Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 01, 2021 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-16209 | |
Entity Registrant Name | ARCH CAPITAL GROUP LTD. | |
Entity Incorporation, State or Country Code | D0 | |
Entity Tax Identification Number | 98-0374481 | |
Entity Address, Address Line One | Waterloo House, Ground Floor | |
Entity Address, Address Line Two | 100 Pitts Bay Road, | |
Entity Address, City or Town | Pembroke | |
Entity Address, Postal Zip Code | HM 08, | |
Entity Address, Country | BM | |
City Area Code | (441) | |
Local Phone Number | 278-9250 | |
Entity Listings [Line Items] | ||
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 386,133,743 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity Central Index Key | 0000947484 | |
Amendment Flag | false | |
Common shares | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Common shares, $0.0011 par value per share | |
Trading Symbol | ACGL | |
Security Exchange Name | NASDAQ | |
Depositary Series F Preferred Stock | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Depositary shares, each representing a 1/1000th interest in a 5.45% Series F preferred share | |
Trading Symbol | ACGLO | |
Security Exchange Name | NASDAQ | |
Depositary Series G Preferred Stock | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Depositary shares, each representing a 1/1000th interest in a 4.55% Series G preferred share | |
Trading Symbol | ACGLN | |
Security Exchange Name | NASDAQ |
Unaudited Consolidated Balance
Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Investments: | ||
Fixed maturities available for sale, at fair value (amortized cost: $16,629,621 and $18,143,305; net of allowance for credit losses: $2,111 and $2,397 ) | $ 16,768,363 | $ 18,717,825 |
Short-term investments available for sale, at fair value (amortized cost: $3,070,120 and $1,924,292; net of allowance for credit losses: $0 and $0) | 3,069,965 | 1,924,922 |
Collateral received under securities lending, at fair value (amortized cost: $— and $301,089) | 0 | 301,096 |
Equity securities, at fair value | 1,790,640 | 1,444,830 |
Other investments (portion measured at fair value: $2,043,970 and $3,824,796) | 2,043,970 | 4,324,796 |
Investments accounted for using the equity method | 2,741,293 | 2,047,889 |
Total investments | 26,414,231 | 28,761,358 |
Cash | 1,137,721 | 906,448 |
Accrued investment income | 75,832 | 103,299 |
Securities pledged under securities lending, at fair value (amortized cost: $— and $294,493) | 0 | 294,912 |
Investment in operating affiliates | 1,111,825 | 129,291 |
Premiums receivable (net of allowance for credit losses: $38,715 and $37,781) | 2,807,720 | 2,064,586 |
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses (net of allowance for credit losses: $12,831 and $11,636) | 5,358,852 | 4,500,802 |
Contractholder receivables (net of allowance for credit losses: $3,484 and $8,638) | 1,824,990 | 1,986,924 |
Ceded unearned premiums | 1,824,910 | 1,234,075 |
Deferred acquisition costs | 893,665 | 790,708 |
Receivable for securities sold | 84,019 | 92,743 |
Goodwill and intangible assets | 963,322 | 692,863 |
Other assets | 2,286,649 | 1,724,288 |
Total assets | 44,783,736 | 43,282,297 |
Liabilities | ||
Reserve for losses and loss adjustment expenses | 17,331,047 | 16,513,929 |
Unearned premiums | 6,165,114 | 4,838,965 |
Reinsurance balances payable | 1,403,929 | 683,263 |
Contractholder payables | 1,828,474 | 1,995,562 |
Collateral held for insured obligations | 254,259 | 215,581 |
Senior notes | 2,724,149 | 2,861,113 |
Revolving credit agreement borrowings | 0 | 155,687 |
Securities lending payable | 0 | 301,089 |
Payable for securities purchased | 357,531 | 218,779 |
Other liabilities | 1,321,470 | 1,510,888 |
Total liabilities | 31,385,973 | 29,294,856 |
Commitments and Contingencies | ||
Redeemable noncontrolling interests | 10,237 | 58,548 |
Shareholders' Equity | ||
Non-cumulative preferred shares | 830,000 | 780,000 |
Common shares ($0.0011 par, shares issued: 582,908,723 and 579,000,841) | 648 | 643 |
Additional paid-in capital | 2,061,906 | 1,977,794 |
Retained earnings | 13,842,787 | 12,362,463 |
Accumulated other comprehensive income (loss), net of deferred income tax | 49,184 | 488,895 |
Common shares held in treasury, at cost (shares: 195,650,971 and 172,280,199) | (3,396,999) | (2,503,909) |
Total shareholders' equity available to Arch | 13,387,526 | 13,105,886 |
Non-redeemable noncontrolling interests | 0 | 823,007 |
Total shareholders' equity | 13,387,526 | 13,928,893 |
Total liabilities, noncontrolling interests and shareholders' equity | $ 44,783,736 | $ 43,282,297 |
Unaudited Consolidated Balanc_2
Unaudited Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | |
Fixed maturities available for sale, at amortized cost | $ 16,629,621 | $ 18,143,305 | |
Short-term investments available for sale, at amortized cost | 3,070,120 | 1,924,292 | |
Allowance for credit losses on investments | 2,111 | 2,397 | |
Collateral received under securities lending, at amortized cost | 0 | 301,089 | |
Other investments measured at fair value | 2,043,970 | 3,824,796 | |
Securities pledged under securities lending, at amortized cost | 0 | 294,493 | |
Allowance for credit losses on premiums receivable | 38,715 | 37,781 | |
Allowance for credit losses on reinsurance recoverable | 12,831 | 11,636 | |
Allowance for credit losses on contractholder receivable | $ 3,484 | $ 8,638 | |
Common shares, par value per share | $ 0.0011 | $ 0.0011 | |
Common shares issued (shares) | 582,908,723 | 579,000,841 | |
Common shares held in treasury (shares) | 195,650,971 | 172,280,199 | |
Fixed maturities | |||
Allowance for credit losses on investments | $ 2,111 | $ 2,397 | |
Short-term investments | |||
Short-term investments available for sale, at amortized cost | 3,070,120 | 1,924,292 | |
Allowance for credit losses on investments | [1] | $ 0 | $ 0 |
[1] | Effective January 1, 2020, the Company adopted ASU 2016-13 and as a result any credit impairment losses on the Company’s available-for-sale investments are recorded as an allowance, subject to reversal. |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenues | ||||
Net premiums earned | $ 1,929,337 | $ 1,771,092 | $ 5,998,668 | $ 5,180,890 |
Net investment income | 88,195 | 128,512 | 298,664 | 405,150 |
Net realized gains (losses) | (25,040) | 280,499 | 320,328 | 470,127 |
Other underwriting income | 7,274 | 5,413 | 18,913 | 18,932 |
Equity in net income (loss) of investment funds accounted for using the equity method | 105,398 | 126,735 | 299,270 | 57,407 |
Other income (loss) | (3,960) | 0 | 1,151 | 65 |
Total revenues | 2,101,204 | 2,312,251 | 6,936,994 | 6,132,571 |
Expenses | ||||
Losses and loss adjustment expenses | 1,226,019 | 1,216,273 | 3,588,950 | 3,562,214 |
Acquisition expenses | 306,015 | 247,942 | 945,639 | 750,014 |
Other operating expenses | 230,832 | 215,686 | 736,808 | 659,479 |
Corporate expenses | 19,672 | 17,937 | 61,007 | 56,653 |
Amortization of intangible assets | 20,135 | 16,715 | 49,823 | 49,835 |
Interest expense | 33,176 | 41,343 | 107,222 | 105,037 |
Net foreign exchange (gains) losses | (36,078) | 44,885 | (38,366) | 11,425 |
Total expenses | 1,799,771 | 1,800,781 | 5,451,083 | 5,194,657 |
Income (loss) before income taxes and income (loss) from operating affiliates | 301,433 | 511,470 | 1,485,911 | 937,914 |
Income tax expense | (4,137) | (23,707) | (94,176) | (77,779) |
Income (loss) from operating affiliates | 124,119 | 919 | 224,052 | 6,262 |
Net income (loss) | 421,415 | 488,682 | 1,615,787 | 866,397 |
Net (income) loss attributable to noncontrolling interests | (1,473) | (69,643) | (82,203) | (4,420) |
Net income (loss) available to Arch | 419,942 | 419,039 | 1,533,584 | 861,977 |
Preferred dividends | (16,090) | (10,403) | (38,159) | (31,209) |
Loss on redemption of preferred shares | (15,101) | 0 | (15,101) | 0 |
Net income (loss) available to Arch common shareholders | $ 388,751 | $ 408,636 | $ 1,480,324 | $ 830,768 |
Net income per common share and common share equivalent | ||||
Basic (per share) | $ 1 | $ 1.01 | $ 3.74 | $ 2.06 |
Diluted (per share) | $ 0.98 | $ 1 | $ 3.66 | $ 2.02 |
Weighted average common shares and common share equivalents outstanding | ||||
Basic (shares) | 389,274,220 | 402,850,485 | 395,899,591 | 403,081,266 |
Diluted (shares) | 397,903,347 | 409,194,657 | 404,260,485 | 410,314,897 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Comprehensive Income | ||||
Net income (loss) | $ 421,415 | $ 488,682 | $ 1,615,787 | $ 866,397 |
Unrealized appreciation (decline) in value of available-for-sale investments: | ||||
Unrealized holding gains (losses) arising during period | (95,923) | 110,782 | (279,102) | 546,291 |
Reclassification of net realized (gains) losses, included in net income (loss) | (62,654) | (79,803) | (120,504) | (368,423) |
Foreign currency translation adjustments | (31,710) | 16,709 | (54,089) | (5,729) |
Comprehensive income (loss) | 231,128 | 536,370 | 1,162,092 | 1,038,536 |
Net (income) loss attributable to noncontrolling interests | (1,473) | (69,643) | (82,203) | (4,420) |
Other comprehensive (income) loss attributable to noncontrolling interests | 9,423 | (10,820) | 13,983 | 2,127 |
Comprehensive income (loss) available to Arch | $ 239,078 | $ 455,907 | $ 1,093,872 | $ 1,036,243 |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Total | Non-cumulative preferred shares | Common shares | Additional paid-in capital | Retained earnings | Retained earningsCumulative effect of an accounting change | Retained earningsBalance at beginning of period, as adjusted | Accumulated other comprehensive income (loss), net of deferred income tax | Unrealized appreciation (decline) in value of available-for-sale securities, net of deferred income tax | Foreign currency translation adjustments, net of deferred income tax | Common shares held in treasury, at cost |
Balance at beginning of period at Dec. 31, 2019 | $ 780,000 | $ 638 | $ 1,889,683 | $ 11,021,006 | $ (22,452) | $ 10,998,554 | $ 212,091 | $ 258,486 | $ (46,395) | $ (2,406,047) | |
Preferred shares issued | 0 | ||||||||||
Stock Redeemed or Called During Period, Value | 0 | ||||||||||
Common shares issued, net | 4 | ||||||||||
Amortization of share-based compensation | 55,872 | ||||||||||
Issue costs on preferred shares | 0 | ||||||||||
Other changes | 5,227 | ||||||||||
Net income (loss) | $ 866,397 | 866,397 | |||||||||
Net (income) loss attributable to noncontrolling interests | (4,420) | (4,420) | |||||||||
Preferred share dividends | (31,209) | (31,209) | |||||||||
Reversal of issue costs on preferred shares redeemed/ Loss on repurchase of preferred shares | 0 | 0 | 0 | ||||||||
Unrealized holding gains (losses) during period, net of reclassification adjustment | 177,868 | ||||||||||
Unrealized holding gains (losses) during period attributable to noncontrolling interests | 1,933 | ||||||||||
Foreign currency translation adjustments | (5,729) | (5,729) | |||||||||
Foreign currency translation adjustments attributable to noncontrolling interests | 194 | ||||||||||
Shares repurchased for treasury | (89,059) | ||||||||||
Balance at end of period at Sep. 30, 2020 | 12,451,997 | 780,000 | 642 | 1,950,782 | 11,829,322 | 386,357 | 438,287 | (51,930) | (2,495,106) | ||
Non-redeemable noncontrolling interests, end of period at Sep. 30, 2020 | 757,920 | ||||||||||
Total shareholders’ equity at Sep. 30, 2020 | 13,209,917 | ||||||||||
Balance at beginning of period at Jun. 30, 2020 | 780,000 | 642 | 1,935,514 | 11,420,686 | 0 | 11,420,686 | 349,488 | 418,487 | (68,999) | (2,494,505) | |
Preferred shares issued | 0 | ||||||||||
Stock Redeemed or Called During Period, Value | 0 | ||||||||||
Common shares issued, net | 0 | ||||||||||
Amortization of share-based compensation | 14,662 | ||||||||||
Issue costs on preferred shares | 0 | ||||||||||
Other changes | 606 | ||||||||||
Net income (loss) | 488,682 | 488,682 | |||||||||
Net (income) loss attributable to noncontrolling interests | (69,643) | (69,643) | |||||||||
Preferred share dividends | (10,403) | (10,403) | |||||||||
Reversal of issue costs on preferred shares redeemed/ Loss on repurchase of preferred shares | 0 | 0 | 0 | ||||||||
Unrealized holding gains (losses) during period, net of reclassification adjustment | 30,979 | ||||||||||
Unrealized holding gains (losses) during period attributable to noncontrolling interests | (11,179) | ||||||||||
Foreign currency translation adjustments | 16,709 | 16,709 | |||||||||
Foreign currency translation adjustments attributable to noncontrolling interests | 360 | ||||||||||
Shares repurchased for treasury | (601) | ||||||||||
Balance at end of period at Sep. 30, 2020 | 12,451,997 | 780,000 | 642 | 1,950,782 | 11,829,322 | 386,357 | 438,287 | (51,930) | (2,495,106) | ||
Non-redeemable noncontrolling interests, end of period at Sep. 30, 2020 | 757,920 | ||||||||||
Total shareholders’ equity at Sep. 30, 2020 | 13,209,917 | ||||||||||
Balance at beginning of period at Dec. 31, 2020 | 13,105,886 | 780,000 | 643 | 1,977,794 | 12,362,463 | 0 | 12,362,463 | 488,895 | 501,295 | (12,400) | (2,503,909) |
Preferred shares issued | 500,000 | ||||||||||
Stock Redeemed or Called During Period, Value | (450,000) | ||||||||||
Common shares issued, net | 5 | ||||||||||
Amortization of share-based compensation | 71,279 | ||||||||||
Issue costs on preferred shares | (14,179) | ||||||||||
Other changes | 11,911 | ||||||||||
Net income (loss) | 1,615,787 | 1,615,787 | |||||||||
Net (income) loss attributable to noncontrolling interests | (82,203) | (82,203) | |||||||||
Preferred share dividends | (38,159) | (38,159) | |||||||||
Reversal of issue costs on preferred shares redeemed/ Loss on repurchase of preferred shares | (15,101) | 15,101 | (15,101) | ||||||||
Unrealized holding gains (losses) during period, net of reclassification adjustment | (399,606) | ||||||||||
Unrealized holding gains (losses) during period attributable to noncontrolling interests | 15,188 | ||||||||||
Foreign currency translation adjustments | (54,089) | (54,089) | |||||||||
Foreign currency translation adjustments attributable to noncontrolling interests | (1,204) | ||||||||||
Shares repurchased for treasury | (893,090) | ||||||||||
Balance at end of period at Sep. 30, 2021 | 13,387,526 | 830,000 | 648 | 2,061,906 | 13,842,787 | 49,184 | 116,877 | (67,693) | (3,396,999) | ||
Non-redeemable noncontrolling interests, end of period at Sep. 30, 2021 | 0 | ||||||||||
Total shareholders’ equity at Sep. 30, 2021 | $ 13,387,526 | ||||||||||
Accounting Standards Update | Accounting Standards Update 2016-13 [Member] | ||||||||||
Balance at beginning of period at Jun. 30, 2021 | 1,280,000 | 647 | 2,028,919 | 13,454,036 | $ 0 | $ 13,454,036 | 230,048 | 264,702 | (34,654) | (3,007,578) | |
Preferred shares issued | 0 | ||||||||||
Stock Redeemed or Called During Period, Value | (450,000) | ||||||||||
Common shares issued, net | 1 | ||||||||||
Amortization of share-based compensation | 14,216 | ||||||||||
Issue costs on preferred shares | 0 | ||||||||||
Other changes | 3,670 | ||||||||||
Net income (loss) | $ 421,415 | 421,415 | |||||||||
Net (income) loss attributable to noncontrolling interests | (1,473) | (1,473) | |||||||||
Preferred share dividends | (16,090) | (16,090) | |||||||||
Reversal of issue costs on preferred shares redeemed/ Loss on repurchase of preferred shares | (15,101) | 15,101 | (15,101) | ||||||||
Unrealized holding gains (losses) during period, net of reclassification adjustment | (158,577) | ||||||||||
Unrealized holding gains (losses) during period attributable to noncontrolling interests | 10,752 | ||||||||||
Foreign currency translation adjustments | (31,710) | (31,710) | |||||||||
Foreign currency translation adjustments attributable to noncontrolling interests | (1,329) | ||||||||||
Shares repurchased for treasury | (389,421) | ||||||||||
Balance at end of period at Sep. 30, 2021 | 13,387,526 | $ 830,000 | $ 648 | $ 2,061,906 | $ 13,842,787 | $ 49,184 | $ 116,877 | $ (67,693) | $ (3,396,999) | ||
Non-redeemable noncontrolling interests, end of period at Sep. 30, 2021 | 0 | ||||||||||
Total shareholders’ equity at Sep. 30, 2021 | $ 13,387,526 |
Unaudited Consolidated Statem_4
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Operating Activities | ||
Net income (loss) | $ 1,615,787 | $ 866,397 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Net realized (gains) losses | (367,313) | (477,683) |
Equity in net (income) or loss of investment funds accounted for using the equity method and other income or loss | (372,650) | 30,306 |
Amortization of intangible assets | 49,823 | 49,835 |
Share-based compensation | 72,303 | 56,433 |
Changes in: | ||
Reserve for losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable | 1,548,211 | 1,668,069 |
Unearned premiums, net of ceded unearned premiums | 985,242 | 498,811 |
Premiums receivable | (847,098) | (461,766) |
Deferred acquisition costs | (247,966) | (107,238) |
Reinsurance balances payable | 618,571 | 205,620 |
Other items, net | (427,359) | 2,666 |
Net cash provided by (used for) operating activities | 2,627,551 | 2,331,450 |
Investing Activities | ||
Purchases of fixed maturity investments | (29,870,023) | (34,050,883) |
Purchases of equity securities | (978,951) | (1,355,848) |
Purchases of other investments | (1,350,056) | (841,886) |
Proceeds from sales of fixed maturity investments | 30,067,792 | 32,544,867 |
Proceeds from sales of equity securities | 695,633 | 731,793 |
Proceeds from sales, redemptions and maturities of other investments | 1,487,919 | 791,807 |
Proceeds from redemptions and maturities of fixed maturity investments | 1,234,412 | 645,292 |
Net settlements of derivative instruments | (67,830) | 163,290 |
Net (purchases) sales of short-term investments | (1,172,798) | (1,159,351) |
Change in cash collateral related to securities lending | 0 | 81,210 |
Purchase of operating affiliate | (753,916) | 0 |
Impact of the deconsolidation of the variable interest entity | (349,202) | 0 |
Purchases of fixed assets | (34,407) | (26,717) |
Other | (361,857) | (131,992) |
Net cash provided by (used for) investing activities | (1,453,284) | (2,608,418) |
Financing Activities | ||
Proceeds from issuance of preferred shares, net | 485,821 | 0 |
Redemption of preferred shares | (450,000) | 0 |
Purchases of common shares under share repurchase program | (872,197) | (75,486) |
Proceeds from common shares issued, net | 281 | (9,656) |
Proceeds from borrowings | 0 | 1,018,793 |
Repayments of borrowings | 0 | (304,000) |
Change in cash collateral related to securities lending | 0 | (81,210) |
Third party investment in non-redeemable noncontrolling interests | 15,971 | (2,867) |
Dividends paid to redeemable noncontrolling interests | (1,907) | (3,541) |
Other | (21,752) | 55,266 |
