 | $ 165.5 | $ 9.0 |
Increase Decrease in Shareholder's Equity | ||||
Net loss | (43.2) | 0.0 | 0.0 | (43.2) |
Dividends declared - Common Shares and RSUs | (13.1) | 0.0 | 0.0 | (13.1) |
Balance at the end of the period at Sep. 30, 2017 | 127.0 | 8.8 | 165.5 | (47.3) |
Balance at the start of the period at Dec. 31, 2017 | 127.1 | 8.8 | 165.6 | (47.3) |
Increase Decrease in Shareholder's Equity | ||||
Net loss | (3.7) | 0.0 | 0.0 | (3.7) |
Dividends declared - Common Shares and RSUs | (7.9) | 0.0 | 0.0 | (7.9) |
Balance at the end of the period at Sep. 30, 2018 | $ 115.5 | $ 8.8 | $ 165.6 | $ (58.9) |
Basis of Presentation and Summary of Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | NOTE 1. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Overview Blue Capital Reinsurance Holdings Ltd. (the "Company" or the "Registrant") is a Bermuda exempted limited liability company that, through its subsidiaries (collectively "Blue Capital"), offers collateralized reinsurance in the property catastrophe market and invests in various insurance-linked securities. The Company was incorporated under the laws of Bermuda on June 24, 2013, and commenced its operations on November 12, 2013. The Company's headquarters and principal executive offices are located at Waterloo House, 100 Pitts Bay Road, Pembroke, Bermuda HM 08, which is also our registered office. The unaudited consolidated financial statements incorporated in this report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the 2017 Form 10-K. In the opinion of management, these interim unaudited consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to fairly present the Company's financial position, results of operations and cash flows. The unaudited consolidated financial statements include the accounts of the Registrant and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These interim unaudited consolidated financial statements may not be indicative of financial results for the full year. The December 31, 2017 consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all of the disclosures required by GAAP. There were no material changes in the Company's significant accounting and reporting policies subsequent to the filing of the 2017 Form 10-K. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues earned and expenses incurred during the period. Actual results could differ materially from those estimates. The significant estimates reflected in these interim unaudited consolidated financial statements include, but are not limited to, loss and LAE reserves and written and earned reinsurance premiums. Estimates and assumptions are periodically reviewed and the effects of revisions are recorded in the consolidated financial statements in the period that they are determined to be necessary. The Company operates as a single business segment through its wholly-owned subsidiaries: (i) Blue Capital Re Ltd. ("Blue Capital Re"), a Bermuda Class 3A insurer which provides collateralized reinsurance; and (ii) Blue Capital Re ILS Ltd. ("Blue Capital Re ILS"), a Bermuda exempted limited liability company which conducts hedging and other investment activities, including entering into industry loss warranties and related instruments, in support of Blue Capital Re's operations. Blue Capital leverages the reinsurance underwriting expertise and infrastructure of Sompo International and its various subsidiaries to conduct its business. Sompo Holdings, Inc. is the ultimate beneficial owner of 33.2% of the Company's outstanding Common Shares through its ownership of Sompo International. Subject to the discretion of the Company’s board of directors (the "Board"), the Company intends to continue to distribute through dividends or repurchases of Common Shares a minimum of 90% of its annual Distributable Income to its holders of Common Shares and RSUs. "Distributable Income," a non-GAAP measure, means GAAP net income plus (minus) non-cash expenses (revenues) recorded in net income for the period. NOTE 1. Basis of Presentation and Summary of Significant Accounting Policies, cont'd Recent Accounting Pronouncements In June 2018, the Financial Accounting Standards Board issued Accounting Standards Update 2018-07, "Improvements to Nonemployee Share-Based Payment Accounting" ("ASU 2018-07"). ASU 2018-07 aligns much of the measurement and classification guidance for share-based payments to nonemployees with that for share-based payments to employees. Among the key changes, equity-classified nonemployee awards are to be measured on the grant date, rather than on the earlier of: (i) the performance commitment date; or (ii) the date at which the nonemployee’s performance is complete. Awards to nonemployees are to be measured by estimating the fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably. Additionally, guidelines related to performance conditions and term of measurement have been aligned. ASU 2018-07 is not expected to impact the Company's Consolidated Financial Statements. |
Loss and LAE Reserve Movements |
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Insurance Loss Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss and LAE Reserve Movements | NOTE 2. Loss and LAE Reserve Movements The following table summarizes Blue Capital Re's loss and LAE reserve movements for the three and nine months ended September 30, 2018 and 2017.
