Third-Party Reinsurance

9 Months Ended

Sep. 30, 2023

P&C Insurance and Reinsurance

In the normal course of business, Ark may seek to limit losses that may arise from catastrophes or other events by reinsuring certain risks with third-party reinsurers. Ark remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts.

The following table summarizes the effects of reinsurance on written and earned premiums and on losses and LAE for the Ark/WM Outrigger segment for the three and nine months ended September 30, 2023 and 2022:


Millions	Three Months Ended September 30,					Nine Months Ended September 30,
	2023			2022		2023			2022
Written premiums:
Direct	$	189.4		$	118.6	$	727.1		$	563.8
Assumed	61.8			96.9		939.6			688.7
Gross written premiums	251.2			215.5		1,666.7			1,252.5
Ceded	(20.2)		(1)	(22.9)		(360.3)		(1)	(246.0)
Net written premiums	$	231.0		$	192.6	$	1,306.4		$	1,006.5
Earned premiums:
Direct	$	273.1		$	193.5	$	624.1		$	492.9
Assumed	370.0			261.4		684.6			473.7
Gross earned premiums	643.1			454.9		1,308.7			966.6
Ceded	(144.2)		(2)	(108.8)		(261.4)		(2)	(208.8)
Net earned premiums	$	498.9		$	346.1	$	1,047.3		$	757.8
Losses and LAE:
Gross	$	269.3		$	391.4	$	627.5		$	712.9
Ceded	(3.5)		(3)	(177.7)		(46.4)		(3)	(256.7)
Net losses and LAE	$	265.8		$	213.7	$	581.1		$	456.2

(1) The ceded written premiums exclude $6.0 and $108.4 ceded by Ark to WM Outrigger Re for the three and nine months ended September 30, 2023, which eliminate in White Mountains’s consolidated financial statements.

(2) The ceded earned premiums exclude $60.6 and $75.4 ceded by Ark to WM Outrigger Re for the three and nine months ended September 30, 2023, which eliminate in White Mountains’s consolidated financial statements.

(3) The ceded loss and LAE exclude $7.3 and $7.9 ceded by Ark to WM Outrigger Re for the three and nine months ended September 30, 2023, which eliminate in White Mountains’s consolidated financial statements.

The following table presents the Ark/WM Outrigger segment’s reinsurance recoverables as of September 30, 2023 and December 31, 2022:


Millions	September 30, 2023			December 31, 2022
Reinsurance recoverables on unpaid losses	$	352.4	(1)	$	505.0	(3)
Reinsurance recoverables on paid losses	26.3			31.1
Ceded unearned premiums	159.7		(2)	59.2
Reinsurance recoverables	$	538.4		$	595.3

(1) The reinsurance recoverables on unpaid losses exclude $7.9 ceded by Ark to WM Outrigger Re as of September 30, 2023, which eliminate in White Mountains’s consolidated financial statements.

(2) The ceded unearned premiums exclude $33.0 ceded by Ark to WM Outrigger Re as of September 30, 2023, which eliminate in White Mountains’s consolidated financial statements.

(3) The reinsurance recoverables on unpaid losses include $145.4 attributable to TPC Providers as of December 31, 2022, which are collateralized.

As reinsurance contracts do not relieve Ark of its obligation to its policyholders, Ark seeks to reduce the credit risk associated with reinsurance balances by avoiding over-reliance on specific reinsurers through the application of concentration limits and thresholds. Ark is selective with its reinsurers, placing reinsurance with only those reinsurers having a strong financial condition. Ark monitors the financial strength of its reinsurers on an ongoing basis.

The following table presents the Ark/WM Outrigger segment’s gross and net reinsurance recoverables by the reinsurer’s A.M. Best Company, Inc (“A.M. Best”) ratings as of September 30, 2023:


$ in Millions	As of September 30, 2023
A.M. Best Rating(1)	Gross			Collateral			Net		% of Total
A+ or better	$	203.7		$	—		$	203.7	69.6	%
A- to A	78.8			—			78.8		26.9
B++ or lower and not rated	96.2		(2)	85.9		(2)	10.3		3.5
Total	$	378.7		$	85.9		$	292.8	100.0	%

(1) A.M. Best ratings as detailed above are: “A+ or better” (Superior) “A- to A” (Excellent), “B++” (Good).

(2) Excludes $7.9 ceded by Ark to WM Outrigger Re as of September 30, 2023, which eliminates in White Mountains’s consolidated financial statements.

Reinsurance Contracts Accounted for as Deposits

Ark has an aggregate excess of loss contract with SiriusPoint Ltd. (“SiriusPoint”), which is accounted for using the deposit method and recorded within other assets. Ark earns an annual crediting rate of 3.0%, which is recorded within other revenue. As of September 30, 2023 and December 31, 2022, the carrying value of Ark’s deposit in SiriusPoint, including accrued interest, was $20.3 million and $20.4 million.

Municipal Bond Guarantee Insurance

See Note 10 — “Municipal Bond Guarantee Insurance” for third-party reinsurance balances and reinsurance contracts accounted for as deposits related to White Mountains’s financial guarantee business.