Preferred dividends paid | (38,096) | (31,209) |
Net cash provided by (used for) financing activities | (881,879) | 566,090 |
Effects of exchange rate changes on foreign currency cash and restricted cash | (34,023) | (5,847) |
Increase (decrease) in cash and restricted cash | 258,365 | 283,275 |
Cash and restricted cash, beginning of year | 1,290,544 | 903,698 |
Cash and restricted cash, end of period | $ 1,548,909 | $ 1,186,973 |
Basis of Presentation and Recen
Basis of Presentation and Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Recent Accounting Pronouncements | Basis of Presentation and Recent Accounting Pronouncements General Arch Capital Group Ltd. (“Arch Capital”) is a public listed Bermuda exempted company which provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly-owned subsidiaries. As used herein, the “Company” means Arch Capital and its subsidiaries. The Company’s consolidated financial statements included the results of Watford Holdings Ltd. and its wholly owned subsidiaries (“Watford”) through June 30, 2021. Effective July 1, 2021, Watford is wholly owned by Greysbridge Holdings Ltd., (“Greysbridge”) and Greysbridge is owned 40% by the Company, 30% by certain investment funds managed by Kelso & Company (“Kelso”) and 30% by certain investment funds managed by Warburg Pincus LLC (“Warburg”). Based on the governing documents of Greysbridge, the Company concluded that, while it retains significant influence over Watford, Watford no longer constitutes a variable interest entity. Accordingly, effective July 1, 2021, Arch no longer consolidates the results of Watford in its consolidated financial statements and footnotes. See note 12 . Basis of Presentation The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”), including the Company’s audited consolidated financial statements and related notes. The Company has reclassified the presentation of certain prior year information to conform to the current presentation, including the correct presentation of ‘income (loss) from operating affiliates’ on its consolidated statements of income for all periods presented to reclass such item from ‘other income (loss)’. The Company also changed its presentation of ‘investment in operating affiliates’ on its consolidated balance sheet for all periods presented to reclass such item from ‘other assets’. Such reclassifications had no effect on the Company’s net income, comprehensive income, shareholders’ equity or cash flows. Management views the impact of the prior period misclassification as not material to the financial statements on a quantitative and qualitative basis. See note 8 . Tabular amounts are in U.S. Dollars in thousands, except share amounts, unless otherwise noted. Recent Accounting Pronouncements Recently Issued Accounting Standards Adopted The Company adopted ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This ASU eliminates certain exceptions for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods. The ASU also clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements. For information regarding additional accounting standards that the Company has not yet adopted, see note 3(r), “Significant Accounting Policies—Recent Accounting Pronouncements,” of the notes to consolidated financial statements in the Company’s 2020 Form 10-K. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Acquired | Acquisitions Westpac Lenders Mortgage Insurance Limited (“WLMI”) On August 31, 2021, the Company completed the acquisition of WLMI, an Australian Prudential Regulation Authority authorized captive lenders mortgage insurance (“LMI”) provider to the Westpac Banking Corporation (“Westpac”). As part of the acquisition, WLMI will retain its existing risk in force and remain Westpac’s exclusive provider of LMI on new mortgage originations for a period of 10 years. Upon completion of this transaction, the Company renamed WLMI to Arch Lenders Mortgage Indemnity Limited (“ALMI” ). ALMI will become the Company’s primary provider of LMI to the Australian market. Somerset Bridge Group Limited, Southern Rock Holdings Limited and affiliates (“Somerset”) On August 6, 2021, the Company completed the acquisition of Somerset. The acquisition includes Somerset’s motor insurance managing general agent, distribution capabilities through direct and aggregator channels, affiliated insurer and fully integrated claims operation. |
Share Transactions
Share Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Share Transactions | Share Transactions Share Repurchases The board of directors of Arch Capital has authorized the investment in Arch Capital’s common shares through a share repurchase program. Since the inception of the share repurchase program, Arch Capital has repurchased 412.0 million common shares for an aggregate purchase price of $4.92 billion. For the nine months ended September 30, 2021, Arch Capital repurchased 22.8 million shares under the share repurchase program with an aggregate purchase price of $872.2 million. Arch Capital repurchased 2.6 million shares under the share repurchase program with an aggregate purchase price of $75.5 million during the nine months ended September 30, 2020. At September 30, 2021, $44.3 million of share repurchases were available under the program, which may be effected from time to time in open market or privately negotiated transactions. The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions and corporate and regulatory considerations. See note 17 . Series G Preferred Shares In June 2021, Arch Capital completed a $500 million underwritten public offering of 20.0 million depositary shares (the “Depositary Shares”), each of which represents a 1/1,000th interest in a share of its 4.550% Non-Cumulative Preferred Shares, Series G, $0.01 par value and $25,000 liquidation preference per share (equivalent to $25 liquidation preference per Depositary Share) (the “Series G Preferred Shares”). Each Depositary Share, evidenced by a depositary receipt, entitles the holder, through the depositary, to a proportional fractional interest in all rights and preferences of the Series G Preferred Shares represented thereby (including any dividend, liquidation, redemption and voting rights). Holders of Series G Preferred Shares will be entitled to receive dividend payments only when, as and if declared by the Company’s board of directors or a duly authorized committee of the board. Any such dividends will be payable from, and including, the date of original issue on a non-cumulative basis, quarterly in arrears on the last day of March, June, September and December of each year, at an annual rate of 4.550%. Dividends on the Series G Preferred Shares are not cumulative. The Company will be restricted from paying dividends on or repurchasing its common shares unless certain dividend payments are made on the Series G Preferred Shares. The Company may not declare or pay a dividend on the Series G Preferred Shares under certain circumstances, including if the Company is or, after giving effect to such payment, would be in breach of applicable individual or group solvency and liquidity requirements or applicable individual or group enhanced capital requirements ("ECR"). The Series G Preferred Shares may not be redeemed at any time if the ECR would be breached immediately before or after giving effect to such redemption, unless the Company replaces the capital represented by preference shares to be redeemed with capital having equal or better capital treatment. Except in specified circumstances relating to certain tax or corporate events, the Series G Preferred Shares are not redeemable prior to June 11, 2026. On and after that date, the Series G Preferred Shares will be redeemable at the Company’s option, in whole or in part, at a redemption price of $25,000 per share of the Series G Preferred Shares (equivalent to $25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends to, but excluding, the redemption date. The Depositary Shares will be redeemed if and to the extent the related Series G Preferred Shares are redeemed by the Company. Neither the Depositary Shares nor the Series G Preferred Shares have a stated maturity, nor will they be subject to any sinking fund or mandatory redemption. The Series G Preferred Shares are not convertible into any other securities. The Series G Preferred Shares do not have voting rights, except under limited circumstances. The net proceeds from the Series G Preferred Shares offering of approximately $485.8 million were primarily used to redeem the Company’s issued and outstanding 5.25% Series E Non-Cumulative Preferred Shares in September 2021. The preferred shares were redeemed at a redemption price equal to $25 per share, plus all declared and unpaid dividends to (but excluding) the redemption date. In accordance with GAAP, following the redemption, original issuance costs related to such shares have been removed from additional paid-in capital and recorded as a “loss on redemption of preferred shares.” Such adjustment had no impact on total shareholders’ equity or cash flows. |
Earnings Per Common Share
Earnings Per Common Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per common share: Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Numerator: Net income (loss) $ 421,415 $ 488,682 $ 1,615,787 $ 866,397 Amounts attributable to noncontrolling interests (1,473) (69,643) (82,203) (4,420) Net income (loss) available to Arch 419,942 419,039 1,533,584 861,977 Preferred dividends (16,090) (10,403) (38,159) (31,209) Loss on redemption of preferred shares (15,101) — (15,101) — Net income (loss) available to Arch common shareholders $ 388,751 $ 408,636 $ 1,480,324 $ 830,768 Denominator: Weighted average common shares and common share equivalents outstanding — basic 389,274,220 402,850,485 395,899,591 403,081,266 Effect of dilutive common share equivalents: Nonvested restricted shares 2,131,915 1,580,791 1,877,930 1,690,447 Stock options (1) 6,497,212 4,763,381 6,482,964 5,543,184 Weighted average common shares and common share equivalents outstanding — diluted 397,903,347 409,194,657 404,260,485 410,314,897 Earnings per common share: Basic $ 1.00 $ 1.01 $ 3.74 $ 2.06 Diluted $ 0.98 $ 1.00 $ 3.66 $ 2.02 (1) Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2021 third quarter and 2020 third quarter, the number of stock options excluded were 1,948,006 and 4,713,241, respectively. For the nine months ended September 30, 2021 and 2020 period, the number of stock options excluded were 2,397,507 and 2,361,413, respectively. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company classifies its businesses into three underwriting segments — insurance, reinsurance and mortgage — and two other operating segments — ‘other’ and corporate (non-underwriting). The Company determined its reportable segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of the Company’s consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results. The Company’s insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company’s chief operating decision makers, the Chief Executive Officer of Arch Capital, the Chief Financial Officer and Treasurer of Arch Capital and the President and Chief Underwriting Officer of Arch Capital. The chief operating decision makers do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for its three underwriting segments based on underwriting income or loss. The Company does not manage its assets by underwriting segment, with the exception of goodwill and intangible assets, and, accordingly, investment income is not allocated to each underwriting segment. The insurance segment consists of the Company’s insurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: construction and national accounts; excess and surplus casualty; lenders products; professional lines; programs; property, energy, marine and aviation; travel, accident and health; and other (consisting of alternative markets, excess workers' compensation and surety business). The reinsurance segment consists of the Company’s reinsurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: casualty; marine and aviation; other specialty; property catastrophe; property excluding property catastrophe (losses on a single risk, both excess of loss and pro rata); and other (consisting of life reinsurance, casualty clash and other). The mortgage segment includes the Company’s U.S. primary mortgage insurance, U.S. credit-risk transfer (“CRT”) which are predominately with government sponsored enterprises (“GSE’s”) and international mortgage insurance and reinsurance operations. Arch Mortgage Insurance Company and United Guaranty Residential Insurance Company (combined “Arch MI U.S.”) are approved as eligible mortgage insurers by Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”), each a GSE. Arch MI U.S. also includes Arch Mortgage Guaranty Company, which is not a GSE-approved entity. The corporate (non-underwriting) segment results include net investment income, other income (loss), corporate expenses, transaction costs and other, interest expense, items related to the Company’s non-cumulative preferred shares, net realized gains or losses (which includes changes in the allowance for credit losses on financial assets and net impairment losses recognized in earnings), equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses, income or loss from operating affiliates and income taxes. Such amounts exclude the results of the ‘other’ segment. Through June 30, 2021, the ‘other’ segment included the results of Watford. In July 2021, the Company announced the completion of the previously disclosed acquisition of Watford by Greysbridge. Based on the governing documents of Greysbridge, the Company has concluded that, while it retains significant influence over Watford, Watford no longer constitutes a variable interest entity. Accordingly, effective July 1, 2021, Arch no longer consolidates the results of Watford in its consolidated financial statements . S ee note 12 . The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to Arch common shareholders: Three Months Ended September 30, 2021 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 1,596,619 $ 1,251,760 $ 360,934 $ 3,207,415 $ — $ 3,207,415 Premiums ceded (442,806) (630,371) (60,207) (1,131,486) — (1,131,486) Net premiums written 1,153,813 621,389 300,727 2,075,929 — 2,075,929 Change in unearned premiums (215,143) 57,313 11,238 (146,592) — (146,592) Net premiums earned 938,670 678,702 311,965 1,929,337 — 1,929,337 Other underwriting income (loss) — 3,293 3,981 7,274 — 7,274 Losses and loss adjustment expenses (668,630) (545,846) (11,543) (1,226,019) — (1,226,019) Acquisition expenses (152,467) (129,450) (24,098) (306,015) — (306,015) Other operating expenses (138,931) (45,647) (46,254) (230,832) — (230,832) Underwriting income (loss) $ (21,358) $ (38,948) $ 234,051 173,745 — 173,745 Net investment income 88,195 — 88,195 Net realized gains (losses) (25,040) — (25,040) Equity in net income (loss) of investment funds accounted for using the equity method 105,398 — 105,398 Other income (loss) (3,960) — (3,960) Corporate expenses (2) (18,636) — (18,636) Transaction costs and other (2) (1,036) — (1,036) Amortization of intangible assets (20,135) — (20,135) Interest expense (33,176) — (33,176) Net foreign exchange gains (losses) 36,078 — 36,078 Income (loss) before income taxes and income (loss) from operating affiliates 301,433 — 301,433 Income tax (expense) benefit (4,137) — (4,137) Income (loss) from operating affiliates 124,119 — 124,119 Net income (loss) 421,415 — 421,415 Amounts attributable to redeemable noncontrolling interests (1,473) — (1,473) Amounts attributable to nonredeemable noncontrolling interests — — — Net income (loss) available to Arch 419,942 — 419,942 Preferred dividends (16,090) — (16,090) Loss on redemption of preferred shares (15,101) — (15,101) Net income (loss) available to Arch common shareholders $ 388,751 $ — $ 388,751 Underwriting Ratios Loss ratio 71.2 % 80.4 % 3.7 % 63.5 % — % 63.5 % Acquisition expense ratio 16.2 % 19.1 % 7.7 % 15.9 % — % 15.9 % Other operating expense ratio 14.8 % 6.7 % 14.8 % 12.0 % — % 12.0 % Combined ratio 102.2 % 106.2 % 26.2 % 91.4 % — % 91.4 % Goodwill and intangible assets $ 261,103 $ 176,128 $ 526,091 $ 963,322 $ — $ 963,322 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Three Months Ended September 30, 2020 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 1,206,328 $ 1,004,590 $ 346,248 $ 2,556,914 $ 197,480 $ 2,681,032 Premiums ceded (382,167) (400,388) (47,783) (830,086) (50,164) (806,888) Net premiums written 824,161 604,202 298,465 1,726,828 147,316 1,874,144 Change in unearned premiums (105,007) (49,704) 52,944 (101,767) (1,285) (103,052) Net premiums earned 719,154 554,498 351,409 1,625,061 146,031 1,771,092 Other underwriting income (loss) (31) 298 4,600 4,867 546 5,413 Losses and loss adjustment expenses (525,321) (422,084) (153,055) (1,100,460) (115,813) (1,216,273) Acquisition expenses (102,420) (85,388) (35,716) (223,524) (24,418) (247,942) Other operating expenses (122,541) (41,818) (36,708) (201,067) (14,619) (215,686) Underwriting income (loss) $ (31,159) $ 5,506 $ 130,530 104,877 (8,273) 96,604 Net investment income 99,857 28,655 128,512 Net realized gains (losses) 210,984 69,515 280,499 Equity in net income (loss) of investment funds accounted for using the equity method 126,735 — 126,735 Other income (loss) — — — Corporate expenses (2) (16,263) — (16,263) Transaction costs and other (2) (1,674) — (1,674) Amortization of intangible assets (16,715) — (16,715) Interest expense (36,224) (5,119) (41,343) Net foreign exchange gains (losses) (38,681) (6,204) (44,885) Income (loss) before income taxes and income (loss) from operating affiliates 432,896 78,574 511,470 Income tax (expense) benefit (23,638) (69) (23,707) Income (loss) from operating affiliates 919 — 919 Net income (loss) 410,177 78,505 488,682 Amounts attributable to redeemable noncontrolling interests (882) (993) (1,875) Amounts attributable to nonredeemable noncontrolling interests — (67,768) (67,768) Net income (loss) available to Arch 409,295 9,744 419,039 Preferred dividends (10,403) — (10,403) Net income (loss) available to Arch common shareholders $ 398,892 $ 9,744 $ 408,636 Underwriting Ratios Loss ratio 73.0 % 76.1 % 43.6 % 67.7 % 79.3 % 68.7 % Acquisition expense ratio 14.2 % 15.4 % 10.2 % 13.8 % 16.7 % 14.0 % Other operating expense ratio 17.0 % 7.5 % 10.4 % 12.4 % 10.0 % 12.2 % Combined ratio 104.2 % 99.0 % 64.2 % 93.9 % 106.0 % 94.9 % Goodwill and intangible assets $ 282,146 $ 20,319 $ 403,662 $ 706,127 $ 7,650 $ 713,777 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Nine Months Ended September 30, 2021 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 4,381,372 $ 4,080,840 $ 1,143,691 $ 9,602,213 $ 457,465 $ 