Loss and LAE reserves are comprised of case reserves (which are based on claims that have been reported) and incurred but not reported ("IBNR") reserves (which are based on losses that are believed to have occurred but for which claims have not yet been reported and may include a provision for expected future development on existing case reserves). Case reserves are set on the basis of loss reports received from third parties. IBNR reserves are estimated by management using various actuarial methods as well as a combination of the Manager's own loss experience, historical industry loss experience and management and the Manager's professional judgment. The uncertainties inherent in the reserving process and potential delays by cedants and brokers in the reporting of loss information, together with the potential for unforeseen adverse developments, may result in loss and LAE reserves ultimately being significantly greater or less than the reserve provided at the end of any given reporting period. Loss and LAE reserve estimates are regularly reviewed and updated as new information becomes known. Any resulting adjustments are reflected in income in the period in which they become known. Blue Capital Re's reserving process is highly dependent on loss information received from its cedants and the Manager. NOTE 2. Loss and LAE Reserve Movements, cont'd During the three months ended September 30, 2018, Blue Capital Re's estimated ultimate loss for prior period accident years was increased by $6.4 million due to the emergence of claims exceeding previous estimates of losses and LAE related to 2017 catastrophe events, primarily Hurricane Irma, which made landfall in the U.S. in September 2017. During the three months ended September 30, 2017, we recognized $0.3 million of adverse loss and LAE reserve development for estimated losses incurred during 2016. During the nine months ended September 30, 2018, Blue Capital Re's estimated ultimate loss for prior period accident years was increased by $11.7 million due to the emergence of claims exceeding previous estimates of losses and LAE related to 2017 catastrophe events, primarily Hurricane Irma. During the nine months ended September 30, 2017, Blue Capital Re's estimated ultimate loss for prior period accident years was increased by $1.3 million due to the emergence of claims exceeding previous estimates of losses and LAE related to those prior years. |
Written and Earned Reinsurance Premiums |
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Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Written and Earned Reinsurance Premiums | NOTE 3. Written and Earned Reinsurance Premiums Written premiums represent business bound from ceding companies and net earned premiums represent the portion of net written premiums (gross written premiums less any ceded reinsurance) which is recognized as revenue over the period of time that coverage is provided. Blue Capital seeks to diversify its exposure across geographic zones around the world in order to obtain a prudent spread of risk. The spread of these exposures is also a function of market conditions and opportunities. The following table sets forth a breakdown of Blue Capital's premiums written by geographic area of risks insured during the three and nine month periods ended September 30, 2018 and 2017:
(1) "Worldwide" comprises reinsurance contracts that cover risks in more than one geographic area and do not specifically exclude the U.S. (2) "Worldwide, excluding U.S." comprises reinsurance contracts that cover risks in more than one geographic area but specifically exclude the U.S. NOTE 3. Written and Earned Reinsurance Premiums, cont'd The following table sets forth a breakdown of Blue Capital's net reinsurance premiums earned by geographic area of risks insured during the three and nine month periods ended September 30, 2018 and 2017:
(1) "Worldwide" comprises reinsurance contracts that cover risks in more than one geographic area and do not specifically exclude the U.S. (2) "Worldwide, excluding U.S." comprises reinsurance contracts that cover risks in more than one geographic area but specifically exclude the U.S. |
Derivative Instruments |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | NOTE 4. Derivative Instruments Outward ILW Swaps In March 2017 and June 2017, Blue Capital Re ILS entered into various ILW swaps (the "2017 Outward ILW Swaps") with third-parties in order to purchase protection against natural catastrophes across multiple geographic zones from March 2017 to March 2018. In return for fixed payments totaling $2.0 million, Blue Capital Re ILS was entitled to receive floating payments in the event of certain losses incurred by the insurance industry as a whole. The maximum aggregate potential recovery to Blue Capital Re ILS from the 2017 Outward ILW Swaps was $9.0 million. As a result of catastrophe events occurring during 2017, a recovery was triggered on the 2017 Outward ILW Swaps resulting in the settlement of $4.7 million to Blue Capital Re ILS. The 2017 Outward ILW Swaps are valued on the basis of modeling developed by the Manager, which represents unobservable (Level 3) inputs. At expiry there were no additional industry loss events occurring which would have triggered a recovery under the 2017 Outward ILW Swaps. In April 2016, Blue Capital Re ILS entered into various outward ILW swaps (the “2016 Outward ILW Swaps”) with third-parties in order to purchase protection against natural catastrophes across multiple geographic zones from April 2016 to April 2017. In return for fixed payments totaling $2.0 million, Blue Capital Re ILS was entitled to receive floating payments in the event of certain losses incurred by the insurance industry as a whole. The maximum aggregate potential recovery to Blue Capital Re ILS from the 2016 Outward ILW Swaps was $9.0 million. At expiry there were no industry loss events occurring which would have triggered a recovery under the 2016 Outward ILW Swaps. The 2016 Outward ILW Swaps were valued on the basis of modeling developed by the Manager, which represents unobservable (Level 3) inputs. NOTE 4. Derivative Instruments, cont'd During the three months ended September 30, 2018 and 2017, Blue Capital Re ILS recognized a gain from derivative instruments of nil and $3.1 million, respectively, pursuant to the Outward ILW Swaps. During the nine months ended September 30, 2018 and 2017, Blue Capital Re ILS recognized a gain from derivative instruments of nil and $2.5 million, respectively, pursuant to the Outward ILW Swaps. The Company did not enter into any ILW swap contracts in 2018. |
