Reinsurance

12 Months Ended

Dec. 31, 2022

In the normal course of business, the Company’s insurance subsidiaries cede a portion of their premium through pro rata and excess of loss reinsurance agreements on a treaty or facultative basis to third parties. The Company’s reinsurance subsidiaries participate in “common account” retrocessional arrangements for certain pro rata treaties. Such arrangements reduce the effect of individual or aggregate losses to all companies participating on such treaties, including the reinsurers, such as the Company’s reinsurance subsidiaries, and the ceding company. In addition, the Company’s reinsurance subsidiaries may purchase retrocessional coverage as part of their risk management program. The Company’s mortgage subsidiaries cede a portion of their premium through quota share arrangements and enter into various aggregate excess of loss mortgage reinsurance agreements with various special purpose reinsurance companies. Reinsurance recoverables are recorded as assets, predicated on the reinsurers’ ability to meet their obligations under the reinsurance agreements. If the reinsurers are unable to satisfy their obligations under the agreements, the Company’s insurance or reinsurance subsidiaries would be liable for such defaulted amounts.

The effects of reinsurance on the Company’s written and earned premiums and losses and loss adjustment expenses with unaffiliated reinsurers were as follows:


	Year Ended December 31,
	2022		2021		2020
Premiums Written
Direct	$	8,540,787	$	7,706,832	$	6,553,910
Assumed	6,785,660		5,045,655		3,534,158
Ceded	(4,249,258)		(3,734,150)		(2,650,352)
Net	$	11,077,189	$	9,018,337	$	7,437,716

Premiums Earned
Direct	$	8,057,635	$	7,149,794	$	6,361,451
Assumed	5,767,738		4,333,873		3,213,873
Ceded	(4,147,296)		(3,401,369)		(2,583,389)
Net	$	9,678,077	$	8,082,298	$	6,991,935

Losses and Loss Adjustment Expenses
Direct	$	3,990,768	$	4,266,758	$	4,392,392
Assumed	3,559,133		2,826,820		2,204,323
Ceded	(2,522,384)		(2,508,775)		(1,907,116)
Net	$	5,027,517	$	4,584,803	$	4,689,599

Bellemeade Re

The Company has entered into various aggregate excess of loss mortgage reinsurance agreements with various special purpose reinsurance companies domiciled in Bermuda (the “Bellemeade Agreements”). For the respective coverage periods, the Company will retain the first layer of the respective aggregate losses and the special purpose reinsurance companies will provide second layer coverage up to the outstanding coverage amount. The Company will then retain losses in excess of the outstanding coverage limit. The aggregate excess of loss reinsurance coverage decreases over a ten-year period as the underlying covered mortgages amortize. See note 12, “Variable Interest Entity and Noncontrolling Interests.”

The following table summarizes the respective coverages and retentions at December 31, 2022:


			December 31, 2022
Bellemeade Entities (Issue Date)	Initial Coverage at Issuance		Current Coverage		Remaining Retention, Net
2017-1 Ltd. (1)	$	368,114	$	36,679	$	142,461
2018-1 Ltd. (2)	374,460		89,698		143,592
2018-3 Ltd. (3)	506,110		199,237		152,861
2019-1 Ltd. (4)	341,790		107,880		118,908
2019-2 Ltd. (5)	621,022		325,462		191,550
2019-3 Ltd. (6)	700,920		222,977		208,931
2019-4 Ltd. (7)	577,267		266,124		142,564
2020-2 Ltd. (8)	449,167		105,110		237,709
2020-3 Ltd. (9)	451,816		250,971		161,544
2020-4 Ltd. (10)	337,013		101,729		138,131
2021-1 Ltd. (11)	643,577		503,267		153,525
2021-2 Ltd. (12)	616,017		535,461		138,524
2021-3 Ltd. (13)	639,391		616,959		132,492
2022-1 Ltd. (14)	316,760		316,760		143,577
2022-2 Ltd. (15)	327,165		327,165		217,436
Total	$	7,270,589	$	4,005,479	$	2,423,805

(1) Issued in October 2017, covering in-force policies issued between January 1, 2017 and June 30, 2017.

(2) Issued in April 2018, covering in-force policies issued between July 1, 2017 and December 31, 2017.

(3) Issued in October 2018, covering in-force policies issued between January 1, 2018 and June 30, 2018.

(4) Issued in March 2019, covering in-force policies primarily issued between 2005 to 2008 under United Guaranty Residential Insurance Company (“UGRIC”); as well as policies issued through 2015 under both UGRIC and Arch Mortgage Insurance Company.

(5) Issued in April 2019, covering in-force policies issued between July 1, 2018 and December 31, 2018.

(6) Issued in July 2019, covering in-force policies issued in 2016.

(7) Issued in October 2019, covering in-force policies issued between January 1, 2019 and June 30, 2019.

(8) Issued in September 2020, covering in-force policies issued between January 1, 2020 and May 31, 2020. $423 million was directly funded by Bellemeade 2020-2 Ltd. with an additional $26 million of capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(9) Issued in November 2020, covering in-force policies issued between June 1, 2020 and August 31, 2020. $418 million was directly funded by Bellemeade 2020-3 Ltd. with an additional $34 million of capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(10) Issued in December 2020, covering in-force policies issued between July 1, 2019 and December 31, 2019. $321 million was directly funded by Bellemeade 2020-4 Ltd. with an additional $16 million of capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(11) Issued in March 2021, covering in-force policies issued between September 1, 2020 and November 30, 2020. $580 million was directly funded by Bellemeade Re 2021-1 Ltd. with an additional $64 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(12) Issued in June 2021, covering in-force policies issued between December 1, 2020 and March 31, 2021. $523 million was directly funded by Bellemeade Re 2021-2 Ltd. via insurance-linked notes, with an additional $93 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(13) Issued in September 2021, covering in-force policies issued between April 1, 2021 and June 30, 2021. $508 million was directly funded by Bellemeade Re 2021-3 Ltd. via insurance-linked notes, with an additional $131 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(14) Issued in January 2022, covering in-force policies issued between July 1, 2021 and November 30, 2021. $284 million was directly funded by Bellemeade Re 2022-1 Ltd. via insurance-linked notes, with an additional $33 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.

(15) Issued in September 2022, covering in-force policies issued between November 1, 2021 and June 30, 2022. $201 million was directly funded by Bellemeade Re 2022-2 Ltd. via insurance-linked notes, with an additional $126 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.