9,890,912 Premiums ceded (1,269,165) (1,535,607) (171,923) (2,973,005) (102,763) (2,907,002) Net premiums written 3,112,207 2,545,233 971,768 6,629,208 354,702 6,983,910 Change in unearned premiums (488,636) (484,607) 10,735 (962,508) (22,734) (985,242) Net premiums earned 2,623,571 2,060,626 982,503 5,666,700 331,968 5,998,668 Other underwriting income (loss) — 3,148 15,026 18,174 739 18,913 Losses and loss adjustment expenses (1,750,257) (1,494,539) (85,112) (3,329,908) (259,042) (3,588,950) Acquisition expenses (417,541) (381,060) (84,297) (882,898) (62,741) (945,639) Other operating expenses (409,386) (150,856) (143,697) (703,939) (32,869) (736,808) Underwriting income (loss) $ 46,387 $ 37,319 $ 684,423 $ 768,129 $ (21,945) $ 746,184 Net investment income 256,354 42,310 298,664 Net realized gains (losses) 239,690 80,638 320,328 Equity in net income (loss) of investment funds accounted for using the equity method 299,270 — 299,270 Other income (loss) 1,151 — 1,151 Corporate expenses (2) (59,279) — (59,279) Transaction costs and other (2) (793) (935) (1,728) Amortization of intangible assets (48,925) (898) (49,823) Interest expense (98,812) (8,410) (107,222) Net foreign exchange gains (losses) 39,691 (1,325) 38,366 Income (loss) before income taxes and income (loss) from operating affiliates 1,396,476 89,435 1,485,911 Income tax (expense) benefit (93,942) (234) (94,176) Income (loss) from operating affiliates 224,052 — 224,052 Net income (loss) 1,526,586 89,201 1,615,787 Amounts attributable to redeemable noncontrolling interests (1,936) (1,953) (3,889) Amounts attributable to nonredeemable noncontrolling interests — (78,314) (78,314) Net income (loss) available to Arch 1,524,650 8,934 1,533,584 Preferred dividends (38,159) — (38,159) Loss on redemption of preferred shares (15,101) — (15,101) Net income (loss) available to Arch common shareholders $ 1,471,390 $ 8,934 $ 1,480,324 Underwriting Ratios Loss ratio 66.7 % 72.5 % 8.7 % 58.8 % 78.0 % 59.8 % Acquisition expense ratio 15.9 % 18.5 % 8.6 % 15.6 % 18.9 % 15.8 % Other operating expense ratio 15.6 % 7.3 % 14.6 % 12.4 % 9.9 % 12.3 % Combined ratio 98.2 % 98.3 % 31.9 % 86.8 % 106.8 % 87.9 % (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Nine Months Ended September 30, 2020 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 3,444,335 $ 2,934,174 $ 1,084,337 $ 7,461,860 $ 590,309 $ 7,831,554 Premiums ceded (1,119,165) (967,698) (136,154) (2,222,031) (150,437) (2,151,853) Net premiums written 2,325,170 1,966,476 948,183 5,239,829 439,872 5,679,701 Change in unearned premiums (202,188) (388,321) 113,965 (476,544) (22,267) (498,811) Net premiums earned 2,122,982 1,578,155 1,062,148 4,763,285 417,605 5,180,890 Other underwriting income (loss) (31) 1,767 15,649 17,385 1,547 18,932 Losses and loss adjustment expenses (1,550,632) (1,235,586) (444,721) (3,230,939) (331,275) (3,562,214) Acquisition expenses (317,428) (255,516) (108,304) (681,248) (68,766) (750,014) Other operating expenses (370,947) (125,831) (120,178) (616,956) (42,523) (659,479) Underwriting income (loss) $ (116,056) $ (37,011) $ 404,594 $ 251,527 $ (23,412) $ 228,115 Net investment income 313,916 91,234 405,150 Net realized gains (losses) 523,964 (53,837) 470,127 Equity in net income (loss) of investment funds accounted for using the equity method 57,407 — 57,407 Other income (loss) 65 — 65 Corporate expenses (2) (51,407) — (51,407) Transaction costs and other (2) (5,246) — (5,246) Amortization of intangible assets (49,835) — (49,835) Interest expense (86,599) (18,438) (105,037) Net foreign exchange gains (losses) (17,812) 6,387 (11,425) Income (loss) before income taxes and income (loss) from operating affiliates 935,980 1,934 937,914 Income tax (expense) benefit (78,112) 333 (77,779) Income (loss) from operating affiliates 6,262 — 6,262 Net income (loss) 864,130 2,267 866,397 Amounts attributable to redeemable noncontrolling interests (1,873) (3,125) (4,998) Amounts attributable to nonredeemable noncontrolling interests — 578 578 Net income (loss) available to Arch 862,257 (280) 861,977 Preferred dividends (31,209) — (31,209) Net income (loss) available to Arch common shareholders $ 831,048 $ (280) $ 830,768 Underwriting Ratios Loss ratio 73.0 % 78.3 % 41.9 % 67.8 % 79.3 % 68.8 % Acquisition expense ratio 15.0 % 16.2 % 10.2 % 14.3 % 16.5 % 14.5 % Other operating expense ratio 17.5 % 8.0 % 11.3 % 13.0 % 10.2 % 12.7 % Combined ratio 105.5 % 102.5 % 63.4 % 95.1 % 106.0 % 96.0 % (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
Reserve for Losses and Loss Adj
Reserve for Losses and Loss Adjustment Expenses | 9 Months Ended |
Sep. 30, 2021 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |
Reserve for losses and loss adjustment expenses | Reserve for Losses and Loss Adjustment Expenses The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses: Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Reserve for losses and loss adjustment expenses at beginning of period $ 17,196,648 $ 15,044,874 $ 16,513,929 $ 13,891,842 Unpaid losses and loss adjustment expenses recoverable 4,146,020 4,156,157 4,314,855 4,082,650 Net reserve for losses and loss adjustment expenses at beginning of period 13,050,628 10,888,717 12,199,074 9,809,192 Net incurred losses and loss adjustment expenses relating to losses occurring in: Current year 1,348,528 1,264,315 3,812,381 3,673,346 Prior years (122,509) (48,042) (223,431) (111,132) Total net incurred losses and loss adjustment expenses 1,226,019 1,216,273 3,588,950 3,562,214 Net losses and loss adjustment expense reserves of acquired business (2) 104,307 — 104,307 $ — Retroactive reinsurance transactions (1) — — (183,893) 60,635 Impact of deconsolidation of Watford (3) (1,460,611) — (1,460,611) — Net foreign exchange (gains) losses (78,152) 114,122 10,818 22,706 Net paid losses and loss adjustment expenses relating to losses occurring in: Current year (208,923) (189,961) (432,348) (359,395) Prior years (417,368) (512,263) (1,610,397) (1,578,464) Total net paid losses and loss adjustment expenses (626,291) (702,224) (2,042,745) (1,937,859) Net reserve for losses and loss adjustment expenses at end of period 12,215,900 11,516,888 12,215,900 11,516,888 Unpaid losses and loss adjustment expenses recoverable 5,115,147 4,383,638 5,115,147 4,383,638 Reserve for losses and loss adjustment expenses at end of period $ 17,331,047 $ 15,900,526 $ 17,331,047 $ 15,900,526 (1) During the 2021 first quarter, the Company entered into a reinsurance to close and other related agreements with Premia Managing Agency Limited (“Premia”), in connection with the 2018 and prior years of account related to the acquisition of Barbican Group Holdings Limited (“Barbican”). During the 2020 first quarter, the Company entered into a reinsurance to close agreement of the 2017 and prior years of account previously covered by a third party arrangement. (2) Represents activity related to the Company’s acquisitions in the 2021 period. See note 2 . (3) See note 12 . Development on Prior Year Loss Reserves 2021 Third Quarter During the 2021 third quarter, the Company recorded net favorable development on prior year loss reserves of $122.5 million, which consisted of $5.1 million from the insurance segment, $72.3 million from the reinsurance segment and $45.1 million from the mortgage segment. The insurance segment’s net favorable development of $5.1 million, or 0.5 loss ratio points, for the 2021 third quarter consisted of $49.0 million of net favorable development in short-tailed and long-tailed lines and $43.9 million of net adverse development in medium-tailed lines. Net favorable development in short-tailed lines reflected $5.4 million of favorable development in lenders products, primarily from the 2020 accident year ( i.e. , the year in which a loss occurred), $5.4 million of favorable development from property (excluding marine), primarily from the 2020 accident year, and $5.1 million of favorable development in travel and accident, across most accident years. Net favorable development in long-tailed lines reflected $26.3 million of favorable development related to construction and national accounts, across most accident years, and $6.7 million of favorable development related to other business, including alternative markets, primarily from the 2015 to 2018 accident years. Net adverse development in medium-tailed lines included $37.0 million of adverse development in contract binding business, across most accident years, partially offset by favorable development in marine and programs, primarily from more recent accident years. The reinsurance segment’s net favorable development of $72.3 million, or 10.7 loss ratio points, for the 2021 third quarter consisted of $65.4 million of net favorable development in short-tailed lines and $6.9 million in medium-tailed and long-tailed lines. Net favorable development in short-tailed lines reflected $46.1 million of favorable development related to property catastrophe and property other than property catastrophe business, primarily from the 2017 to 2020 underwriting years (i.e., all premiums and losses attributable to contracts having an inception or renewal date within the given twelve-month period) and $18.9 million of favorable development related to other specialty, primarily from the 2012 to 2017 underwriting years. Net favorable development in medium-tailed and long-tailed lines included $4.7 million of favorable development in casualty, primarily from the 2013 and 2014 underwriting years. The mortgage segment’s net favorable development was $45.1 million, or 14.5 loss ratio points, for the 2021 third quarter, about half of which came from U.S. primary mortgage insurance, from better than expected cure activity in pre-pandemic delinquencies and recoveries on second lien and student loans, and the other half from our CRT portfolio and international mortgage insurance. 2020 Third Quarter During the 2020 third quarter, the Company recorded net favorable development on prior year loss reserves of $48.0 million, which consisted of $2.3 million from the insurance segment, $42.0 million from the reinsurance segment and $4.5 million from the mortgage segment, partially offset by $0.7 million unfavorable from the ‘other’ segment. The insurance segment’s net favorable development of $2.3 million, or 0.3 loss ratio points, for the 2020 third quarter consisted of $12.9 million of net favorable development in short-tailed and long-tailed lines and $10.6 million of net adverse development in medium-tailed lines. Net favorable development of $11.8 million in short-tailed lines reflected $8.0 million of favorable development from property (excluding marine), primarily from the 2015 to 2018 accident years and $3.4 million of favorable development in travel and accident, primarily from the 2019 accident year. Net favorable development of $1.1 million in long-tailed lines reflected $8.7 million of favorable development in construction and national accounts, primarily from the 2018 accident year, and $4.2 million of favorable development related to other business, including alternative markets and excess workers’ compensation, primarily from the 2013 to 2017 accident years, partially offset by $11.7 million of adverse development in executive assurance and casualty, primarily from the 2015 and 2019 accident year. Net adverse development in medium-tailed lines included $7.1 million of adverse development in program business, primarily from 2015 to 2018 accident years and $3.7 million of adverse development in contract binding, across all accident years. The reinsurance segment’s net favorable development of $42.0 million, or 7.6 loss ratio points, for the 2020 third quarter consisted of $45.6 million of net favorable development in short-tailed and medium-tailed lines and net adverse development of $3.6 million from long-tailed lines. Net favorable development in short-tailed lines reflected $27.6 million of favorable development related to property catastrophe and property other than property catastrophe business, primarily from the 2016 to 2019 underwriting years and $7.8 million of favorable development from other specialty, primarily from the 2016 to 2019 underwriting years. Net favorable development of $9.4 million in medium-tailed lines reflected favorable development in marine and aviation across most underwriting years. Adverse development of $3.6 million in long-tailed lines reflected an increase in reserves from casualty, primarily from the 2012 to 2019 underwriting years. The mortgage segment’s net favorable development was $4.5 million, or 1.3 loss ratio points, for the 2020 third quarter, primarily driven by subrogation recoveries on second lien and student loan business. Nine Months Ended September 30, 2021 During the nine months ended September 30, 2021, the Company recorded net favorable development on prior year loss reserves of $223.4 million, which consisted of $13.1 million from the insurance segment, $119.6 million from the reinsurance segment and $99.1 million from the mortgage segment, partially offset by $8.4 million of adverse development from the ‘other’ segment (activity for the six months ended June 30, 2021 prior to deconsolidation of Watford). The insurance segment’s net favorable development of $13.1 million, or 0.5 loss ratio points, for the 2021 period consisted of $102.5 million of net favorable development in short-tailed and long-tailed lines, partially offset by $89.4 million of net adverse development in medium-tailed lines. Net favorable development of $65.3 million in short-tailed lines reflected $27.0 million of favorable development from property (excluding marine), primarily from the 2019 and 2020 accident years, $24.0 million of favorable development in lenders products, primarily from the 2020 accident year, and $14.4 million of favorable development in travel and accident, primarily from the 2017 to 2020 accident years. Net favorable development of $37.1 million in long-tailed lines included favorable development primarily related to construction, national accounts and alternative markets, primarily from the 2016 to 2019 accident years. Net adverse development in medium-tailed lines reflected $57.1 million of adverse development in contract binding business, primarily from the 2014 to 2019 accident years, $26.2 million of adverse development in professional liability business, primarily from the 2019 and 2020 accident years, and $6.9 million of adverse development in programs business, primarily from the 2019 accident year. The reinsurance segment’s net favorable development of $119.6 million, or 5.8 loss ratio points, for the 2021 period consisted of $139.7 million of net favorable development from short-tailed and medium-tailed lines, partially offset by $20.1 million of net adverse development from long-tailed lines. Net favorable development of $132.6 million in short-tailed lines reflected $97.1 million of favorable development from other specialty lines, primarily from the 2016 to 2019 underwriting years, and $71.7 million of favorable development from property other than property catastrophe business, primarily from the 2017 to 2020 underwriting years. Such amounts were partially offset by adverse development of $36.3 million from property catastrophe, primarily from the 2020 underwriting year. Adverse development in long-tailed lines reflected an increase in reserves from casualty, primarily from the 2018 underwriting year. The mortgage segment’s net favorable development was $99.1 million, or 10.1 loss ratio points, for the 2021 period, which included reserve releases associated with various vintage credit risk transfer contracts that were called by the GSEs, favorable development on U.S. and international business and subrogation recoveries on second lien and student loan business. Nine Months Ended September 30, 2020 During the nine months ended September 30, 2020, the Company recorded net favorable development on prior year loss reserves of $111.1 million, which consisted of $5.9 million from the insurance segment, $93.8 million from the reinsurance segment, $10.8 million from the mortgage segment and $0.6 million from the ‘other’ segment. The insurance segment’s net favorable development of $5.9 million, or 0.3 loss ratio points, for the 2020 period consisted of $41.6 million of net favorable development in short-tailed and long-tailed lines, partially offset by $35.7 million of net adverse development in medium-tailed lines. Net favorable development of $27.2 million in short-tailed lines reflected $17.5 million of favorable development from property (excluding marine), primarily from the 2015 to 2018 accident years, $6.2 million of favorable development on travel and accident, primarily from 2019 accident year, and $3.5 million of favorable development in lenders products, primarily from the 2018 and 2019 accident years. Net favorable development of $14.4 million in long-tailed lines included $11.7 million of favorable development related to other business, including alternative markets and excess workers’ compensation, primarily from the 2013 to 2017 accident years. Net adverse development in medium-tailed lines reflected $23.0 million of adverse development in contract binding business, across all accident years, and $13.5 million of adverse development in program business, primarily from the 2016 to 2018 accident years. The reinsurance segment’s net favorable development of $93.8 million, or 5.9 loss ratio points, for the 2020 period consisted of $113.0 million of net favorable development from short-tailed and medium-tailed lines, partially offset by $19.2 million of net adverse development from long-tailed lines. Net favorable development of $101.8 million in short-tailed lines reflected $52.1 million related to property catastrophe and property other than property catastrophe business, primarily from the 2016 to 2019 underwriting years, and $47.1 million from other specialty lines, across most underwriting years. Adverse development in long-tailed lines of $19.2 million reflected an increase in reserves from casualty, primarily from the 2012 to 2015 underwriting years. The mortgage segment’s net favorable development was $10.8 million, or 1.0 loss ratio points, for the 2020 period, primarily driven by subrogation recoveries on second lien and student loan business. |
Allowance for Expected Credit L
Allowance for Expected Credit Losses | 9 Months Ended |
Sep. 30, 2021 | |
Credit Loss [Abstract] | |