Basic and Diluted Earnings Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Earnings Per Common Share | NOTE 5. Basic and Diluted Earnings per Common Share The Company applies the two-class method of calculating its earnings per Common Share. In applying the two-class method, any outstanding RSUs are considered to be participating securities. See Note 7. For all periods presented in which RSUs were outstanding, the two-class method was used to determine basic and diluted earnings per Common Share since this method yielded a more dilutive result than the treasury stock method. For purposes of determining basic and diluted earnings per Common Share, a portion of net income is allocated to outstanding RSUs which serves to reduce the Company’s earnings per Common Share numerators. Net losses are not allocated to outstanding RSUs and, therefore, do not impact the Company's per Common Share numerators in any period in which it incurs a net loss. The following table outlines the Company's computation of its basic and diluted losses per Common Share for the three and nine months ended September 30, 2018 and 2017:
(1) During the three and nine month periods ended September 30, 2018 and 2017, there were no earnings allocated to participating securities since the Company incurred net losses. Dividends to Holders of Common Shares and RSUs The Company declared regular cash dividends per Common Share and RSU of $0.30 during each of the three month periods ended September 30, 2018 and 2017. In addition, in February 2017, the Company declared a special dividend with respect to its 2016 Distributable Income of $0.59, per Common Share and RSU. As of September 30, 2018, the Company had $2.6 million of dividends payable to holders of Common Shares and RSUs, which is included within "other liabilities" on its Unaudited Consolidated Balance Sheet at that date. As of December 31, 2017, the Company had nil dividends payable to holders of Common Shares and RSUs. The total amount of dividends paid to holders of Common Shares and RSUs during the nine month periods ended September 30, 2018 and 2017 was $5.3 million and $10.5 million, respectively. There are restrictions on the payment of dividends by the Company, Blue Capital Re and Blue Capital Re ILS. Any future determination to pay dividends to holders of Common Shares and RSUs will be at the discretion of the Board and will be dependent upon many factors, including the Company's results of operations, cash flows, financial position, capital requirements, general business opportunities, and legal, regulatory and contractual restrictions. |
Credit Facility |
9 Months Ended |
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Sep. 30, 2018 | |
Line of Credit Facility [Abstract] | |
Credit Facility | NOTE 6. Credit Facility On May 6, 2016, the Company entered into a credit facility (the "2016 Credit Facility") with Endurance Investment Holdings Ltd. (the "Lender"), a wholly-owned subsidiary of Sompo International. The 2016 Credit Facility provides the Company with an unsecured $20.0 million revolving credit facility for working capital and general corporate purposes. Borrowings under the 2016 Credit Facility bear interest, set at the time of the borrowing, at a rate equal to the applicable LIBOR rate plus 150 basis points. A one-time fee of $20,000 was due to the Lender in connection with establishing the 2016 Credit Facility. The 2016 Credit Facility was amended on July 31, 2018 to extend its expiry to September 30, 2020 under identical terms. The 2016 Credit Facility contains covenants that limit the Company’s ability, among other things, to grant liens on its assets, sell assets, merge or consolidate, or incur debt. If the Company fails to comply with any of these covenants, the Lender could revoke the facility and exercise remedies against the Company. In addition, in the event of a default in the performance of any of the agreements or covenants under certain management agreements with the Manager by the Company, the Lender has the right to terminate the 2016 Credit Facility. As of September 30, 2018, the Company was in compliance with all of its respective covenants associated with the 2016 Credit Facility. As of September 30, 2018 and December 31, 2017, the Company had no outstanding borrowings under the 2016 Credit Facility. On October 8, 2018 the Company borrowed $3.0 million under the 2016 Credit Facility. During each of the nine month periods ended September 30, 2018 and 2017, the Company paid no interest under the 2016 Credit Facility. During the three and nine month periods ended September 30, 2018 and 2017, the Company incurred no facility or structuring fees in connection with the 2016 Credit Facility. |
Share-Based Compensation |
9 Months Ended |
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Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | NOTE 7. Share-Based Compensation The Company's 2013 Long-Term Incentive Plan (the "2013 LTIP"), which was adopted by the Board in September 2013, permits the issuance of up to one percent of the aggregate Common Shares outstanding to participants. Incentive awards that may be granted under the 2013 LTIP include RSUs, restricted Common Shares, incentive share options (on a limited basis), non-qualified share options, share appreciation rights, deferred share units, performance compensation awards, performance units, cash incentive awards and other equity-based and equity-related awards. At the discretion of the Board's Compensation and Nominating Committee, incentive awards, the value of which are based on Common Shares, may be made to the Company's directors, future employees and consultants pursuant to the 2013 LTIP. For all periods presented, the Company's outstanding share-based incentive awards consisted solely of RSUs. RSUs are phantom (as opposed to actual) Common Shares which, depending on the individual award, vest in equal tranches over a one to five-year period subject to the recipient maintaining a continuous relationship with the Company through the applicable vesting date. RSUs are payable in Common Shares upon vesting (the amount of which may be reduced by applicable statutory income tax withholdings at the recipient's option). RSUs do not require the payment of an exercise price and are not entitled to voting rights, but they are entitled to receive payments equivalent to any dividends and distributions declared on the Common Shares underlying the RSUs. During the three and nine months ended September 30, 2018, the Company awarded a total of 10,640 RSUs (2017 - 6,540) to directors of its Board. The RSUs earn ratably each year based on continued service as a director over a three-year vesting period. The grant date fair value of the RSUs was $0.1 million (2017 - $0.1 million). During the nine months ended September 30, 2018, 5,936 RSUs vested (2017 - 5,158). The fair value of the vesting RSUs was $0.1 million (2017 - $0.1 million). NOTE 7. Share-Based Compensation, cont'd During the nine months ended September 30, 2018, no RSUs were forfeited (2017 - 2,352). During each of the three and nine months ended September 30, 2018 and 2017, the Company recognized less than $0.1 million of RSU expense. At September 30, 2018 compensation costs not yet recognized related to unvested RSUs was $0.1 million. As of September 30, 2018 and December 31, 2017, there were 16,892 and 12,188 RSUs outstanding, respectively, under the 2013 LTIP. |
