Reinsurance Ceded (Tables)

3 Months Ended

Mar. 31, 2020

Reinsurance Recoverables, Recorded After Allowance for Credit Losses

Amounts recoverable from reinsurers are recognized in a manner consistent with the loss and loss adjustment expense (“LAE”) liabilities associated with the reinsurance placement and presented on the balance sheet as reinsurance recoverables, and are recorded after an allowance for credit losses. Reinsurance recoverable balances as of March 31, 2020 and December 31, 2019 are presented in the table below:

	As of March 31,			As of December 31,
	2020			2019
	($ in millions)
Reinsurance recoverables on paid losses	$	75.9		$	98.1
Ceded outstanding loss and LAE		1,559.5			1,583.9
Reinsurance recoverables, before allowance for credit losses		1,635.4			1,682.0
Allowance for credit losses		(6.8	)		—
Total	$	1,628.6		$	1,682.0

Information Regarding Concentration of Reinsurance Recoverables and Ratings Profile of Our Reinsurers

The following table presents information regarding concentration of Alleghany’s reinsurance recoverables and the ratings profile of our reinsurers as of March 31, 2020:

Reinsurer⁽¹⁾	Rating⁽²⁾	Amount			Percentage
	($ in millions)
Syndicates at Lloyd's of London	A (Excellent)	$	132.9			8.1	%
Kane SAC Ltd, Rondout Segregated Account⁽³⁾	not rated		121.8			7.4	%
PartnerRe Ltd	A (Excellent)		97.4			6.0	%
Fairfax Financial Holdings Ltd	A (Superior)		90.4			5.5	%
Swiss Reinsurance Company	A+ (Superior)		88.1			5.4	%
Third Point Reinsurance Group	A- (Excellent)		87.0			5.3	%
Kane SAC Ltd, Bowery Segregated Account⁽³⁾	not rated		77.4			4.7	%
RenaissanceRe Holdings Ltd	A+ (Superior)		75.4			4.6	%
W.R. Berkley Corporation	A+ (Superior)		67.7			4.1	%
Liberty Mutual	A (Excellent)		55.9			3.4	%
All other reinsurers			741.4			45.5	%
Total reinsurance recoverables, before allowance for credit losses⁽⁴⁾		$	1,635.4			100.0	%
Allowance for credit losses			(6.8	)
Total		$	1,628.6
Secured reinsurance recoverables⁽³⁾		$	659.6			40.3	%

(1)	Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company.

(2)	Represents the A.M. Best Company, Inc. financial strength rating for the applicable reinsurance subsidiary or subsidiaries from which the reinsurance recoverable is due.

(3)	Represents reinsurance recoverables secured by funds held, trust agreements or letters of credit.

(4)

Approximately 66 percent of our reinsurance recoverables balance as of March 31, 2020 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher, with a majority of the other reinsurance recoverables being secured by funds held, trust agreements or letters of credit.

Allowance for Credit Losses on Reinsurance Recoverables

The following table presents a rollforward of Alleghany’s allowance for credit losses on reinsurance recoverables for the three months ended March 31, 2020:

	For the Three Months Ended March 31, 2020
Allowance for Credit Losses	($ in millions)
Balance as of January 1, 2020	$	—
Balance as of January 1, 2020 - cumulative effect of an accounting change⁽¹⁾		3.3
Provision for credit losses⁽²⁾		3.5
Charge-offs		—
Recoveries		—
Balance as of March 31, 2020	$	6.8

(1)	See Note 1(c) of this Form 10-Q for further information regarding Alleghany’s adoption of new credit loss accounting guidance.

(2)	Primarily reflects an increase in the estimate of expected credit losses based on current conditions and reasonable and supportable forecasts as of March 31, 2020 arising from the Pandemic, as defined in Note 9(a) of this Form 10-Q.