Allowance for expected credit losses | Allowance for Expected Credit Losses Premiums Receivable The following table provides a roll forward of the allowance for expected credit losses of the Company’s premium receivables: Premium Receivables, Net of Allowance Allowance for Expected Credit Losses Three Months Ended September 30, 2021 Balance at beginning of period $ 2,866,578 $ 35,979 Change for provision of expected credit losses (1) 2,736 Balance at end of period $ 2,807,720 $ 38,715 Three Months Ended September 30, 2020 Balance at beginning of period $ 2,203,753 $ 36,054 Change for provision of expected credit losses (1) 1,046 Balance at end of period $ 2,225,311 $ 37,100 Nine Months Ended September 30, 2021 Balance at beginning of period $ 2,064,586 $ 37,781 Change for provision of expected credit losses (1) 934 Balance at end of period $ 2,807,720 $ 38,715 Nine Months Ended September 30, 2020 Balance at beginning of period $ 1,778,717 $ 21,003 Cumulative effect of accounting change (2) 6,539 Change for provision of expected credit losses (1) 9,558 Balance at end of period $ 2,225,311 $ 37,100 (1) Amounts deemed uncollectible are written-off in operating expenses. For the 2021 third quarter and 2020 third quarter, amounts written off were $1.2 million and nil, respectively. For the nine months ended September 30, 2021 and 2020 period, amounts written off were were $2.4 million and $2.3 million, respectively. (2) Adoption of ASU 2016-13 Reinsurance Recoverables The following table provides a roll forward of the allowance for expected credit losses of the Company’s reinsurance recoverables: Reinsurance Recoverables, Net of Allowance Allowance for Expected Credit Losses Three Months Ended September 30, 2021 Balance at beginning of period $ 4,314,515 $ 11,029 Change for provision of expected credit losses 1,802 Balance at end of period $ 5,358,852 $ 12,831 Three Months Ended September 30, 2020 Balance at beginning of period $ 4,363,507 $ 13,595 Change for provision of expected credit losses 399 Balance at end of period $ 4,621,937 $ 13,994 Nine Months Ended September 30, 2021 Balance at beginning of period $ 4,500,802 $ 11,636 Change for provision of expected credit losses 1,195 Balance at end of period $ 5,358,852 $ 12,831 Nine Months Ended September 30, 2020 Balance at beginning of period $ 4,346,816 $ 1,364 Cumulative effect of accounting change (1) 12,010 Change for provision of expected credit losses 620 Balance at end of period $ 4,621,937 $ 13,994 (1) Adoption of ASU 2016-13 The following table summarizes the Company’s reinsurance recoverables on paid and unpaid losses (not including ceded unearned premiums): September 30, December 31 2021 2020 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses $ 5,358,852 $ 4,500,802 % due from carriers with A.M. Best rating of “A-” or better 69.1 % 63.9 % % due from all other carriers with no A.M. Best rating (1) 30.9 % 36.1 % Largest balance due from any one carrier as % of total shareholders’ equity 6.5 % 1.8 % (1) At September 30, 2021 and December 31, 2020 over 93% and 94% of such amount were collateralized through reinsurance trusts, funds withheld arrangements, letters of credit or other, respectively. Contractholder Receivables The following table provides a roll forward of the allowance for expected credit losses of the Company’s contractholder receivables: Contract-holder Receivables, Net of Allowance Allowance for Expected Credit Losses Three Months Ended September 30, 2021 Balance at beginning of period $ 1,882,948 $ 4,471 Change for provision of expected credit losses (987) Balance at end of period $ 1,824,990 $ 3,484 Three Months Ended September 30, 2020 Balance at beginning of period $ 2,179,124 $ 6,290 Change for provision of expected credit losses (389) Balance at end of period 2,185,614 $ 5,901 Nine Months Ended September 30, 2021 Balance at beginning of period $ 1,986,924 $ 8,638 Change for provision of expected credit losses (5,154) Balance at end of period $ 1,824,990 $ 3,484 Nine Months Ended September 30, 2020 Balance at beginning of period $ 2,119,460 $ — Cumulative effect of accounting change (1) 6,663 Change for provision of expected credit losses (762) Balance at end of period $ 2,185,614 $ 5,901 (1) Adoption of ASU 2016-13 |
Investment Information
Investment Information | 9 Months Ended |
Sep. 30, 2021 | |
Disclosure Investment Information [Abstract] | |
Investment Information | Investment Information Available For Sale Investments The following table summarizes the fair value and cost or amortized cost of the Company’s securities classified as available for sale: Estimated Gross Gross Allowance for Expected Credit Losses (2) Cost or September 30, 2021 Fixed maturities (1): Corporate bonds $ 6,403,617 $ 155,246 $ (40,649) $ (1,440) $ 6,290,460 Mortgage backed securities 405,797 3,384 (3,966) (24) 406,403 Municipal bonds 382,722 20,096 (1,206) (2) 363,834 Commercial mortgage backed securities 579,424 3,598 (548) (3) 576,377 U.S. government and government agencies 4,460,515 12,912 (30,320) — 4,477,923 Non-U.S. government securities 1,863,734 46,378 (28,948) (82) 1,846,386 Asset backed securities 2,672,554 12,576 (7,700) (560) 2,668,238 Total 16,768,363 254,190 (113,337) (2,111) 16,629,621 Short-term investments 3,069,965 1,625 (1,780) — 3,070,120 Total $ 19,838,328 $ 255,815 $ (115,117) $ (2,111) $ 19,699,741 December 31, 2020 Fixed maturities (1): Corporate bonds $ 7,856,571 $ 414,247 $ (34,388) $ (896) $ 7,477,608 Mortgage backed securities 630,001 8,939 (5,028) (278) 626,368 Municipal bonds 494,522 27,291 (3,835) (11) 471,077 Commercial mortgage backed securities 389,900 8,722 (2,954) (122) 384,254 U.S. government and government agencies 5,557,077 22,612 (12,611) — 5,547,076 Non-U.S. government securities 2,433,733 153,891 (8,060) — 2,287,902 Asset backed securities 1,634,804 19,225 (10,715) (1,090) 1,627,384 Total 18,996,608 654,927 (77,591) (2,397) 18,421,669 Short-term investments 1,924,922 2,693 (2,063) — 1,924,292 Total $ 20,921,530 $ 657,620 $ (79,654) $ (2,397) $ 20,345,961 (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. (2) Effective January 1, 2020, the Company adopted ASU 2016-13 and as a result any credit impairment losses on the Company’s available-for-sale investments are recorded as an allowance, subject to reversal. The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position: Less than 12 Months 12 Months or More Total Estimated Gross Estimated Gross Estimated Gross September 30, 2021 Fixed maturities (1): Corporate bonds $ 2,744,615 $ (36,595) $ 68,450 $ (4,054) $ 2,813,065 $ (40,649) Mortgage backed securities 257,789 (3,113) 22,769 (853) 280,558 (3,966) Municipal bonds 46,450 (731) 7,148 (475) 53,598 (1,206) Commercial mortgage backed securities 76,518 (256) 6,578 (292) 83,096 (548) U.S. government and government agencies 3,621,719 (29,797) 9,755 (523) 3,631,474 (30,320) Non-U.S. government securities 1,283,266 (27,523) 22,304 (1,425) 1,305,570 (28,948) Asset backed securities 1,119,638 (6,524) 37,078 (1,176) 1,156,716 (7,700) Total 9,149,995 (104,539) 174,082 (8,798) 9,324,077 (113,337) Short-term investments 265,011 (1,780) — — 265,011 (1,780) Total $ 9,415,006 $ (106,319) $ 174,082 $ (8,798) $ 9,589,088 $ (115,117) December 31, 2020 Fixed maturities (1): Corporate bonds $ 747,442 $ (33,086) $ 3,934 $ (1,302) $ 751,376 $ (34,388) Mortgage backed securities 284,619 (4,788) 3,637 (240) 288,256 (5,028) Municipal bonds 67,937 (3,835) — — 67,937 (3,835) Commercial mortgage backed securities 126,624 (2,916) 2,655 (38) 129,279 (2,954) U.S. government and government agencies 1,285,907 (12,611) — — 1,285,907 (12,611) Non-U.S. government securities 543,844 (7,658) 2,441 (402) 546,285 (8,060) Asset backed securities 634,470 (9,110) 57,737 (1,605) 692,207 (10,715) Total 3,690,843 (74,004) 70,404 (3,587) 3,761,247 (77,591) Short-term investments 97,920 (2,063) — — 97,920 (2,063) Total $ 3,788,763 $ (76,067) $ 70,404 $ (3,587) $ 3,859,167 $ (79,654) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. At September 30, 2021, on a lot level basis, approximately 3,910 security lots out of a total of approximately 10,020 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $2.5 million. At December 31, 2020, on a lot level basis, approximately 2,320 security lots out of a total of approximately 11,180 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $0.9 million. The contractual maturities of the Company’s fixed maturities are shown in the following table. Expected maturities, which are management’s best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. September 30, 2021 December 31, 2020 Maturity Estimated Amortized Estimated Amortized Due in one year or less $ 416,601 $ 410,373 $ 348,200 $ 339,951 Due after one year through five years 7,862,472 7,772,773 10,629,959 10,340,819 Due after five years through 10 years 4,483,025 4,453,526 4,881,564 4,654,754 Due after 10 years 348,490 341,931 482,180 448,139 13,110,588 12,978,603 16,341,903 15,783,663 Mortgage backed securities 405,797 406,403 630,001 626,368 Commercial mortgage backed securities 579,424 576,377 389,900 384,254 Asset backed securities 2,672,554 2,668,238 1,634,804 1,627,384 Total (1) $ 16,768,363 $ 16,629,621 $ 18,996,608 $ 18,421,669 (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. Securities Lending Agreements In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions to enhance investment income. Prior to the termination of this program, the Company loaned certain of its securities to third parties, primarily major brokerage firms, for short periods of time through a lending agent. The Company maintained legal control over the securities it lent (shown as ‘Securities pledged under securities lending, at fair value’ on the Company’s balance sheet), retained the earnings and cash flows associated with the loaned securities and received a fee from the borrower for the temporary use of the securities. An indemnification agreement with the lending agent protected the Company in the event a borrower became insolvent or failed to return any of the securities on loan from the Company. The Company received collateral (shown as ‘Collateral received under securities lending, at fair value’ on the Company’s balance sheet) in the form of cash or U.S. government and government agency securities. At September 30, 2021, the Company had no cash collateral or security collateral due to the termination of the program. At December 31, 2020, the fair value of the cash collateral received on securities lending was nil, and the fair value of security collateral received was $301.1 million. The carrying value of collateral held under the Company’s securities lending transactions by significant investment category and remaining contractual maturity of the underlying agreements was as follows at December 31, 2020 (no balances at September 30, 2021 due to the termination of the program): Remaining Contractual Maturity of the Agreements Overnight and Continuous Less than 30 Days 30-90 Days 90 Days or More Total December 31, 2020 U.S. government and government agencies $ 142,317 $ — $ 139,290 $ — $ 281,607 Corporate bonds 3,021 — — — 3,021 Equity securities 16,461 — — — 16,461 Total $ 161,799 $ — $ 139,290 $ — $ 301,089 Gross amount of recognized liabilities for securities lending in offsetting disclosure in note 10 $ — Amounts related to securities lending not included in offsetting disclosure in note 10 $ 301,089 Equity Securities, at Fair Value At September 30, 2021, the Company held $1.8 billion of equity securities, at fair value, compared to $1.4 billion at December 31, 2020. Such holdings include publicly traded common stocks primarily in the consumer cyclical and non-cyclical, technology, communication and financial sectors and exchange-traded funds in fixed income, equity and other sectors. Other Investments The following table summarizes the Company’s other investments and other investable assets: September 30, December 31, Fixed maturities $ 414,007 $ 843,354 Other investments 1,489,759 2,331,885 Short-term investments 115,681 557,008 Equity securities 24,523 92,549 Investments accounted for using the fair value option $ 2,043,970 $ 3,824,796 Other investable assets (1) — 500,000 Total other investments $ 2,043,970 $ 4,324,796 (1) Participation interests in a receivable of a reverse repurchase agreement. The following table summarizes the Company’s other investments, as detailed in the previous table, by strategy: September 30, December 31, Term loan investments $ 528,585 $ 1,231,731 Lending 579,563 572,636 Credit related funds 56,997 90,780 Energy 84,880 65,813 Investment grade fixed income 131,910 138,646 Infrastructure 26,359 165,516 Private equity 81,465 48,750 Real estate — 18,013 Total $ 1,489,759 $ 2,331,885 Investments Accounted For Using the Equity Method The following table summarizes the Company’s investments accounted for using the equity method, by strategy: September 30, December 31, Credit related funds $ 952,794 $ 740,060 Equities 414,322 343,058 Real estate 340,510 258,518 Lending 330,368 179,629 Private equity 365,840 235,289 Infrastructure 222,484 175,882 Energy 114,975 115,453 Total $ 2,741,293 $ 2,047,889 Certain of the Company’s other investments are in investment funds for which the Company has the option to redeem at agreed upon values as described in each investment fund’s subscription agreement. Depending on the terms of the various subscription agreements, investments in investment funds may be redeemed daily, monthly, quarterly or on other terms. Two common redemption restrictions which may impact the Company’s ability to redeem these investment funds are gates and lockups. A gate is a suspension of redemptions which may be implemented by the general partner or investment manager of the fund in order to defer, in whole or in part, the redemption request in the event the aggregate amount of redemption requests exceeds a predetermined percentage of the investment fund’s net assets which may otherwise hinder the general partner or investment manager’s ability to liquidate holdings in an orderly fashion in order to generate the cash necessary to fund extraordinarily large redemption payouts. A lockup period is the initial amount of time an investor is contractually required to hold the security before having the ability to redeem. If the investment funds are eligible to be redeemed, the time to redeem such fund can take weeks or months following the notification. Limited Partnership Interests In the normal course of its activities, the Company invests in limited partnerships as part of its overall investment strategy. Such amounts are included in ‘investments accounted for using the equity method’ and ‘investments accounted for using the fair value option.’ The Company has determined that it is not required to consolidate these investments because it is not the primary beneficiary of the funds. The Company’s maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the Company’s consolidated balance sheet and any unfunded commitment. The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item: September 30, December 31, Investments accounted for using the equity method (1) 2,741,293 2,047,889 Investments accounted for using the fair value option (2) 176,884 184,720 Total $ 2,918,177 $ 2,232,609 (1) Aggregate unfunded commitments were $2.3 billion at September 30, 2021, compared to $1.8 billion at December 31, 2020. (2) Aggregate unfunded commitments were $22.9 million at September 30, 2021, compared to $35.6 million at December 31, 2020. Net Investment Income The components of net investment income were derived from the following sources: September 30, 2021 2020 Three Months Ended Fixed maturities $ 75,964 $ 98,344 Term loans 1,736 22,459 Equity securities 9,867 6,659 Short-term investments 1,858 1,332 Other (1) 17,378 22,060 Gross investment income 106,803 150,854 Investment expenses (18,608) (22,342) Net investment income $ 88,195 $ 128,512 Nine Months Ended Fixed maturities $ 255,215 $ 318,582 Term loans 33,343 66,141 Equity securities 24,101 18,885 Short-term investments 3,603 9,611 Other (1) 51,683 57,926 Gross investment income 367,945 471,145 Investment expenses (69,281) (65,995) Net investment income $ 298,664 $ 405,150 (1) Includes income distributions from investment funds and other items. Net Realized Gains (Losses) Net realized gains (losses), which include changes in the allowance for credit losses on financial assets and net impairment losses recognized in earnings were as follows: September 30, 2021 2020 Three Months Ended Available for sale securities: Gross gains on investment sales $ 86,819 $ 104,733 Gross losses on investment sales (18,446) (16,862) Change in fair value of assets and liabilities accounted for using the fair value option: Fixed maturities (7,492) 34,115 Other investments 3,811 61,622 Equity securities 3,042 4,048 Short-term investments 16 3,377 Equity securities, at fair value: Net realized gains (losses) on sales during the period 14,736 26,549 Net unrealized gains (losses) on equity securities still held at reporting date (40,155) 33,562 Allowance for credit losses: Investments related (456) 1,332 Underwriting related (3,985) 351 Derivative instruments (1) (21,435) 20,369 Other (2) (41,495) 7,303 Net realized gains (losses) $ (25,040) $ 280,499 Nine Months Ended Available for sale securities: Gross gains on investment sales $ 267,362 $ 515,086 Gross losses on investment sales (132,071) (98,654) Change in fair value of assets and liabilities accounted for using the fair value option: Fixed maturities 19,973 (25,370) Other investments 111,550 (67,608) Equity securities 10,599 5,803 Short-term investments 648 (1,936) Equity securities, at fair value: Net realized gains (losses) on sales during the period 86,155 7,760 Net unrealized gains (losses) on equity securities still held at reporting date 45,400 3,682 Allowance for credit losses: Investments related (1,208) (4,763) Underwriting related 2,664 (8,753) Net impairments losses — (533) Derivative instruments (1) (36,428) 146,722 Other (2) (54,316) (1,309) Net realized gains (losses) $ 320,328 $ 470,127 (1) See note 10 for information on the Company’s derivative instruments. (2) 2021 periods reflected $33.1 million of losses related to the Company’s deconsolidation of Watford. Equity in Net Income (Loss) of Investment Funds Accounted for Using the Equity Method The Company recorded $105.4 million of equity in net income related to investment funds accounted for using the equity method in the 2021 third quarter, compared to income of $126.7 million for the 2020 third quarter, and an income of $299.3 million for the nine months ended September 30, 2021, compared to income of $57.4 million for nine months ended September 30, 2020. In applying the equity method, investments are initially recorded at cost and are subsequently adjusted based on the Company’s proportionate share of the net income or loss of the funds (which include changes in the market value of the underlying securities in the funds). Such investments are generally recorded on a one three Investments in Operating Affiliates Investments