Related Party Transactions |
9 Months Ended |
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Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 8. Related Party Transactions As of September 30, 2018 and December 31, 2017, Sompo International and its wholly owned subsidiary, Endurance Specialty Insurance Ltd. ("Endurance Bermuda"), owned 33.2% of the Company's outstanding Common Shares. See Note 1. Through each of the following roles and relationships, Blue Capital leverages Sompo International's reinsurance underwriting expertise and infrastructure to conduct its business: (i) the Manager, a wholly-owned subsidiary of Sompo International, manages Blue Capital Re's and Blue Capital Re ILS's reinsurance underwriting decisions; (ii) Blue Water Re Ltd. ("Blue Water Re") is a significant source of reinsurance business for Blue Capital Re; (iii) Sompo International's General Counsel serves as a director; (iv) the Manager's Treasurer serves as the Company's CFO; and (v) Sompo International's Chief Financial Officer is the Manager's CEO, the CEO of the Company and serves as the Company's Chairman of the Board. All of the compensation that employees of Sompo International are entitled to as directors of the Company is assigned directly to Sompo International. Services Provided to Blue Capital by Sompo International Sompo International provides services to Blue Capital through the following arrangements: BW Retrocessional Agreement. Through a retrocessional contract dated December 31, 2013 (the "BW Retrocessional Agreement"), between Blue Capital Re and Blue Water Re, Blue Water Re has the option to cede to Blue Capital Re up to 100% of its participation in the ceded reinsurance business it writes, provided that such business is in accordance with the Company’s underwriting guidelines. Pursuant to the BW Retrocessional Agreement, Blue Capital Re may participate in: (i) retrocessional, quota share or other agreements between Blue Water Re and Endurance Bermuda or other third-party reinsurers, which provides it with the opportunity to participate in a diversified portfolio of risks on a proportional basis; and (ii) fronting agreements between Blue Water Re and Endurance Bermuda or other well capitalized third-party rated reinsurers, which allows Blue Capital Re to transact business with counterparties who prefer to enter into contracts with rated reinsurers. For all periods presented, all of the reinsurance business of Blue Capital Re was originated pursuant to the BW Retrocessional Agreement. Investment Management Agreement. The Company has entered into an Investment Management Agreement (the "Investment Management Agreement") with the Manager. Pursuant to the terms of the Investment Management Agreement, the Manager has full discretionary authority, including the delegation of the provision of its services, to manage the Company's assets, subject to the Company’s underwriting guidelines, the terms of the Investment Management Agreement and the oversight of the Board. Underwriting and Insurance Management Agreement. The Company, Blue Capital Re and the Manager have entered into an Underwriting and Insurance Management Agreement (the "Underwriting and Insurance Management Agreement"). Pursuant to the Underwriting and Insurance Management Agreement, the Manager provides underwriting, risk management, claims management, ceded retrocession agreements management and actuarial and reinsurance accounting services to Blue Capital Re. NOTE 8. Related Party Transactions, cont'd The Manager has full discretionary authority to manage the underwriting decisions of Blue Capital Re, subject to the Company's underwriting guidelines, the terms of the Underwriting and Insurance Management Agreement and the oversight of the Company's and Blue Capital Re's boards of directors. Administrative Services Agreement. The Company has entered into an Administrative Services Agreement with the Manager, as amended on November 13, 2014 (the "Administrative Services Agreement"). Pursuant to the terms of the Administrative Services Agreement, the Manager provides Blue Capital with support services, including the services of our CFO, as well as finance and accounting, internal audit, modeling software licenses, office space, information technology and administrative support. Credit Facility Agreement. The Company entered into the 2016 Credit Facility with the Lender on May 6, 2016. The 2016 Credit Facility provides the Company with an unsecured $20.0 million revolving credit facility for working capital and general corporate purposes and expires on September 30, 2020. As of September 30, 2018 and December 31, 2017, the Company had no outstanding borrowings under the 2016 Credit Facility. On October 8, 2018 the Company borrowed $3.0 million under the 2016 Credit Facility. Fees Incurred Pursuant to the Aforementioned Agreements During the three and nine months ended September 30, 2018, the Company incurred general and administrative expenses of: (i) $0.5 million and $1.4 million pursuant to the Investment Management Agreement; (ii) $0.1 million and $0.4 million pursuant to the Administrative Services Agreement; and (iii) nil pursuant to the Underwriting and Insurance Management Agreement. During the three and nine months ended September 30, 2017, the Company incurred general and administrative expenses of: (i) $0.6 million and $2.0 million pursuant to the Investment Management Agreement; (ii) $0.1 million and $0.4 million pursuant to the Administrative Services Agreement; and (iii) nil and $0.4 million pursuant to the Underwriting and Insurance Management Agreement. During each of the three and nine months ended September 30, 2018 and 2017, the Company incurred no fees related to the 2016 Credit Facility. See Note 6. As of September 30, 2018 and December 31, 2017, the Company owed Sompo International $0.8 million and $0.7 million for the services performed pursuant to the aforementioned agreements, respectively, which are a component of "other liabilities" on the Company's Consolidated Balance Sheets at those dates. |
