Related Party Transactions and Major Customers

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions and Major Customers

RELATED PARTY TRANSACTIONS AND MAJOR CUSTOMERS

Tower Hill

The Company has equity interests in the Tower Hill Companies as described in “Note 5. Investments.” The Company has entered into reinsurance arrangements with certain subsidiaries and affiliates of Tower Hill and has also entered into reinsurance arrangements with respect to business produced by the Tower Hill

Companies. As part of the acquisition of TMR, the Company acquired certain assumed and ceded reinsurance arrangements with certain subsidiaries and affiliates of Tower Hill and other assumed and ceded reinsurance arrangements with respect to business produced by the Tower Hill Companies. The impact of these reinsurance arrangements is included in the Company’s results of operation since the date of acquisition of TMR, March 22, 2019, through December 31, 2019, and on the Company’s consolidated balance sheet at December 31, 2019.

During 2019, the Company recorded $39.8 million (2018 - $45.5 million, 2017 - $39.1 million) of gross premiums written assumed from the Tower Hill Companies and its subsidiaries and affiliates. Gross premiums earned totaled $40.7 million (2018 - $43.8 million, 2017 - $35.7 million) and expenses incurred were $6.1 million (2018 - $7.1 million, 2017 - $5.1 million) for 2019. The Company had a net related outstanding receivable balance of $14.8 million as of December 31, 2019 (2018 - receivable of $19.3 million). During 2019, the Company assumed net claims and claim expenses of $37.7 million (2018 - assumed net claims and claim expenses of $111.2 million, 2017 - assumed net claims and claim expenses of $94.4 million) and, as of December 31, 2019, had a net reserve for claims and claim expenses of $71.8 million (2018 - $98.8 million).

During 2019, the Company recorded $0.5 million of ceded premium written to the Tower Hill Companies and its subsidiaries and affiliates. Ceded premiums earned totaled $0.4 million and expenses ceded were $Nil for 2019. The Company had a net related outstanding payable balance of $Nil as of December 31, 2019. During 2019, the Company recovered net claims and claim expenses of $41.8 million and, as of December 31, 2019, had a reinsurance recoverable balance of $21.8 million.

In addition, the Company received distributions of $13.4 million from the Tower Hill Companies during 2019 (2018 - $12.1 million, 2017 - $8.3 million).

Top Layer Re

During 2019, the Company received distributions from Top Layer Re of $20.0 million (2018 - $12.5 million, 2017 - $20.0 million), and recorded a management fee of $2.3 million (2018 - $2.7 million, 2017 - $2.7 million). The management fee reimburses the Company for services it provides to Top Layer Re.

Broker Concentration

During 2019, the Company received 79.6% of its gross premiums written (2018 - 75.2%, 2017 - 76.4%) from three brokers. Subsidiaries and affiliates of AON, Marsh, and Willis Towers Watson accounted for 41.7%, 27.1% and 10.8%, respectively, of gross premiums written in 2019 (2018 - 40.7%, 24.6% and 9.9%, respectively, 2017 - 42.8%, 23.8% and 9.8%, respectively).