in which the Company has significant influence over the operating and financial policies are classified as ‘investments in operating affiliates’ on the Company’s balance sheets and are accounted for under the equity method. Such investments primarily include the Company’s investment in Coface, Greysbridge and Premia. Investments in Coface and Premia are generally recorded on a three In 2021, the Company completed the share purchase agreement with Natixis to purchase 29.5% of the common equity of Coface, a France-based leader in the global trade credit insurance market. The consideration paid was €9.95 per share, or an aggregate €453 million (approximately $546 million) including related fees. Income (loss) from operating affiliates reflected a one-time gain of $74.5 million realized from the acquisition. As a result of equity method accounting rules, approximately $36 million of additional gain was deferred and will generally be recognized over the next five years. As of September 30, 2021, the Company owned approximately 29.86% of the issued shares of Coface, or 30.10% excluding treasury shares, with a carrying value of $615.9 million. In July 2021, the Company announced the completion of the previously disclosed acquisition of Watford by Greysbridge for a cash purchase price of $35.00 per common share. Effective July 1, 2021, Watford is wholly owned by Greysbridge, and Greysbridge is owned 40% by the Company, 30% by certain investment funds managed by Kelso and 30% by certain investment funds managed by Warburg. At September 30, 2021 the Company’s carrying value in Greysbridge was $363.3 million, which reflected the Company’s aggregate purchase price of $278.9 million along with income (loss) from operating affiliates, which included a one-time gain of $95.7 million recognized from the acquisition. In addition, the ‘net realized gains (losses)’ line on the Company’s consolidated statements of income included a $33.1 million loss as a result of deconsolidation of Watford in the Company’s financial statements following the close of the transaction. See n ote 12 . Income from operating affiliates for the 2021 third quarter was $124.1 million, compared to an income of $0.9 million, for the 2020 third quarter, and income of $224.1 million for the nine months ended September 30, 2021, compared to an income of $6.3 million for the nine months ended September 30, 2020. The income from operating affiliates for the 2021 period, primarily related to the Company’s recent acquisitions of Coface and Greysbridge. Allowance for Expected Credit Losses The following table provides a roll forward of the allowance for expected credit losses of the Company’s securities classified as available for sale: Structured Securities (1) Municipal Corporate Total Three Months Ended September 30, 2021 Balance at beginning of period $ 759 $ 6 $ 1,359 $ 2,124 Additions for current-period provision for expected credit losses 48 — — 48 Additions (reductions) for previously recognized expected credit losses 14 (4) 395 405 Reductions due to disposals (3) (234) — (232) (466) Balance at end of period $ 587 $ 2 $ 1,522 $ 2,111 Three Months Ended September 30, 2020 Balance at beginning of period $ 1,726 $ 28 $ 4,115 $ 5,869 Additions for current-period provision for expected credit losses 27 — 202 229 Additions (reductions) for previously recognized expected credit losses 403 33 (1,996) (1,560) Reductions due to disposals (28) — (577) (605) Balance at end of period $ 2,128 $ 61 $ 1,744 $ 3,933 Nine Months Ended September 30, 2021 Balance at beginning of period $ 1,490 $ 11 $ 896 $ 2,397 Additions for current-period provision for expected credit losses 282 — 2,428 2,710 Additions (reductions) for previously recognized expected credit losses (751) (9) (557) (1,317) Reductions due to disposals (3) (434) — (1,245) (1,679) Balance at end of period $ 587 $ 2 $ 1,522 $ 2,111 Nine Months Ended September 30, 2020 Balance at beginning of period $ — $ — $ — $ — Cumulative effect of accounting change (2) 517 — 117 634 Additions for current-period provision for expected credit losses 2,868 67 7,643 10,578 Additions (reductions) for previously recognized expected credit losses (903) 8 (4,920) (5,815) Reductions due to disposals (354) (14) (1,096) (1,464) Balance at end of period $ 2,128 $ 61 $ 1,744 $ 3,933 (1) Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities. (2) Adoption of ASU 2016-13 (3) Reduction for the 2021 periods primarily related to the Company’s deconsolidation of Watford. Restricted Assets The Company is required to maintain assets on deposit, which primarily consist of fixed maturities, with various regulatory authorities to support its underwriting operations. The Company’s subsidiaries maintain assets in trust accounts as collateral for transactions with affiliated companies and also have investments in segregated portfolios primarily to provide collateral or guarantees for letters of credit to third parties. See note 18, “Commitments and Contingencies,” of the notes to consolidated financial statements in the Company’s 2020 Form 10-K. The following table details the value of the Company’s restricted assets: September 30, December 31, Assets used for collateral or guarantees: Affiliated transactions $ 4,271,208 $ 4,643,334 Third party agreements 2,594,053 3,083,324 Deposits with U.S. regulatory authorities 803,878 827,552 Deposits with non-U.S. regulatory authorities 469,497 179,099 Total restricted assets $ 8,138,636 $ 8,733,309 Reconciliation of Cash and Restricted Cash The following table details reconciliation of cash and restricted cash within the Consolidated Balance Sheets: September 30, December 31, Cash $ 1,137,721 $ 906,448 Restricted cash (included in ‘other assets’) $ 411,188 $ 384,096 Cash and restricted cash $ 1,548,909 $ 1,290,544 |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair ValueAccounting guidance regarding fair value measurements addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP and provides a common definition of fair value to be used throughout GAAP. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. In addition, it establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement (Level 1 being the highest priority and Level 3 being the lowest priority). The levels in the hierarchy are defined as follows: Level 1: Inputs to the valuation methodology are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets Level 2: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement Following is a description of the valuation methodologies used for securities measured at fair value, as well as the general classification of such securities pursuant to the valuation hierarchy. The Company reviews its securities measured at fair value and discusses the proper classification of such investments with investment advisers and others. The Company determines the existence of an active market based on its judgment as to whether transactions for the financial instrument occur in such market with sufficient frequency and volume to provide reliable pricing information. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. The Company uses quoted values and other data provided by nationally recognized independent pricing sources as inputs into its process for determining fair values of its fixed maturity investments. To validate the techniques or models used by pricing sources, the Company's review process includes, but is not limited to: (i) quantitative analysis ( e.g., comparing the quarterly return for each managed portfolio to its target benchmark, with significant differences identified and investigated); (ii) a review of the average number of prices obtained in the pricing process and the range of resulting fair values; (iii) initial and ongoing evaluation of methodologies used by outside parties to calculate fair value; (iv) a comparison of the fair value estimates to the Company’s knowledge of the current market; (v) a comparison of the pricing services' fair values to other pricing services' fair values for the same investments; and (vi) periodic back-testing, which includes randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates from the pricing service. A price source hierarchy was maintained in order to determine which price source would be used (i.e. , a price obtained from a pricing service with more seniority in the hierarchy will be used over a less senior one in all cases). The hierarchy prioritizes pricing services based on availability and reliability and assigns the highest priority to index providers. Based on the above review, the Company will challenge any prices for a security or portfolio which are considered not to be representative of fair value. The Company did not adjust any of the prices obtained from the independent pricing sources at September 30, 2021. In certain circumstances, when fair values are unavailable from these independent pricing sources, quotes are obtained directly from broker-dealers who are active in the corresponding markets. Such quotes are subject to the validation procedures noted above. Where quotes are unavailable, fair value is determined by the Investment Manager using quantitative and qualitative assessments such as internally modeled values. Of the $23.8 billion of financial assets and liabilities measured at fair value at September 30, 2021, approximately $9.0 million, or 0.0%, were priced using non-binding broker-dealer quotes or modeled valuations. Of the $26.5 billion of financial assets and liabilities measured at fair value at December 31, 2020, approximately $150.1 million, or 0.6%, were priced using non-binding broker-dealer quotes or modeled valuations. Fixed maturities The Company uses the market approach valuation technique to estimate the fair value of its fixed maturity securities, when possible. The market approach includes obtaining prices from independent pricing services, such as index providers and pricing vendors, as well as to a lesser extent quotes from broker-dealers. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. Each source has its own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of “matrix pricing” in which the independent pricing source uses observable market inputs including, but not limited to, investment yields, credit risks and spreads, benchmarking of like securities, broker-dealer quotes, reported trades and sector groupings to determine a reasonable fair value. The following describes the significant inputs generally used to determine the fair value of the Company’s fixed maturity securities by asset class: • U.S. government and government agencies — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The Company determined that all U.S. Treasuries would be classified as Level 1 securities due to observed levels of trading activity, the high number of strongly correlated pricing quotes received on U.S. Treasuries and other factors. The fair values of U.S. government agency securities are generally determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads for these securities are observable market inputs, the fair values of U.S. government agency securities are classified within Level 2. • Corporate bonds — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined using the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. As the significant inputs used in the pricing process for corporate bonds are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. • Mortgage-backed securities — valuations provided by independent pricing services, substantially all through pricing vendors and index providers with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the expected average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. • Municipal bonds — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally determined using spreads obtained from broker-dealers who trade in the relevant security market, trade prices and the new issue market. As the significant inputs used in the pricing process for municipal bonds are observable market inputs, the fair value of these securities are classified within Level 2. • Commercial mortgage-backed securities — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for commercial mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. • Non-U.S. government securities — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally based on international indices or valuation models which include daily observed yield curves, cross-currency basis index spreads and country credit spreads. As the significant inputs used in the pricing process for non-U.S. government securities are observable market inputs, the fair value of these securities are classified within Level 2. • Asset-backed securities — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for asset-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. Equity securities The Company determined that exchange-traded equity securities would be included in Level 1 as their fair values are based on quoted market prices in active markets. Certain equity securities are included in Level 2 of the valuation hierarchy as the significant inputs used in the pricing process for such securities are observable market inputs. Other equity securities are included in Level 3 due to the lack of an available independent price source for such securities. As the significant inputs used to price these securities are unobservable, the fair value of such securities are classified as Level 3. Other investments The Company’s other investments include term loan investments for which fair values are estimated by using quoted prices of term loan investments with similar characteristics, pricing models or matrix pricing. Such investments are generally classified within Level 2. The fair values for certain of the Company’s other investments are determined using net asset values as advised by external fund managers. The net asset value is based on the fund manager’s valuation of the underlying holdings in accordance with the fund’s governing documents. In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. A small number of securities are included in Level 3 due to the lack of an available independent price source for such securities. Derivative instruments The Company’s futures contracts, foreign currency forward contracts, interest rate swaps and other derivatives trade in the over-the-counter derivative market. The Company uses the market approach valuation technique to estimate the fair value for these derivatives based on significant observable market inputs from third party pricing vendors, non-binding broker-dealer quotes and/or recent trading activity. As the significant inputs used in the pricing process for these derivative instruments are observable market inputs, the fair value of these securities are classified within Level 2. Short-term investments The Company determined that certain of its short-term investments held in highly liquid money market-type funds, Treasury bills and commercial paper would be included in Level 1 as their fair values are based on quoted market prices in active markets. The fair values of other short-term investments are generally determined using the spread above the risk-free yield curve and are classified within Level 2. Residential mortgage loans The Company’s residential mortgage loans (included in ‘other assets’ in the consolidated balance sheets) include amounts related to the Company’s whole mortgage loan purchase and sell program. Fair values of residential mortgage loans are generally determined based on market prices. As significant inputs used in pricing process for these residential mortgage loans are observable market inputs, the fair value of these securities are classified within Level 2. Contingent consideration liabilities Contingent consideration liabilities (included in ‘other liabilities’ in the consolidated balance sheets) include amounts related to various Company’s acquisitions. Such amounts are remeasured at fair value at each balance sheet date with changes in fair value recognized in ‘net realized gains (losses).’ To determine the fair value of contingent consideration liabilities, the Company estimates future payments using an income approach based on modeled inputs which include a weighted average cost of capital. The Company determined that contingent consideration liabilities would be included within Level 3. The following table presents the Company’s financial assets and liabilities measured at fair value by level at September 30, 2021: Estimated Fair Value Measurements Using: Estimated Quoted Prices in Significant Significant Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 6,403,617 $ — $ 6,403,604 $ 13 Mortgage backed securities 405,797 — 405,797 — Municipal bonds 382,722 — 382,722 — Commercial mortgage backed securities 579,424 — 579,424 — U.S. government and government agencies 4,460,515 4,431,935 28,580 — Non-U.S. government securities 1,863,734 — 1,863,734 — Asset backed securities 2,672,554 — 2,669,110 3,444 Total 16,768,363 4,431,935 12,332,971 3,457 Short-term investments 3,069,965 2,046,391 1,023,574 — Equity securities, at fair value 1,790,640 1,756,462 31,596 2,582 Derivative instruments (4) 89,958 — 89,958 — Residential mortgage loans 7,701 — 7,701 — Fair value option: Corporate bonds 374,326 — 374,326 — Non-U.S. government bonds 19,829 — 19,829 — Mortgage backed securities — — — — Commercial mortgage backed securities — — — — Asset backed securities 19,852 — 19,852 — U.S. government and government agencies — — — — Short-term investments 115,681 1,190 114,491 — Equity securities 24,522 19,987 — 4,535 Other investments 359,011 17,861 311,393 29,757 Other investments measured at net asset value (2) 1,130,748 Total 2,043,969 39,038 839,891 34,292 Total assets measured at fair value $ 23,770,596 $ 8,273,826 $ 14,325,691 $ 40,331 Liabilities measured at fair value: Contingent consideration liabilities $ (17,811) $ — $ — $ (17,811) Securities sold but not yet purchased (3) — — — — Derivative instruments (4) (43,526) — (43,526) — Total liabilities measured at fair value $ (61,337) $ — $ (43,526) $ (17,811) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See note 8 , “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See note 10 . The following table presents the Company’s financial assets and liabilities measured at fair value by level at December 31, 2020: Estimated Fair Value Measurements Using: Estimated Quoted Prices in Significant Significant Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 7,856,571 $ — $ 7,856,558 $ 13 Mortgage backed securities 630,001 — 630,001 — Municipal bonds 494,522 — 494,522 — Commercial mortgage backed securities 389,900 — 389,900 — U.S. government and government agencies 5,557,077 5,463,356 93,721 — Non-U.S. government securities 2,433,733 — 2,433,733 — Asset backed securities 1,634,804 — 1,631,378 3,426 Total 18,996,608 5,463,356 13,529,813 3,439 Short-term investments 1,924,922 1,920,565 4,357 — Equity securities, at fair value 1,460,959 1,401,653 17,291 42,015 Derivative instruments (4) 177,383 — 177,383 — Fair value option: Corporate bonds 651,294 — 650,309 985 Non-U.S. government bonds 35,263 — 35,263 — Mortgage backed securities 3,282 — 3,282 — Commercial mortgage backed securities 1,090 — 1,090 — Asset backed securities 152,151 — 152,151 — U.S. government and government agencies 274 164 110 — Short-term investments 557,008 420,131 136,877 — Equity securities 92,549 23,373 188 68,988 Other investments 1,134,229 51,149 1,015,977 67,103 Other investments measured at net asset value (2) 1,197,656 Total 3,824,796 494,817 1,995,247 137,076 Total assets measured at fair value $ 26,384,668 $ 9,280,391 $ 15,724,091 $ 182,530 Liabilities measured at fair value: Contingent consideration liabilities $ (461) $ — $ — $ (461) Securities sold but not yet purchased (3) (21,679) — (21,679) — Derivative instruments (4) (108,705) — (108,705) — Total liabilities measured at fair value $ (130,845) $ — $ (130,384) $ (461) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See note 8 , “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See note 10 . The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs: Assets Liabilities s Available For Sale Fair Value Option Fair Value Structured Securities (1) Corporate Corporate Other Equity Equity Contingent Consideration Liabilities Three Months Ended September 30, 2021 Balance at beginning of period $ 3,424 $ 13 $ 998 $ 73,900 $ 73,678 $ 49,136 $ (466) Total gains or (losses) (realized/unrealized) Included in earnings (2) 10 — — — 38 11 — Included in other comprehensive income 10 — — — — — — Purchases, issuances, sales and settlements Purchases — — — — — 208 (17,345) Issuances — — — — — — — Sales (3) — — (998) (44,143) (69,181) (46,773) — Settlements — — — — — — — Transfers in and/or out of Level 3 — — — — — — — Balance at end of period $ 3,444 $ 13 $ — $ 29,757 $ 4,535 $ 2,582 $ (17,811) Three Months Ended September 30, 2020 Balance at beginning of period $ 3,450 $ 857 $ 998 $ 46,453 $ 61,447 $ 51,981 $ (1,250) Total gains or (losses) (realized/unrealized) Included in earnings (2) (75) (5,872) (34) 885 2,076 (946) — Included in other comprehensive income 191 6,936 — — — — — Purchases, issuances, sales and settlements Purchases — — — 22,436 — — — Issuances — — — — — — — Sales — — — (3,588) — (8,349) — Settlements (11) — — — — — 620 Transfers in and/or out of Level 3 — (1,908) — — — — — Balance at end of period $ 3,555 $ 13 $ 964 $ 66,186 $ 63,523 $ 42,686 $ (630) Nine Months Ended September 30, 2021 Balance at beginning of year $ 3,426 $ 13 $ 985 $ 67,103 $ 68,988 $ 42,015 $ (461) Total gains or (losses) (realized/unrealized) Included in earnings (2) (46) — 13 881 4,728 1,837 — Included in other comprehensive income 67 — — — — — — Purchases, issuances, sales and settlements Purchases — — — 13,003 — 5,503 (17,345) Issuances — — — — — — — Sales (3) — — (998) (51,230) (69,181) (46,773) — Settlements (3) — — — — — (5) Transfers in and/or out of Level 3 — — — — — — — Balance at end of period $ 3,444 $ 13 $ — $ 29,757 $ 4,535 $ 2,582 $ (17,811) Nine Months Ended September 30, 2020 Balance at beginning of year $ 5,216 $ 8,851 $ 932 $ 68,817 $ 58,094 $ 55,889 $ (7,998) Total gains or (losses) (realized/unrealized) Included in earnings (2) (130) (5,865) (34) (129) 5,429 7,132 (72) Included in other comprehensive income (118) 397 — — — — — Purchases, issuances, sales and settlements Purchases — — 66 22,460 — 3,464 — Issuances — — — — — — — Sales — — — (27,946) — (23,799) — Settlements (1,413) (1,462) — — — — 7,440 Transfers in and/or out of Level 3 — (1,908) — 2,984 — — — Balance at end of period $ 3,555 $ 13 $ 964 $ 66,186 $ 63,523 $ 42,686 $ (630) (1) Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities. (2) Gains or losses were included in net realized gains (losses). (3) Sales for the 2021 periods primarily related to the Company’s deconsolidation of Watford. Financial Instruments Disclosed, But Not Carried, At Fair Value The Company uses various financial instruments in the normal course of its business. The carrying values of cash, accrued investment income, receivable for securities sold, certain other assets, payable for securities purchased and certain other liabilities approximated their fair values at September 30, 2021, due to their respective short maturities. As these financial instruments are not actively traded, their respective fair values are classified within Level 2. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company’s investment strategy allows for the use of derivative instruments. The Company’s derivative instruments are recorded on its consolidated balance sheets at fair value. The Company utilizes exchange traded U.S. Treasury note, Eurodollar and other futures contracts and commodity futures to manage portfolio duration or replicate investment positions in its portfolios and the Company routinely utilizes foreign currency forward contracts, currency options, index futures contracts and other derivatives as part of its total return objective. In addition, certain of the Company’s investments are managed in portfolios which incorporate the use of foreign currency forward contracts which are intended to provide an economic hedge against foreign currency movements. In addition, the Company purchases to-be-announced mortgage backed securities (“TBAs”) as part of its investment strategy. TBAs represent commitments to purchase a future issuance of agency mortgage backed securities. For the period between purchase of a TBA and issuance of the underlying security, the Company’s position is accounted for as a derivative. The Company purchases TBAs in both long and short positions to enhance investment performance and as part of its overall investment strategy. The following table summarizes information on the fair values and notional values of the Company’s derivative instruments: Estimated Fair Value Asset Derivatives Liability Derivatives Notional September 30, 2021 Futures contracts (2) $ 36,010 $ (17,562) $ 2,796,442 Foreign currency forward contracts (2) 7,380 (13,914) 1,234,665 TBAs (3) 49,227 — 47,603 Other (2) 46,568 (12,050) 4,184,225 Total $ 139,185 $ (43,526) December 31, 2020 Futures contracts (2) $ 11,046 $ (4,496) $ 3,099,796 Foreign currency forward contracts (2) 52,716 (6,202) 1,656,729 TBAs (3) — — — Other (2) 113,621 (98,007) 5,763,919 Total $ 177,383 $ (108,705) (1) Represents the absolute notional value of all outstanding contracts, consisting of long and short positions. (2) The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’ (3) The fair value of TBAs are included in ‘fixed maturities available for sale, at fair value.’ The Company did not hold any derivatives which were designated as hedging instruments at September 30, 2021 or December 31, 2020. The Company’s derivative instruments can be traded under master netting agreements, which establish terms that apply to all derivative transactions with a counterparty. In the event of a bankruptcy or other stipulated event of default, such agreements provide that the non-defaulting party may elect to terminate all outstanding derivative transactions, in which case all individual derivative positions (loss or gain) with a counterparty are closed out and netted and replaced with a single amount, usually referred to as the termination amount, which is expressed in a single currency. The resulting single net amount, where positive, is payable to the party “in-the-money” regardless of whether or not it is the defaulting party, unless the parties have agreed that only the non-defaulting party is entitled to receive a termination payment where the net amount is positive and is in its favor. Contractual close-out netting reduces derivatives credit exposure from gross to net exposure. At September 30, 2021, asset derivatives and liability derivatives of $133.1 million and $42.2 million, respectively, were subject to a master netting agreement, compared to $138.8 million and $93.0 million, respectively, at December 31, 2020. The remaining derivatives included in the preceding table were not subject to a master netting agreement. Realized and unrealized contract gains and losses on the Company’s derivative instruments are reflected in ‘net realized gains (losses)’ in the consolidated statements of income, as summarized in the following table: Derivatives not designated as September 30, hedging instruments: 2021 2020 Three Months Ended Net realized gains (losses): Futures contracts $ (10,073) $ 10,945 Foreign currency forward contracts (16,146) 10,813 TBAs (46) 120 Other (1) 4,830 (1,509) Total $ (21,435) $ 20,369 Nine Months Ended Net realized gains (losses): Futures contracts $ (17,394) $ 105,282 Foreign currency forward contracts (36,922) 3,466 TBAs (46) 1,129 Other (1) 17,934 36,845 Total $ (36,428) $ 146,722 (1) Includes realized gains and losses on swaps, options and other derivatives contracts. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Investment Commitments The Company’s investment commitments, which are primarily related to agreements entered into by the Company to invest in funds and separately managed accounts when called upon, were approximately $2.6 billion at September 30, 2021, compared to $2.1 billion at December 31, 2020. Interest Paid Interest paid on the Company’s senior notes and other borrowings were $75.8 million for the nine months ended September 30, 2021, compared to $60.6 million for the 2020 period. |
Variable Interest Entities and
Variable Interest Entities and Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2021 | |
Noncontrolling Interest [Abstract] | |
Variable Interest Entity and Noncontrolling Interests | Variable Interest Entities and Noncontrolling Interests Watford In March 2014, the Company invested $100.0 million and acquired approximately 11% of Watford’s outstanding common equity. Watford was considered a VIE and the Company concluded that it was the primary beneficiary of Watford, through June 30, 2021. As such, the results of Watford were included in the Company’s consolidated financial statements as of and for the periods ended June 30, 2021. In the 2020 fourth quarter, Arch Capital, Watford and Greysbridge, a wholly-owned subsidiary of Arch Capital, entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”). The merger and the related Greysbridge equity financing closed on July 1, 2021. Effective July 1, 2021, Watford is wholly owned by Greysbridge, and Greysbridge is owned 40% by the Company, 30% by certain investment funds managed by Kelso and 30% by certain investment funds managed by Warburg. Based on the governing documents of Greysbridge, the Company concluded that, while it retains significant influence over Watford, Watford no longer constitutes a variable interest entity. Accordingly, effective July 1, 2021, the Company no longer consolidates the results of Watford in its consolidated financial statements and footnotes. Beginning in the 2021 third quarter, the Company classifies its investment as ‘investments in operating affiliates’ on the Company’s balance sheets and is accounted for under the equity method. The following table provides the carrying amount and balance sheet caption in which the assets and liabilities of Watford were reported at December 31, 2020: December 31, 2020 Assets Investments accounted for using the fair value option (1) $ 1,790,385 Fixed maturities available for sale, at fair value 655,249 Equity securities, at fair value 52,410 Cash 211,451 Accrued investment income 14,679 Premiums receivable 224,377 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses 286,590 Ceded unearned premiums 122,339 Deferred acquisition costs 53,705 Receivable for securities sold 37,423 Goodwill and intangible assets 7,650 Other assets 75,801 Total assets of consolidated VIE $ 3,532,059 Liabilities Reserve for losses and loss adjustment expenses $ 1,519,583 Unearned premiums 407,714 Reinsurance balances payable 63,269 Revolving credit agreement borrowings 155,687 Senior notes 172,689 Payable for securities purchased 25,881 Other liabilities 193,494 Total liabilities of consolidated VIE $ 2,538,317 Redeemable noncontrolling interests $ 52,398 (1) Included in “other investments” on the Company’s balance sheet. Through June 30, 2021, Watford generated $47.0 million of cash provided by operating activities, $96.3 million of cash provided by investing activities and $2.0 million of cash used for financing activities, compared to $133.6 million of cash provided by operating activities, $242.0 million of cash provided by investing activities and $279.7 million of cash used for financing activities for the nine months ended September 30, 2020. Non-redeemable noncontrolling interests Through June 30, 2021, the Company accounted for the portion of Watford’s common equity attributable to third party investors in the shareholders’ equity section of its consolidated balance sheets. The portion of Watford’s income or loss attributable to third party investors was recorded in the consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests.’ The following table sets forth activity in the non-redeemable noncontrolling interests: September 30, 2021 2020 Three Months Ended Balance, beginning of period $ 918,874 $ 679,089 Impact of deconsolidation of Watford (918,874) — Additional paid in capital attributable to noncontrolling interests — 243 Amounts attributable to noncontrolling interests — 67,768 Other comprehensive income (loss) attributable to noncontrolling interests — 10,820 Balance, end of period $ — $ 757,920 Nine Months Ended Balance, beginning of year $ 823,007 $ 762,777 Impact of deconsolidation of Watford (918,874) Additional paid in capital attributable to noncontrolling interests 22,113 715 Repurchases attributable to non-redeemable noncontrolling interests (1) — (2,867) Amounts attributable to noncontrolling interests 78,314 (578) Other comprehensive income (loss) attributable to noncontrolling interests (4,560) (2,127) Balance, end of period $ — $ 757,920 (1) During 2020, Watford’s board of directors authorized the investment in Watford’s common shares through a share repurchase program. Redeemable noncontrolling interests Through June 30, 2021, the Company accounted for redeemable noncontrolling interests in the mezzanine section of its consolidated balance sheets in accordance with applicable accounting guidance. Such redeemable noncontrolling interests primarily related to the Watford Preference Shares issued in late March 2014 with a par value of $0.01 per share and a liquidation preference of $25.00 per share. The Watford Preference Shares were issued at a discounted amount of $24.50 per share. Through June 30, 2021 preferred dividends, including the accretion of the discount and issuance costs, were included in ‘net (income) loss attributable to noncontrolling interests’ in the Company’s consolidated statements of income. The following table sets forth activity in the redeemable non-controlling interests: September 30, 2021 2020 Three Months Ended Balance, beginning of period $ 57,533 $ 55,986 Impact of deconsolidation of Watford (48,919) — Accretion of preference share issuance costs — 23 Other 1,623 1,826 Balance, end of period $ 10,237 $ 57,835 Nine Months Ended Balance, beginning of year $ 58,548 $ 55,404 Impact of deconsolidation of Watford (48,919) — Accretion of preference share issuance costs — 70 Other 608 2,361 Balance, end of period $ 10,237 $ 57,835 The portion of income or loss attributable to third party investors, recorded in the Company’s consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests,’ are summarized in the table below: September 30, 2021 2020 Three Months Ended Amounts attributable to non-redeemable noncontrolling interests $ — $ (67,768) Amounts attributable to redeemable noncontrolling interests (1,473) (1,875) Net (income) loss attributable to noncontrolling interests $ (1,473) $ (69,643) Nine Months Ended Amounts attributable to non-redeemable noncontrolling interests $ (78,314) $ 578 Amounts attributable to redeemable noncontrolling interests (3,889) (4,998) Net (income) loss attributable to noncontrolling interests $ (82,203) $ (4,420) Bellemeade Re The Company has entered into aggregate excess of loss mortgage reinsurance agreements with various special purpose reinsurance companies domiciled in Bermuda (the “Bellemeade Agreements”). At the time the Bellemeade Agreements were entered into, the applicability of the accounting guidance that addresses VIEs was evaluated. As a result of the evaluation of the Bellemeade Agreements, the Company concluded that these entities are VIEs. However, given that the ceding insurers do not have the unilateral power to direct those activities that are significant to their economic performance, the Company does not consolidate such entities in its consolidated financial statements. The following table presents the total assets of the Bellemeade entities, as well as the Company’s maximum exposure to loss associated with these VIEs, calculated as the maximum historical observable spread between the benchmark index for each respective transaction and short term invested trust asset yields. The benchmark index for agreements effective prior to 2021 is based on one-month LIBOR, while the 2021 agreements benchmark index is based on the Secured Overnight Financing Rate (“SOFR”). SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. September 30, 2021 December 31, 2020 Maximum Exposure to Loss Maximum Exposure to Loss Bellemeade Entities (Issue Date) Total VIE Assets On-Balance Sheet (Asset) Liability Off-Balance Sheet Total Total VIE Assets On-Balance Sheet (Asset) Liability Off-Balance Sheet Total Bellemeade 2017-1 Ltd. (Oct-17) $ 145,573 $ (214) $ 585 $ 371 $ 145,573 $ (245) $ 844 $ 599 Bellemeade 2018-1 Ltd. (Apr-18) 228,938 (764) 1,683 919 250,095 (903) 2,245 1,342 Bellemeade 2018-2 Ltd. (Aug-18) — — — — 108,395 (138) 280 142 Bellemeade 2018-3 Ltd. (Oct-18) 302,563 (1,049) 2,328 1,279 302,563 (1,320) 3,262 1,942 Bellemeade 2019-1 Ltd. (Mar-19) 210,529 (931) 8,142 7,211 219,256 (1,361) 8,461 7,100 Bellemeade 2019-2 Ltd. (Apr-19) 398,316 (787) 5,658 4,871 398,316 (730) 5,201 4,471 Bellemeade 2019-3 Ltd. (Jul-19) 491,634 (826) 3,971 3,145 528,084 (861) 5,079 4,218 Bellemeade 2019-4 Ltd. (Oct-19) 468,737 (682) 4,761 4,079 468,737 (890) 6,676 5,786 Bellemeade 2020-1 Ltd. (Jun-20) (1) — — — — 275,068 (178) 1,012 834 Bellemeade 2020-2 Ltd. (Sep-20) (2) 266,704 (279) 2,629 2,350 423,420 (556) 6,839 6,283 Bellemeade 2020-3 Ltd. (Nov-20) (3) 381,410 (395) 6,646 6,251 418,158 (631) 9,605 8,974 Bellemeade 2020-4 Ltd. (Dec-20) (4) 226,916 (100) 2,190 2,090 321,393 (156) 6,816 6,660 Bellemeade 2021-1 Ltd. (Mar-21) (5) 579,717 229 4,217 4,446 — — — — Bellemeade 2021-2 Ltd. (Jun-21) (6) 522,807 906 5,090 5,996 — — — — Bellemeade 2021-3 Ltd. (Sep-21) (7) 507,873 182 4,561 4,743 — — — — Total $ 4,731,717 $ (4,710) $ 52,461 $ 47,751 $ 3,859,058 $ (7,969) $ 56,320 $ 48,351 (1) An additional $79 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (2) An additional $26 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (3) An additional $34 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (4) An additional $16 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (5) An additional $64 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (6) An additional $93 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2021 | |