Commitments and Contingent Liabilities |
9 Months Ended |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | NOTE 9. Commitments and Contingent Liabilities Commitments As of September 30, 2018 and December 31, 2017, Blue Capital had no commitments for operating leases or capital expenditures and does not expect any material expenditures of this type during the foreseeable future. The Company and its subsidiaries may not terminate the Investment Management Agreement, the Underwriting and Insurance Management Agreement or the Administrative Services Agreement until November 5, 2018, the fifth anniversary of the completion of its initial public offering, whether or not the Manager's performance results are satisfactory. Upon any termination or non-renewal of either of the Investment Management Agreement or the Underwriting and Insurance Management Agreement (other than for a material breach by, or the insolvency of, the Manager), the Company must pay a one-time termination fee to the Manager equal to 5% of its GAAP shareholders' equity (approximately $5.8 million as of September 30, 2018). NOTE 9. Commitments and Contingent Liabilities, cont'd Blue Capital Re does not operate with a financial strength rating and, instead, fully collateralizes its reinsurance obligations through cash and cash equivalents held in various trust funds established for the benefit of ceding companies. Amounts Held in Trust for the Benefit of Ceding Companies As of September 30, 2018 and December 31, 2017, Blue Capital Re ILS did not have any cash and cash equivalents pledged to trust accounts established for the benefit of third parties. As of September 30, 2018 and December 31, 2017, Blue Capital had transferred $153.5 million and $164.8 million of its cash and cash equivalents, respectively, to a trust account established by Blue Water Re for its benefit pursuant to the BW Retrocessional Agreement. See Note 8. These amounts are presented on the Company's Consolidated Balance Sheets as "funds held by ceding companies." Litigation Blue Capital Re, pursuant to the BW Retrocessional Agreement, has provided for a reinsurance recovery totaling $5.0 million through its participation in an Industry Loss Warranty protection purchased by Blue Water Re. The counterparty to the Industry Loss Warranty contract has disputed the claim for the recovery, which is based upon the size of an insured industry loss calculated based upon third-party data. Blue Water Re is vigorously pursuing recovery in this action. In June 2018, Blue Capital Re ILS, together with two other vehicles managed by the Manager, commenced legal proceedings against certain parties relating to the purchase by Blue Capital Re ILS of a parametric insurance product called an Industry Parametric Protection that provided coverage if the sustained wind speed during a hurricane or tropical storm exceeded a pre-selected trigger. Blue Capital Re ILS alleges, among its other claims, that it was provided false and misleading information in connection with its purchase of the Industry Parametric Protection. Blue Capital Re ILS is vigorously pursuing recovery in this action. In addition to the litigation and arbitration described above, Blue Capital Re, as a reinsurer, is subject to litigation and arbitration proceedings in the normal course of its business. Such proceedings often involve reinsurance contract disputes which are typical for the reinsurance industry. Blue Capital Re's estimates of possible losses incurred in connection with such legal proceedings are provided for as "loss and loss adjustment expenses" on its Unaudited Consolidated Statements of Income and Comprehensive Income and are included within "loss and loss adjustment expense reserves" on its Consolidated Balance Sheets. We determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. We assess our potential liability by analyzing our litigation and regulatory matters using available information. We develop our views on estimated losses in consultation with outside counsel handling our defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should developments in any of these matters cause a change in our determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material adverse effect on our results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs. Concentrations of Credit and Counterparty Risk Blue Capital Re ILS's derivative instruments are subject to counterparty risk. The Company and the Manager routinely monitor this risk. NOTE 9. Commitments and Contingent Liabilities, cont'd Blue Capital Re markets retrocessional and reinsurance policies worldwide through brokers. Credit risk exists to the extent that any of these brokers may be unable to fulfill their contractual obligations to Blue Capital Re. For example, Blue Capital Re is required to pay amounts owed on claims under policies to brokers, and these brokers, in turn, pay these amounts to the ceding companies that have reinsured a portion of their liabilities with Blue Capital Re. In some jurisdictions, if a broker fails to make such a payment, Blue Capital Re might remain liable to the ceding company for the deficiency. In addition, in certain jurisdictions, when the ceding company pays premiums for these policies to brokers, these premiums are considered to have been paid and the ceding insurer is no longer liable to Blue Capital Re for those amounts, whether or not the premiums have actually been received. Blue Capital Re remains liable for losses it incurs to the extent that any third-party reinsurer is unable or unwilling to make timely payments under reinsurance agreements. Blue Capital Re would also be liable in the event that its ceding companies were unable to collect amounts due from underlying third-party reinsurers. |
Fair Value of Financial Instruments |
9 Months Ended |
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Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 10. Fair Value of Financial Instruments GAAP requires disclosure of fair value information for certain financial instruments. For those financial instruments in which quoted market prices are not available, fair values are estimated by discounting future cash flows using current market rates or quoted market prices for similar obligations. These estimates are not necessarily indicative of amounts that could be realized in a current market exchange. Blue Capital carries its assets and liabilities that constitute financial instruments on its Consolidated Balance Sheets at fair value with the exception of its outstanding borrowings under the 2016 Credit Facility. At September 30, 2018 and December 31, 2017, the Company had no outstanding borrowings under the 2016 Credit Facility. See Note 6. |
