Transactions with Related Parties

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

Transactions with Related Parties

In 2017, the Company acquired approximately 25% of Premia Holdings Ltd. Premia Holdings Ltd. is the parent of Premia Reinsurance Ltd., a multi-line Bermuda reinsurance company (together with Premia Holdings Ltd., “Premia”). Premia’s strategy is to reinsure or acquire companies or reserve portfolios in the non-life property and casualty insurance and reinsurance run-off market. Arch Re Bermuda and certain Arch co-investors invested $100 million and acquired approximately 25% of Premia as well as warrants to purchase additional common equity. Arch has appointed two directors to serve on the seven person board of directors of Premia. Arch Re Bermuda is providing a quota share

reinsurance treaty on certain business written by Premia, and subsidiaries of Arch Capital are providing certain administrative and support services to Premia, in each case pursuant to separate multi-year agreements. During 2023, the Company entered into certain reinsurance transactions with Premia which generated net premiums written and earned of $80 million and $81 million, respectively, compared to $121 million and $120 million of net premiums written and earned, respectively in 2022. At December 31, 2023, the Company recorded a funds held asset from Premia of $158 million, compared to $119 million at December 31, 2022.

In the 2021 first quarter, as part of the Company’s acquisition of Barbican, the Company entered into an agreement with Premia Managing Agency Limited for the reinsurance to close of Syndicate 1955’s 2018 underwriting year of account into Premia Syndicate 1884’s 2021 underwriting year of account. The reinsurance to close covers legacy business underwritten by Syndicate 1955 on the underwriting 2018 and prior years of account and under the agreement, approximately $380 million of net liabilities was transferred to Syndicate 1884, with an effective date of January 1, 2021. The Company had no reinsurance recoverable on unpaid and paid losses or funds held liability at December 31, 2023 and December 31, 2022.

In July 2021, following consummation of the Merger Agreement and the related Greysbridge equity financing, pursuant to which Somers became wholly owned by Greysbridge, and Greysbridge is owned 40% by the Company, 30% by certain funds managed by Kelso and 30% by certain funds managed by Warburg. During 2023 and 2022 periods, the Company entered into certain reinsurance transactions with Somers which reduced the Company’s net premiums written by $574 million and $519 million, respectively. In addition, Somers paid certain acquisition costs and administrative fees to the Company. At December 31, 2023, the Company recorded a reinsurance recoverable on unpaid and paid losses from Somers of $1.3 billion and a reinsurance balance payable to Somers of $475 million. At December 31, 2022, reinsurance recoverable on unpaid and paid losses from Somers was $1.2 billion, with a reinsurance balance payable to Somers of $414 million. See note 12, “Variable Interest Entity and Noncontrolling Interests.”

The Company has a put/call option that was entered into in connection with the Greysbridge equity financing, whereby beginning January 1, 2024 the Company will have a call right (but not the obligation) and Warburg and Kelso will each have a put right (but not the obligation) to buy/sell one third of their initial shares annually at the tangible book value per share of Greysbridge for the most recently ended fiscal quarter.

As of December 31, 2023, the Company owns $35 million in aggregate principal amount of Somers 6.5% senior notes, due July 2, 2029