Comprehensive Income Note Disclosure [Abstract] | |
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss): Amounts Reclassified from AOCI Consolidated Statement of Income Three Months Ended Nine Months Ended Details About Line Item That Includes September 30, September 30, AOCI Components Reclassification 2021 2020 2021 2020 Unrealized appreciation on available-for-sale investments Net realized gains (losses) $ 68,373 $ 87,871 $ 135,291 $ 416,432 Provision for credit losses (457) 1,333 (1,208) (4,762) Other-than-temporary impairment losses — — — (533) Total before tax 67,916 89,204 134,083 411,137 Income tax (expense) benefit (5,262) (9,401) (13,579) (42,714) Net of tax $ 62,654 $ 79,803 $ 120,504 $ 368,423 Before Tax Amount Tax Expense (Benefit) Net of Tax Amount Three Months Ended September 30, 2021 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ (104,607) $ (8,684) $ (95,923) Less reclassification of net realized gains (losses) included in net income 67,916 5,262 62,654 Foreign currency translation adjustments (32,060) (350) (31,710) Other comprehensive income (loss) $ (204,583) $ (14,296) $ (190,287) Three Months Ended September 30, 2020 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 119,265 $ 8,483 $ 110,782 Less reclassification of net realized gains (losses) included in net income 89,204 9,401 79,803 Foreign currency translation adjustments 16,918 209 16,709 Other comprehensive income (loss) $ 46,979 $ (709) $ 47,688 Nine Months Ended September 30, 2021 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ (307,910) $ (28,808) $ (279,102) Less reclassification of net realized gains (losses) included in net income 134,083 13,579 120,504 Foreign currency translation adjustments (54,083) 6 (54,089) Other comprehensive income (loss) $ (496,076) $ (42,381) $ (453,695) Nine Months Ended September 30, 2020 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 611,390 $ 65,099 $ 546,291 Less reclassification of net realized gains (losses) included in net income 411,137 42,714 368,423 Foreign currency translation adjustments (5,911) (182) (5,729) Other comprehensive income (loss) $ 194,342 $ 22,203 $ 172,139 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s income tax provision on income before income taxes, including income (loss) from operating affiliates, resulted in an effective tax rate of 5.5% for the nine months ended September 30, 2021, compared to 8.2% for the nine months ended September 30, 2020. The effective tax rate for the 2021 period included discrete income tax benefits of $28.7 million which had the effect of decreasing the effective tax rate on net income available to Arch common shareholders by 1.7%. The discrete tax items in the 2021 period primarily related to the partial release of a valuation allowance on certain U.K. deferred tax assets. The Company’s effective tax rate, which is based upon the expected annual effective tax rate, may fluctuate from period to period based on the relative mix of income or loss reported by jurisdiction and the varying tax rates in each jurisdiction. The Company had a net deferred tax asset of $162.5 million at September 30, 2021, compared to a net deferred tax asset of $15.7 million at December 31, 2020. The change is primarily a result of mortgage contingency reserves activity, fixed asset capitalization and market value fluctuations in the investment portfolio. In addition, the Company paid $202.4 million and $146.8 million of income taxes for the nine months ended September 30, 2021 and 2020, respectively. |
Legal Proceedings
Legal Proceedings | 9 Months Ended |
Sep. 30, 2021 | |
Disclosure Legal Proceedings [Abstract] | |
Legal Proceedings | Legal ProceedingsThe Company, in common with the insurance industry in general, is subject to litigation and arbitration in the normal course of its business. As of September 30, 2021, the Company was not a party to any litigation or arbitration which is expected by management to have a material adverse effect on the Company’s results of operations and financial condition and liquidity. |
Transactions With Related Parti
Transactions With Related Parties | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Transactions with related parties | Transactions with Related PartiesIn 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. Barbican recorded reinsurance recoverable on unpaid and paid losses and funds held liability of nil and $8.8 million, respectively, at September 30, 2021, compared to $199.8 million and $149.6 million, respectively, at December 31, 2020. In July 2021, following consummation of the Merger Agreement and the related Greysbridge equity financing, pursuant to which Watford is 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, the Company entered into certain reinsurance transactions with Watford. For the three months ended September 30, 2021, the Company ceded premiums written related to such transactions of $316.2 million (which includes reinsurance transactions in force as well as those entered into in conjunction with the Merger Agreement). In addition, Watford paid certain acquisition costs and administrative fees to the Company. At September 30, 2021, the Company recorded a reinsurance recoverable on unpaid and paid losses from Watford of $874.9 million and a reinsurance balance payable to Watford of $281.2 million. See note 12, “Variable Interest Entities and Noncontrolling Interests , ” for information about Watford. 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 September 30, 2021, the Company owns $35.0 million in aggregate principal amount of Watford Holdings Ltd’s 6.5% senior notes, due July 2, 2029 and approximately 6.6% of Watford’s preference shares. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event Share Repurchases In October 2021, the Company announced that its Board of Directors has increased its share repurchase program to an aggregate of up to $1.5 billion, which may be effected from time to time in open market or privately negotiated transactions through December 31, 2022. The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions and corporate and regulatory considerations. From October 1 to October 13, 2021, the Company repurchased approximately 1.2 million common shares for an aggregate purchase price of $45.5 million. At October 27, 2021 approximately $1.5 billion of repurchases were available under the share repurchase program. |
Basis of Presentation and Rec_2
Basis of Presentation and Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of accounting | The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. |
Reclassification of prior periods | The Company has reclassified the presentation of certain prior year information to conform to the current presentation, including the correct presentation of ‘income (loss) from operating affiliates’ on its consolidated statements of income for all periods presented to reclass such item from ‘other income (loss)’. The Company also changed its presentation of ‘investment in operating affiliates’ on its consolidated balance sheet for all periods presented to reclass such item from ‘other assets’. Such reclassifications had no effect on the Company’s net income, comprehensive income, shareholders’ equity or cash flows. Management views the impact of the prior period misclassification as not material to the financial statements on a quantitative and qualitative basis. See note 8 |
Recent accounting pronouncements | Recently Issued Accounting Standards Adopted The Company adopted ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This ASU eliminates certain exceptions for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods. The ASU also clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements. |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted earnings per common share | The following table sets forth the computation of basic and diluted earnings per common share: Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Numerator: Net income (loss) $ 421,415 $ 488,682 $ 1,615,787 $ 866,397 Amounts attributable to noncontrolling interests (1,473) (69,643) (82,203) (4,420) Net income (loss) available to Arch 419,942 419,039 1,533,584 861,977 Preferred dividends (16,090) (10,403) (38,159) (31,209) Loss on redemption of preferred shares (15,101) — (15,101) — Net income (loss) available to Arch common shareholders $ 388,751 $ 408,636 $ 1,480,324 $ 830,768 Denominator: Weighted average common shares and common share equivalents outstanding — basic 389,274,220 402,850,485 395,899,591 403,081,266 Effect of dilutive common share equivalents: Nonvested restricted shares 2,131,915 1,580,791 1,877,930 1,690,447 Stock options (1) 6,497,212 4,763,381 6,482,964 5,543,184 Weighted average common shares and common share equivalents outstanding — diluted 397,903,347 409,194,657 404,260,485 410,314,897 Earnings per common share: Basic $ 1.00 $ 1.01 $ 3.74 $ 2.06 Diluted $ 0.98 $ 1.00 $ 3.66 $ 2.02 (1) Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2021 third quarter and 2020 third quarter, the number of stock options excluded were 1,948,006 and 4,713,241, respectively. For the nine months ended September 30, 2021 and 2020 period, the number of stock options excluded were 2,397,507 and 2,361,413, respectively. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Analysis of underwriting income or loss by segment and reconciliation to net income available to common shareholders | The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to Arch common shareholders: Three Months Ended September 30, 2021 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 1,596,619 $ 1,251,760 $ 360,934 $ 3,207,415 $ — $ 3,207,415 Premiums ceded (442,806) (630,371) (60,207) (1,131,486) — (1,131,486) Net premiums written 1,153,813 621,389 300,727 2,075,929 — 2,075,929 Change in unearned premiums (215,143) 57,313 11,238 (146,592) — (146,592) Net premiums earned 938,670 678,702 311,965 1,929,337 — 1,929,337 Other underwriting income (loss) — 3,293 3,981 7,274 — 7,274 Losses and loss adjustment expenses (668,630) (545,846) (11,543) (1,226,019) — (1,226,019) Acquisition expenses (152,467) (129,450) (24,098) (306,015) — (306,015) Other operating expenses (138,931) (45,647) (46,254) (230,832) — (230,832) Underwriting income (loss) $ (21,358) $ (38,948) $ 234,051 173,745 — 173,745 Net investment income 88,195 — 88,195 Net realized gains (losses) (25,040) — (25,040) Equity in net income (loss) of investment funds accounted for using the equity method 105,398 — 105,398 Other income (loss) (3,960) — (3,960) Corporate expenses (2) (18,636) — (18,636) Transaction costs and other (2) (1,036) — (1,036) Amortization of intangible assets (20,135) — (20,135) Interest expense (33,176) — (33,176) Net foreign exchange gains (losses) 36,078 — 36,078 Income (loss) before income taxes and income (loss) from operating affiliates 301,433 — 301,433 Income tax (expense) benefit (4,137) — (4,137) Income (loss) from operating affiliates 124,119 — 124,119 Net income (loss) 421,415 — 421,415 Amounts attributable to redeemable noncontrolling interests (1,473) — (1,473) Amounts attributable to nonredeemable noncontrolling interests — — — Net income (loss) available to Arch 419,942 — 419,942 Preferred dividends (16,090) — (16,090) Loss on redemption of preferred shares (15,101) — (15,101) Net income (loss) available to Arch common shareholders $ 388,751 $ — $ 388,751 Underwriting Ratios Loss ratio 71.2 % 80.4 % 3.7 % 63.5 % — % 63.5 % Acquisition expense ratio 16.2 % 19.1 % 7.7 % 15.9 % — % 15.9 % Other operating expense ratio 14.8 % 6.7 % 14.8 % 12.0 % — % 12.0 % Combined ratio 102.2 % 106.2 % 26.2 % 91.4 % — % 91.4 % Goodwill and intangible assets $ 261,103 $ 176,128 $ 526,091 $ 963,322 $ — $ 963,322 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Three Months Ended September 30, 2020 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 1,206,328 $ 1,004,590 $ 346,248 $ 2,556,914 $ 197,480 $ 2,681,032 Premiums ceded (382,167) (400,388) (47,783) (830,086) (50,164) (806,888) Net premiums written 824,161 604,202 298,465 1,726,828 147,316 1,874,144 Change in unearned premiums (105,007) (49,704) 52,944 (101,767) (1,285) (103,052) Net premiums earned 719,154 554,498 351,409 1,625,061 146,031 1,771,092 Other underwriting income (loss) (31) 298 4,600 4,867 546 5,413 Losses and loss adjustment expenses (525,321) (422,084) (153,055) (1,100,460) (115,813) (1,216,273) Acquisition expenses (102,420) (85,388) (35,716) (223,524) (24,418) (247,942) Other operating expenses (122,541) (41,818) (36,708) (201,067) (14,619) (215,686) Underwriting income (loss) $ (31,159) $ 5,506 $ 130,530 104,877 (8,273) 96,604 Net investment income 99,857 28,655 128,512 Net realized gains (losses) 210,984 69,515 280,499 Equity in net income (loss) of investment funds accounted for using the equity method 126,735 — 126,735 Other income (loss) — — — Corporate expenses (2) (16,263) — (16,263) Transaction costs and other (2) (1,674) — (1,674) Amortization of intangible assets (16,715) — (16,715) Interest expense (36,224) (5,119) (41,343) Net foreign exchange gains (losses) (38,681) (6,204) (44,885) Income (loss) before income taxes and income (loss) from operating affiliates 432,896 78,574 511,470 Income tax (expense) benefit (23,638) (69) (23,707) Income (loss) from operating affiliates 919 — 919 Net income (loss) 410,177 78,505 488,682 Amounts attributable to redeemable noncontrolling interests (882) (993) (1,875) Amounts attributable to nonredeemable noncontrolling interests — (67,768) (67,768) Net income (loss) available to Arch 409,295 9,744 419,039 Preferred dividends (10,403) — (10,403) Net income (loss) available to Arch common shareholders $ 398,892 $ 9,744 $ 408,636 Underwriting Ratios Loss ratio 73.0 % 76.1 % 43.6 % 67.7 % 79.3 % 68.7 % Acquisition expense ratio 14.2 % 15.4 % 10.2 % 13.8 % 16.7 % 14.0 % Other operating expense ratio 17.0 % 7.5 % 10.4 % 12.4 % 10.0 % 12.2 % Combined ratio 104.2 % 99.0 % 64.2 % 93.9 % 106.0 % 94.9 % Goodwill and intangible assets $ 282,146 $ 20,319 $ 403,662 $ 706,127 $ 7,650 $ 713,777 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Nine Months Ended September 30, 2021 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 4,381,372 $ 4,080,840 $ 1,143,691 $ 9,602,213 $ 457,465 $ 9,890,912 Premiums ceded (1,269,165) (1,535,607) (171,923) (2,973,005) (102,763) (2,907,002) Net premiums written 3,112,207 2,545,233 971,768 6,629,208 354,702 6,983,910 Change in unearned premiums (488,636) (484,607) 10,735 (962,508) (22,734) (985,242) Net premiums earned 2,623,571 2,060,626 982,503 5,666,700 331,968 5,998,668 Other underwriting income (loss) — 3,148 15,026 18,174 739 18,913 Losses and loss adjustment expenses (1,750,257) (1,494,539) (85,112) (3,329,908) (259,042) (3,588,950) Acquisition expenses (417,541) (381,060) (84,297) (882,898) (62,741) (945,639) Other operating expenses (409,386) (150,856) (143,697) (703,939) (32,869) (736,808) Underwriting income (loss) $ 46,387 $ 37,319 $ 684,423 $ 768,129 $ (21,945) $ 746,184 Net investment income 256,354 42,310 298,664 Net realized gains (losses) 239,690 80,638 320,328 Equity in net income (loss) of investment funds accounted for using the equity method 299,270 — 299,270 Other income (loss) 1,151 — 1,151 Corporate expenses (2) (59,279) — (59,279) Transaction costs and other (2) (793) (935) (1,728) Amortization of intangible assets (48,925) (898) (49,823) Interest expense (98,812) (8,410) (107,222) Net foreign exchange gains (losses) 39,691 (1,325) 38,366 Income (loss) before income taxes and income (loss) from operating affiliates 1,396,476 89,435 1,485,911 Income tax (expense) benefit (93,942) (234) (94,176) Income (loss) from operating affiliates 224,052 — 224,052 Net income (loss) 1,526,586 89,201 1,615,787 Amounts attributable to redeemable noncontrolling interests (1,936) (1,953) (3,889) Amounts attributable to nonredeemable noncontrolling interests — (78,314) (78,314) Net income (loss) available to Arch 1,524,650 8,934 1,533,584 Preferred dividends (38,159) — (38,159) Loss on redemption of preferred shares (15,101) — (15,101) Net income (loss) available to Arch common shareholders $ 1,471,390 $ 8,934 $ 1,480,324 Underwriting Ratios Loss ratio 66.7 % 72.5 % 8.7 % 58.8 % 78.0 % 59.8 % Acquisition expense ratio 15.9 % 18.5 % 8.6 % 15.6 % 18.9 % 15.8 % Other operating expense ratio 15.6 % 7.3 % 14.6 % 12.4 % 9.9 % 12.3 % Combined ratio 98.2 % 98.3 % 31.9 % 86.8 % 106.8 % 87.9 % (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Nine Months Ended September 30, 2020 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 3,444,335 $ 2,934,174 $ 1,084,337 $ 7,461,860 $ 590,309 $ 7,831,554 Premiums ceded (1,119,165) (967,698) (136,154) (2,222,031) (150,437) (2,151,853) Net premiums written 2,325,170 1,966,476 948,183 5,239,829 439,872 5,679,701 Change in unearned premiums (202,188) (388,321) 113,965 (476,544) (22,267) (498,811) Net premiums earned 2,122,982 1,578,155 1,062,148 4,763,285 417,605 5,180,890 Other underwriting income (loss) (31) 1,767 15,649 17,385 1,547 18,932 Losses and loss adjustment expenses (1,550,632) (1,235,586) (444,721) (3,230,939) (331,275) (3,562,214) Acquisition expenses (317,428) (255,516) (108,304) (681,248) (68,766) (750,014) Other operating expenses (370,947) (125,831) (120,178) (616,956) (42,523) (659,479) Underwriting income (loss) $ (116,056) $ (37,011) $ 404,594 $ 251,527 $ (23,412) $ 228,115 Net investment income 313,916 91,234 405,150 Net realized gains (losses) 523,964 (53,837) 470,127 Equity in net income (loss) of investment funds accounted for using the equity method 57,407 — 57,407 Other income (loss) 65 — 65 Corporate expenses (2) (51,407) — (51,407) Transaction costs and other (2) (5,246) — (5,246) Amortization of intangible assets (49,835) — (49,835) Interest expense (86,599) (18,438) (105,037) Net foreign exchange gains (losses) (17,812) 6,387 (11,425) Income (loss) before income taxes and income (loss) from operating affiliates 935,980 1,934 937,914 Income tax (expense) benefit (78,112) 333 (77,779) Income (loss) from operating affiliates 6,262 — 6,262 Net income (loss) 864,130 2,267 866,397 Amounts attributable to redeemable noncontrolling interests (1,873) (3,125) (4,998) Amounts attributable to nonredeemable noncontrolling interests — 578 578 Net income (loss) available to Arch 862,257 (280) 861,977 Preferred dividends (31,209) — (31,209) Net income (loss) available to Arch common shareholders $ 831,048 $ (280) $ 830,768 Underwriting Ratios Loss ratio 73.0 % 78.3 % 41.9 % 67.8 % 79.3 % 68.8 % Acquisition expense ratio 15.0 % 16.2 % 10.2 % 14.3 % 16.5 % 14.5 % Other operating expense ratio 17.5 % 8.0 % 11.3 % 13.0 % 10.2 % 12.7 % Combined ratio 105.5 % 102.5 % 63.4 % 95.1 % 106.0 % 96.0 % (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