Subsequent Events (Notes) |
9 Months Ended |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 11. Subsequent Events On October 10, 2018, Hurricane Michael made landfall in Florida. Preliminary information indicates that this storm has the potential to cause significant losses within the insurance industry generally. To date, reported claims have been limited. Accordingly, while losses emanating cannot be accurately estimated at this time, the Company will need to establish appropriate loss reserves related to Hurricane Michael in the fourth quarter of 2018, which may have a negative impact on its results of operations. |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Overview | Basis of Presentation and Overview Blue Capital Reinsurance Holdings Ltd. (the "Company" or the "Registrant") is a Bermuda exempted limited liability company that, through its subsidiaries (collectively "Blue Capital"), offers collateralized reinsurance in the property catastrophe market and invests in various insurance-linked securities. The Company was incorporated under the laws of Bermuda on June 24, 2013, and commenced its operations on November 12, 2013. The Company's headquarters and principal executive offices are located at Waterloo House, 100 Pitts Bay Road, Pembroke, Bermuda HM 08, which is also our registered office. The unaudited consolidated financial statements incorporated in this report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the 2017 Form 10-K. In the opinion of management, these interim unaudited consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to fairly present the Company's financial position, results of operations and cash flows. The unaudited consolidated financial statements include the accounts of the Registrant and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These interim unaudited consolidated financial statements may not be indicative of financial results for the full year. The December 31, 2017 consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all of the disclosures required by GAAP. There were no material changes in the Company's significant accounting and reporting policies subsequent to the filing of the 2017 Form 10-K. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues earned and expenses incurred during the period. Actual results could differ materially from those estimates. The significant estimates reflected in these interim unaudited consolidated financial statements include, but are not limited to, loss and LAE reserves and written and earned reinsurance premiums. Estimates and assumptions are periodically reviewed and the effects of revisions are recorded in the consolidated financial statements in the period that they are determined to be necessary. The Company operates as a single business segment through its wholly-owned subsidiaries: (i) Blue Capital Re Ltd. ("Blue Capital Re"), a Bermuda Class 3A insurer which provides collateralized reinsurance; and (ii) Blue Capital Re ILS Ltd. ("Blue Capital Re ILS"), a Bermuda exempted limited liability company which conducts hedging and other investment activities, including entering into industry loss warranties and related instruments, in support of Blue Capital Re's operations. Blue Capital leverages the reinsurance underwriting expertise and infrastructure of Sompo International and its various subsidiaries to conduct its business. Sompo Holdings, Inc. is the ultimate beneficial owner of 33.2% of the Company's outstanding Common Shares through its ownership of Sompo International. |
Loss and LAE Reserve Movements (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Insurance Loss Reserves [Abstract] | |
Unpaid Policy Claims and Claims Adjustment Expense, Policy | Loss and LAE reserves are comprised of case reserves (which are based on claims that have been reported) and incurred but not reported ("IBNR") reserves (which are based on losses that are believed to have occurred but for which claims have not yet been reported and may include a provision for expected future development on existing case reserves). Case reserves are set on the basis of loss reports received from third parties. IBNR reserves are estimated by management using various actuarial methods as well as a combination of the Manager's own loss experience, historical industry loss experience and management and the Manager's professional judgment. The uncertainties inherent in the reserving process and potential delays by cedants and brokers in the reporting of loss information, together with the potential for unforeseen adverse developments, may result in loss and LAE reserves ultimately being significantly greater or less than the reserve provided at the end of any given reporting period. Loss and LAE reserve estimates are regularly reviewed and updated as new information becomes known. Any resulting adjustments are reflected in income in the period in which they become known. Blue Capital Re's reserving process is highly dependent on loss information received from its cedants and the Manager. |
Written and Earned Reinsurance Premiums Written and Earned Reinsurance Premiums (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Insurance Premiums Revenue Recognition, Policy | Written premiums represent business bound from ceding companies and net earned premiums represent the portion of net written premiums (gross written premiums less any ceded reinsurance) which is recognized as revenue over the period of time that coverage is provided. |
Commitments and Contingent Liabilities (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Amounts Held in Trust for the Benefit of Ceding Companies | Blue Capital Re does not operate with a financial strength rating and, instead, fully collateralizes its reinsurance obligations through cash and cash equivalents held in various trust funds established for the benefit of ceding companies. |
Fair Value of Financial Instruments (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments, Policy | GAAP requires disclosure of fair value information for certain financial instruments. For those financial instruments in which quoted market prices are not available, fair values are estimated by discounting future cash flows using current market rates or quoted market prices for similar obligations. These estimates are not necessarily indicative of amounts that could be realized in a current market exchange. Blue Capital carries its assets and liabilities that constitute financial instruments on its Consolidated Balance Sheets at fair value with the exception of its outstanding borrowings under the 2016 Credit Facility. |
Loss and LAE Reserve Movements (Tables) |
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Insurance Loss Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Loss and LAE Reserve Movements | The following table summarizes Blue Capital Re's loss and LAE reserve movements for the three and nine months ended September 30, 2018 and 2017.
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Written and Earned Reinsurance Premiums (Tables) |
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Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of net written and earned reinsurance premiums by geographic area | The following table sets forth a breakdown of Blue Capital's premiums written by geographic area of risks insured during the three and nine month periods ended September 30, 2018 and 2017:
(1) "Worldwide" comprises reinsurance contracts that cover risks in more than one geographic area and do not specifically exclude the U.S. (2) "Worldwide, excluding U.S." comprises reinsurance contracts that cover risks in more than one geographic area but specifically exclude the U.S. NOTE 3. Written and Earned Reinsurance Premiums, cont'd The following table sets forth a breakdown of Blue Capital's net reinsurance premiums earned by geographic area of risks insured during the three and nine month periods ended September 30, 2018 and 2017:
(1) "Worldwide" comprises reinsurance contracts that cover risks in more than one geographic area and do not specifically exclude the U.S. (2) "Worldwide, excluding U.S." comprises reinsurance contracts that cover risks in more than one geographic area but specifically exclude the U.S. |
Basic and Diluted Earnings Per Common Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of basic and diluted earnings per Common Share | The following table outlines the Company's computation of its basic and diluted losses per Common Share for the three and nine months ended September 30, 2018 and 2017:
(1) During the three and nine month periods ended September 30, 2018 and 2017, there were no earnings allocated to participating securities since the Company incurred net losses. |
Basis of Presentation and Summary of Significant Accounting Policies (Details) |
9 Months Ended | |
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Sep. 30, 2018 |
Dec. 31, 2017 |
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Sompo International [Member] | ||
Related party transactions | ||
Percentage of outstanding common stock | 33.20% | 33.20% |
Minimum | ||
Related party transactions | ||
Percentage of Distributable Income Distributed | 90.00% |
Written and Earned Reinsurance Premiums (Earned Premium) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||||
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Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Net premiums earned | $ 6.5 | $ 15.6 | $ 21.3 | $ 36.1 | |||||
Blue Capital (subsidiaries of reporting entity) | |||||||||
Net premiums earned | $ 6.5 | $ 15.6 | $ 21.3 | $ 36.1 | |||||
Percentage of net earned reinsurance premiums by geographic area of risks insured | 100.00% | 100.00% | 100.00% | 100.00% | |||||
Blue Capital (subsidiaries of reporting entity) | Worldwide | |||||||||
Net premiums earned | [1] | $ 4.9 | $ 10.0 | $ 16.8 | $ 25.9 | ||||
Percentage of net earned reinsurance premiums by geographic area of risks insured | [1] | 75.00% | 63.00% | 80.00% | 71.00% | ||||
Blue Capital (subsidiaries of reporting entity) | USA: Nationwide | |||||||||
Net premiums earned | $ 0.2 | $ 1.4 | $ 0.6 | $ 2.9 | |||||
Percentage of net earned reinsurance premiums by geographic area of risks insured | 3.00% | 9.00% | 3.00% | 8.00% | |||||
Blue Capital (subsidiaries of reporting entity) | USA: Florida | |||||||||
Net premiums earned | $ 1.0 | $ 3.1 | $ 2.6 | $ 5.4 | |||||
Percentage of net earned reinsurance premiums by geographic area of risks insured | 15.00% | 20.00% | 11.00% | 15.00% | |||||
Blue Capital (subsidiaries of reporting entity) | USA: Gulf Region | |||||||||
Net premiums earned | $ 0.1 | $ 0.5 | $ 0.3 | $ 0.6 | |||||
Percentage of net earned reinsurance premiums by geographic area of risks insured | 2.00% | 3.00% | 1.00% | 2.00% | |||||
Blue Capital (subsidiaries of reporting entity) | USA: California | |||||||||
Net premiums earned | $ 0.0 | $ 0.1 | $ 0.0 | $ 0.3 | |||||
Percentage of net earned reinsurance premiums by geographic area of risks insured | 0.00% | 1.00% | 0.00% | 1.00% | |||||
Blue Capital (subsidiaries of reporting entity) | USA: Midwest Region and Other | |||||||||
Net premiums earned | $ 0.1 | $ 0.1 | $ 0.3 | $ 0.2 | |||||
Percentage of net earned reinsurance premiums by geographic area of risks insured | 2.00% | 1.00% | 1.00% | 1.00% | |||||
Blue Capital (subsidiaries of reporting entity) | Northeast | |||||||||
Net premiums earned | $ 0.0 | $ 0.1 | $ 0.1 | $ 0.1 | |||||
Percentage of net earned reinsurance premiums by geographic area of risks insured | 0.00% | 1.00% | 1.00% | 0.00% | |||||
Blue Capital (subsidiaries of reporting entity) | USA: Mid-Atlantic Region | |||||||||
Net premiums earned | $ 0.0 | $ 0.1 | $ 0.0 | $ 0.3 | |||||
Percentage of net earned reinsurance premiums by geographic area of risks insured | 0.00% | 1.00% | 0.00% | 1.00% | |||||
Blue Capital (subsidiaries of reporting entity) | Worldwide, excluding U.S. | |||||||||
Net premiums earned | [2] | $ 0.2 | $ 0.2 | $ 0.6 | $ 0.4 | ||||
Percentage of net earned reinsurance premiums by geographic area of risks insured | [2] | 3.00% | 1.00% | 3.00% | 1.00% | ||||
|
Derivative Instruments (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|
Apr. 30, 2016 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Derivative Instruments | ||||||
Gain (Loss) from derivative instruments | $ 0.0 | $ 3.1 | $ 0.0 | $ 2.5 | ||
Blue Capital Re Ils Ltd [Member] | OutwardsILWSwaps [Member] | ||||||
Derivative Instruments | ||||||
Gain (Loss) from derivative instruments | $ 0.0 | 3.1 | $ 0.0 | 2.5 | ||
Blue Capital Re Ils Ltd [Member] | Outwards ILW Swaps 2016 [Member] | ||||||
Derivative Instruments | ||||||
Fixed-rate payment paid on swap | $ 2.0 | |||||
Maximum aggregate recovery under swap | $ 9.0 | |||||
Blue Capital Re Ils Ltd [Member] | Outwards ILW Swaps 2017 [Member] | ||||||
Derivative Instruments | ||||||
Fixed-rate payment paid on swap | $ 2.0 | |||||
Maximum aggregate recovery under swap | $ 9.0 | |||||
Derivative Swap Recovery | $ 4.7 | $ 4.7 |
Basic and Diluted Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Feb. 28, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|||
Basic and Diluted Earnings Per Common Share | ||||||||
Net loss | $ (6.7) | $ (51.9) | $ (3.7) | $ (43.2) | ||||
Less: net earnings allocated to participating securities(1) | [1] | 0.0 | 0.0 | 0.0 | 0.0 | |||
Earnings per Common Share numerator | $ (6.7) | $ (51.9) | $ (3.7) | $ (43.2) | ||||
Average Common Shares outstanding (in thousands of shares) | 8,767 | 8,761 | 8,764 | 8,758 | ||||
Basic and diluted losses per Common Share | $ (0.76) | $ (5.93) | $ (0.42) | $ (4.94) | ||||
Dividends declared per Common Share and RSU | $ 0.3 | $ 0.3 | $ 0.9 | $ 1.49 | ||||
Dividends Payable | $ 2.6 | $ 2.6 | $ 0.0 | |||||
Payments of Ordinary Dividends, Common Stock | 5.3 | $ 10.5 | ||||||
Maximum | ||||||||
Basic and Diluted Earnings Per Common Share | ||||||||
Less: net earnings allocated to participating securities(1) | $ 0.1 | $ 0.1 | $ 0.1 | |||||
Regular Dividends Declared | ||||||||
Basic and Diluted Earnings Per Common Share | ||||||||
Dividends declared per Common Share and RSU | $ 0.3 | $ 0.3 | $ 0.9 | $ 0.9 | ||||
Special Dividends Declared | ||||||||
Basic and Diluted Earnings Per Common Share | ||||||||
Dividends declared per Common Share and RSU | $ 0.59 | |||||||
|
Credit Facility (Details) - 2016 Credit Facility - USD ($) |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Oct. 08, 2018 |
May 06, 2016 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Credit Facility | |||||||
Outstanding borrowings | $ 0 | $ 0 | $ 0 | ||||
Interest Paid, Including Capitalized Interest, Operating and Investing Activities | 0 | $ 0 | |||||
Facility and structuring fees related to Credit Agreement | $ 0 | $ 0 | $ 0 | $ 0 | |||
Endurance Investments Holdings Ltd. | |||||||
Credit Facility | |||||||
Maximum borrowing capacity | $ 20,000,000 | ||||||
Facility and structuring fees related to Credit Agreement | $ 20,000 | ||||||
London Interbank Offered Rate (LIBOR) | Endurance Investments Holdings Ltd. | |||||||
Credit Facility | |||||||
Basis spread (as a percent) | 1.50% | ||||||
Subsequent Event | |||||||
Credit Facility | |||||||
Proceeds from Long-term Lines of Credit | $ 3,000,000 |
Share-Based Compensation (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
RSUs | |||||
Share-Based Compensation | |||||
Expenses recognized | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | |
Compensation cost not yet recognized | $ 0.1 | $ 0.1 | |||
2013 LTIP | |||||
Share-Based Compensation | |||||
Percentage of Aggregate Common Shares Outstanding Authorized for Issuance | 1.00% | ||||
2013 LTIP | RSUs | |||||
Share-Based Compensation | |||||
Incentive awards outstanding (in shares) | 16,892 | 16,892 | 12,188 | ||
2013 LTIP | Minimum | RSUs | |||||
Share-Based Compensation | |||||
Vesting period | 1 year | ||||
2013 LTIP | Maximum | RSUs | |||||
Share-Based Compensation | |||||
Vesting period | 5 years | ||||
Director [Member] | RSUs | |||||
Share-Based Compensation | |||||
Vesting period | 3 years | ||||
Number of shares awarded | 10,640 | 6,540 | 10,640 | 6,540 | |
FV of awards granted | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | |
Number of shares forfeited | 0 | 2,352 | |||
Number of shares vested | 5,936 | 5,158 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | $ 0.1 | $ 0.1 |
Related Party Transactions (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Oct. 08, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
May 06, 2016 |
|
Investment Management Agreement | |||||||
Related party transactions | |||||||
General and administrative expenses | $ 0.5 | $ 0.6 | $ 1.4 | $ 2.0 | |||
Underwriting and Insurance Management Agreement | |||||||
Related party transactions | |||||||
General and administrative expenses | 0.0 | 0.0 | 0.4 | ||||
Administrative Services Agreement | |||||||
Related party transactions | |||||||
General and administrative expenses | $ 0.1 | 0.1 | $ 0.4 | 0.4 | |||
Sompo International [Member] | |||||||
Related party transactions | |||||||
Percentage of outstanding common stock | 33.20% | 33.20% | 33.20% | ||||
Amount due to for services performed | $ 0.8 | $ 0.8 | $ 0.7 | ||||
Blue Capital Re Ltd [Member] | Blue Water Re | BW Retrocessional Agreement | Maximum | |||||||
Related party transactions | |||||||
Percentage of participation in the ceded reinsurance business of the related party for which option to cede exists | 100.00% | ||||||
2016 Credit Facility | |||||||
Related party transactions | |||||||
Outstanding borrowings | 0.0 | $ 0.0 | $ 0.0 | ||||
2016 Credit Facility | Endurance Investments Holdings Ltd. | |||||||
Related party transactions | |||||||
Maximum borrowing capacity | $ 20.0 | ||||||
Interest and financing expenses incurred with related party | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 | |||
Subsequent Event | 2016 Credit Facility | |||||||
Related party transactions | |||||||
Proceeds from Long-term Lines of Credit | $ 3.0 |
Commitments and Contingent Liabilities (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Commitments and contingent liabilities | ||
Funds held by ceding companies | $ 153.5 | $ 164.8 |
Investment Management Agreement | ||
Commitments and contingent liabilities | ||
Period after IPO during which contract may not be terminated | 5 years | |
Underwriting and Insurance Management Agreement | ||
Commitments and contingent liabilities | ||
Period after IPO during which contract may not be terminated | 5 years | |
Administrative Services Agreement | ||
Commitments and contingent liabilities | ||
Period after IPO during which contract may not be terminated | 5 years | |
Investment Management Agreement Or Underwriting and Insurance Management Agreement | ||
Commitments and contingent liabilities | ||
One-time termination fee as a percent of shareholders' equity | 5.00% | |
Amount of one-time termination fee payable | $ 5.8 | |
Blue Capital Re Ltd [Member] | ||
Commitments and contingent liabilities | ||
Loss Contingency, Estimate of Possible Loss | 5.0 | |
Cash and Cash Equivalents [Member] | Blue Capital Re Ils Ltd [Member] | ||
Commitments and contingent liabilities | ||
Cash and cash equivalents pledged as collateral | 0.0 | |
Blue Water Re | Cash and Cash Equivalents [Member] | Blue Capital (subsidiaries of reporting entity) | ||
Commitments and contingent liabilities | ||
Funds held by ceding companies | $ 153.5 | $ 164.8 |
Fair Value of Financial Instruments (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
2016 Credit Facility | ||
Fair value disclosures | ||
Outstanding borrowings | $ 0.0 | $ 0.0 |
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