Reserve for Losses and Loss A_2
Reserve for Losses and Loss Adjustment Expenses (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |
Analysis of losses and loss adjustment expenses and reconciliation of beginning and ending reserve balances | The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses: Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Reserve for losses and loss adjustment expenses at beginning of period $ 17,196,648 $ 15,044,874 $ 16,513,929 $ 13,891,842 Unpaid losses and loss adjustment expenses recoverable 4,146,020 4,156,157 4,314,855 4,082,650 Net reserve for losses and loss adjustment expenses at beginning of period 13,050,628 10,888,717 12,199,074 9,809,192 Net incurred losses and loss adjustment expenses relating to losses occurring in: Current year 1,348,528 1,264,315 3,812,381 3,673,346 Prior years (122,509) (48,042) (223,431) (111,132) Total net incurred losses and loss adjustment expenses 1,226,019 1,216,273 3,588,950 3,562,214 Net losses and loss adjustment expense reserves of acquired business (2) 104,307 — 104,307 $ — Retroactive reinsurance transactions (1) — — (183,893) 60,635 Impact of deconsolidation of Watford (3) (1,460,611) — (1,460,611) — Net foreign exchange (gains) losses (78,152) 114,122 10,818 22,706 Net paid losses and loss adjustment expenses relating to losses occurring in: Current year (208,923) (189,961) (432,348) (359,395) Prior years (417,368) (512,263) (1,610,397) (1,578,464) Total net paid losses and loss adjustment expenses (626,291) (702,224) (2,042,745) (1,937,859) Net reserve for losses and loss adjustment expenses at end of period 12,215,900 11,516,888 12,215,900 11,516,888 Unpaid losses and loss adjustment expenses recoverable 5,115,147 4,383,638 5,115,147 4,383,638 Reserve for losses and loss adjustment expenses at end of period $ 17,331,047 $ 15,900,526 $ 17,331,047 $ 15,900,526 (1) During the 2021 first quarter, the Company entered into a reinsurance to close and other related agreements with Premia Managing Agency Limited (“Premia”), in connection with the 2018 and prior years of account related to the acquisition of Barbican Group Holdings Limited (“Barbican”). During the 2020 first quarter, the Company entered into a reinsurance to close agreement of the 2017 and prior years of account previously covered by a third party arrangement. (2) Represents activity related to the Company’s acquisitions in the 2021 period. See note 2 . (3) See note 12 . |
Allowance for Expected Credit_2
Allowance for Expected Credit Losses (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Credit Loss [Abstract] | |
Premiums receivable | The following table provides a roll forward of the allowance for expected credit losses of the Company’s premium receivables: Premium Receivables, Net of Allowance Allowance for Expected Credit Losses Three Months Ended September 30, 2021 Balance at beginning of period $ 2,866,578 $ 35,979 Change for provision of expected credit losses (1) 2,736 Balance at end of period $ 2,807,720 $ 38,715 Three Months Ended September 30, 2020 Balance at beginning of period $ 2,203,753 $ 36,054 Change for provision of expected credit losses (1) 1,046 Balance at end of period $ 2,225,311 $ 37,100 Nine Months Ended September 30, 2021 Balance at beginning of period $ 2,064,586 $ 37,781 Change for provision of expected credit losses (1) 934 Balance at end of period $ 2,807,720 $ 38,715 Nine Months Ended September 30, 2020 Balance at beginning of period $ 1,778,717 $ 21,003 Cumulative effect of accounting change (2) 6,539 Change for provision of expected credit losses (1) 9,558 Balance at end of period $ 2,225,311 $ 37,100 (1) Amounts deemed uncollectible are written-off in operating expenses. For the 2021 third quarter and 2020 third quarter, amounts written off were $1.2 million and nil, respectively. For the nine months ended September 30, 2021 and 2020 period, amounts written off were were $2.4 million and $2.3 million, respectively. (2) Adoption of ASU 2016-13 |
Reinsurance recoverables | The following table provides a roll forward of the allowance for expected credit losses of the Company’s reinsurance recoverables: Reinsurance Recoverables, Net of Allowance Allowance for Expected Credit Losses Three Months Ended September 30, 2021 Balance at beginning of period $ 4,314,515 $ 11,029 Change for provision of expected credit losses 1,802 Balance at end of period $ 5,358,852 $ 12,831 Three Months Ended September 30, 2020 Balance at beginning of period $ 4,363,507 $ 13,595 Change for provision of expected credit losses 399 Balance at end of period $ 4,621,937 $ 13,994 Nine Months Ended September 30, 2021 Balance at beginning of period $ 4,500,802 $ 11,636 Change for provision of expected credit losses 1,195 Balance at end of period $ 5,358,852 $ 12,831 Nine Months Ended September 30, 2020 Balance at beginning of period $ 4,346,816 $ 1,364 Cumulative effect of accounting change (1) 12,010 Change for provision of expected credit losses 620 Balance at end of period $ 4,621,937 $ 13,994 (1) Adoption of ASU 2016-13 |
Ceded credit risk | The following table summarizes the Company’s reinsurance recoverables on paid and unpaid losses (not including ceded unearned premiums): September 30, December 31 2021 2020 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses $ 5,358,852 $ 4,500,802 % due from carriers with A.M. Best rating of “A-” or better 69.1 % 63.9 % % due from all other carriers with no A.M. Best rating (1) 30.9 % 36.1 % Largest balance due from any one carrier as % of total shareholders’ equity 6.5 % 1.8 % (1) At September 30, 2021 and December 31, 2020 over 93% and 94% of such amount were collateralized through reinsurance trusts, funds withheld arrangements, letters of credit or other, respectively. |
Contractholder receivables | The following table provides a roll forward of the allowance for expected credit losses of the Company’s contractholder receivables: Contract-holder Receivables, Net of Allowance Allowance for Expected Credit Losses Three Months Ended September 30, 2021 Balance at beginning of period $ 1,882,948 $ 4,471 Change for provision of expected credit losses (987) Balance at end of period $ 1,824,990 $ 3,484 Three Months Ended September 30, 2020 Balance at beginning of period $ 2,179,124 $ 6,290 Change for provision of expected credit losses (389) Balance at end of period 2,185,614 $ 5,901 Nine Months Ended September 30, 2021 Balance at beginning of period $ 1,986,924 $ 8,638 Change for provision of expected credit losses (5,154) Balance at end of period $ 1,824,990 $ 3,484 Nine Months Ended September 30, 2020 Balance at beginning of period $ 2,119,460 $ — Cumulative effect of accounting change (1) 6,663 Change for provision of expected credit losses (762) Balance at end of period $ 2,185,614 $ 5,901 (1) Adoption of ASU 2016-13 |
Investment Information (Tables)
Investment Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Disclosure Investment Information [Abstract] | |
Summary of fair value and cost or amortized cost of available for sale securities | The following table summarizes the fair value and cost or amortized cost of the Company’s securities classified as available for sale: Estimated Gross Gross Allowance for Expected Credit Losses (2) Cost or September 30, 2021 Fixed maturities (1): Corporate bonds $ 6,403,617 $ 155,246 $ (40,649) $ (1,440) $ 6,290,460 Mortgage backed securities 405,797 3,384 (3,966) (24) 406,403 Municipal bonds 382,722 20,096 (1,206) (2) 363,834 Commercial mortgage backed securities 579,424 3,598 (548) (3) 576,377 U.S. government and government agencies 4,460,515 12,912 (30,320) — 4,477,923 Non-U.S. government securities 1,863,734 46,378 (28,948) (82) 1,846,386 Asset backed securities 2,672,554 12,576 (7,700) (560) 2,668,238 Total 16,768,363 254,190 (113,337) (2,111) 16,629,621 Short-term investments 3,069,965 1,625 (1,780) — 3,070,120 Total $ 19,838,328 $ 255,815 $ (115,117) $ (2,111) $ 19,699,741 December 31, 2020 Fixed maturities (1): Corporate bonds $ 7,856,571 $ 414,247 $ (34,388) $ (896) $ 7,477,608 Mortgage backed securities 630,001 8,939 (5,028) (278) 626,368 Municipal bonds 494,522 27,291 (3,835) (11) 471,077 Commercial mortgage backed securities 389,900 8,722 (2,954) (122) 384,254 U.S. government and government agencies 5,557,077 22,612 (12,611) — 5,547,076 Non-U.S. government securities 2,433,733 153,891 (8,060) — 2,287,902 Asset backed securities 1,634,804 19,225 (10,715) (1,090) 1,627,384 Total 18,996,608 654,927 (77,591) (2,397) 18,421,669 Short-term investments 1,924,922 2,693 (2,063) — 1,924,292 Total $ 20,921,530 $ 657,620 $ (79,654) $ (2,397) $ 20,345,961 (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. |
Summary of available for sale securities in a continual unrealized loss position | The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position: Less than 12 Months 12 Months or More Total Estimated Gross Estimated Gross Estimated Gross September 30, 2021 Fixed maturities (1): Corporate bonds $ 2,744,615 $ (36,595) $ 68,450 $ (4,054) $ 2,813,065 $ (40,649) Mortgage backed securities 257,789 (3,113) 22,769 (853) 280,558 (3,966) Municipal bonds 46,450 (731) 7,148 (475) 53,598 (1,206) Commercial mortgage backed securities 76,518 (256) 6,578 (292) 83,096 (548) U.S. government and government agencies 3,621,719 (29,797) 9,755 (523) 3,631,474 (30,320) Non-U.S. government securities 1,283,266 (27,523) 22,304 (1,425) 1,305,570 (28,948) Asset backed securities 1,119,638 (6,524) 37,078 (1,176) 1,156,716 (7,700) Total 9,149,995 (104,539) 174,082 (8,798) 9,324,077 (113,337) Short-term investments 265,011 (1,780) — — 265,011 (1,780) Total $ 9,415,006 $ (106,319) $ 174,082 $ (8,798) $ 9,589,088 $ (115,117) December 31, 2020 Fixed maturities (1): Corporate bonds $ 747,442 $ (33,086) $ 3,934 $ (1,302) $ 751,376 $ (34,388) Mortgage backed securities 284,619 (4,788) 3,637 (240) 288,256 (5,028) Municipal bonds 67,937 (3,835) — — 67,937 (3,835) Commercial mortgage backed securities 126,624 (2,916) 2,655 (38) 129,279 (2,954) U.S. government and government agencies 1,285,907 (12,611) — — 1,285,907 (12,611) Non-U.S. government securities 543,844 (7,658) 2,441 (402) 546,285 (8,060) Asset backed securities 634,470 (9,110) 57,737 (1,605) 692,207 (10,715) Total 3,690,843 (74,004) 70,404 (3,587) 3,761,247 (77,591) Short-term investments 97,920 (2,063) — — 97,920 (2,063) Total $ 3,788,763 $ (76,067) $ 70,404 $ (3,587) $ 3,859,167 $ (79,654) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. |
Contractual maturities of the Company's fixed maturities and fixed maturities pledged under securities lending arrangements | The contractual maturities of the Company’s fixed maturities are shown in the following table. Expected maturities, which are management’s best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. September 30, 2021 December 31, 2020 Maturity Estimated Amortized Estimated Amortized Due in one year or less $ 416,601 $ 410,373 $ 348,200 $ 339,951 Due after one year through five years 7,862,472 7,772,773 10,629,959 10,340,819 Due after five years through 10 years 4,483,025 4,453,526 4,881,564 4,654,754 Due after 10 years 348,490 341,931 482,180 448,139 13,110,588 12,978,603 16,341,903 15,783,663 Mortgage backed securities 405,797 406,403 630,001 626,368 Commercial mortgage backed securities 579,424 576,377 389,900 384,254 Asset backed securities 2,672,554 2,668,238 1,634,804 1,627,384 Total (1) $ 16,768,363 $ 16,629,621 $ 18,996,608 $ 18,421,669 (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. |
Securities lending transactions accounted for as secured borrowings, by significant investment category | The carrying value of collateral held under the Company’s securities lending transactions by significant investment category and remaining contractual maturity of the underlying agreements was as follows at December 31, 2020 (no balances at September 30, 2021 due to the termination of the program): Remaining Contractual Maturity of the Agreements Overnight and Continuous Less than 30 Days 30-90 Days 90 Days or More Total December 31, 2020 U.S. government and government agencies $ 142,317 $ — $ 139,290 $ — $ 281,607 Corporate bonds 3,021 — — — 3,021 Equity securities 16,461 — — — 16,461 Total $ 161,799 $ — $ 139,290 $ — $ 301,089 Gross amount of recognized liabilities for securities lending in offsetting disclosure in note 10 $ — Amounts related to securities lending not included in offsetting disclosure in note 10 $ 301,089 |
Summary of assets and liabilities accounted for using the fair value option | The following table summarizes the Company’s other investments and other investable assets: September 30, December 31, Fixed maturities $ 414,007 $ 843,354 Other investments 1,489,759 2,331,885 Short-term investments 115,681 557,008 Equity securities 24,523 92,549 Investments accounted for using the fair value option $ 2,043,970 $ 3,824,796 Other investable assets (1) — 500,000 Total other investments $ 2,043,970 $ 4,324,796 (1) Participation interests in a receivable of a reverse repurchase agreement. |
Summary of other investments | The following table summarizes the Company’s other investments, as detailed in the previous table, by strategy: September 30, December 31, Term loan investments $ 528,585 $ 1,231,731 Lending 579,563 572,636 Credit related funds 56,997 90,780 Energy 84,880 65,813 Investment grade fixed income 131,910 138,646 Infrastructure 26,359 165,516 Private equity 81,465 48,750 Real estate — 18,013 Total $ 1,489,759 $ 2,331,885 |
Summary of investments accounted for using equity method | The following table summarizes the Company’s investments accounted for using the equity method, by strategy: September 30, December 31, Credit related funds $ 952,794 $ 740,060 Equities 414,322 343,058 Real estate 340,510 258,518 Lending 330,368 179,629 Private equity 365,840 235,289 Infrastructure 222,484 175,882 Energy 114,975 115,453 Total $ 2,741,293 $ 2,047,889 |
Summary of investments in limited partnership interests where the Company has a variable interest | The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item: September 30, December 31, Investments accounted for using the equity method (1) 2,741,293 2,047,889 Investments accounted for using the fair value option (2) 176,884 184,720 Total $ 2,918,177 $ 2,232,609 (1) Aggregate unfunded commitments were $2.3 billion at September 30, 2021, compared to $1.8 billion at December 31, 2020. (2) Aggregate unfunded commitments were $22.9 million at September 30, 2021, compared to $35.6 million at December 31, 2020. |
Components of net investment income | The components of net investment income were derived from the following sources: September 30, 2021 2020 Three Months Ended Fixed maturities $ 75,964 $ 98,344 Term loans 1,736 22,459 Equity securities 9,867 6,659 Short-term investments 1,858 1,332 Other (1) 17,378 22,060 Gross investment income 106,803 150,854 Investment expenses (18,608) (22,342) Net investment income $ 88,195 $ 128,512 Nine Months Ended Fixed maturities $ 255,215 $ 318,582 Term loans 33,343 66,141 Equity securities 24,101 18,885 Short-term investments 3,603 9,611 Other (1) 51,683 57,926 Gross investment income 367,945 471,145 Investment expenses (69,281) (65,995) Net investment income $ 298,664 $ 405,150 |
Summary of net realized gains (losses), excluding other-than-temporary impairment provisions | Net realized gains (losses), which include changes in the allowance for credit losses on financial assets and net impairment losses recognized in earnings were as follows: September 30, 2021 2020 Three Months Ended Available for sale securities: Gross gains on investment sales $ 86,819 $ 104,733 Gross losses on investment sales (18,446) (16,862) Change in fair value of assets and liabilities accounted for using the fair value option: Fixed maturities (7,492) 34,115 Other investments 3,811 61,622 Equity securities 3,042 4,048 Short-term investments 16 3,377 Equity securities, at fair value: Net realized gains (losses) on sales during the period 14,736 26,549 Net unrealized gains (losses) on equity securities still held at reporting date (40,155) 33,562 Allowance for credit losses: Investments related (456) 1,332 Underwriting related (3,985) 351 Derivative instruments (1) (21,435) 20,369 Other (2) (41,495) 7,303 Net realized gains (losses) $ (25,040) $ 280,499 Nine Months Ended Available for sale securities: Gross gains on investment sales $ 267,362 $ 515,086 Gross losses on investment sales (132,071) (98,654) Change in fair value of assets and liabilities accounted for using the fair value option: Fixed maturities 19,973 (25,370) Other investments 111,550 (67,608) Equity securities 10,599 5,803 Short-term investments 648 (1,936) Equity securities, at fair value: Net realized gains (losses) on sales during the period 86,155 7,760 Net unrealized gains (losses) on equity securities still held at reporting date 45,400 3,682 Allowance for credit losses: Investments related (1,208) (4,763) Underwriting related 2,664 (8,753) Net impairments losses — (533) Derivative instruments (1) (36,428) 146,722 Other (2) (54,316) (1,309) Net realized gains (losses) $ 320,328 $ 470,127 (1) See note 10 for information on the Company’s derivative instruments. (2) 2021 periods reflected $33.1 million of losses related to the Company’s deconsolidation of Watford. |
Rollforward of the allowance for expected credit losses of securities classified as available for sale | The following table provides a roll forward of the allowance for expected credit losses of the Company’s securities classified as available for sale: Structured Securities (1) Municipal Corporate Total Three Months Ended September 30, 2021 Balance at beginning of period $ 759 $ 6 $ 1,359 $ 2,124 Additions for current-period provision for expected credit losses 48 — — 48 Additions (reductions) for previously recognized expected credit losses 14 (4) 395 405 Reductions due to disposals (3) (234) — (232) (466) Balance at end of period $ 587 $ 2 $ 1,522 $ 2,111 Three Months Ended September 30, 2020 Balance at beginning of period $ 1,726 $ 28 $ 4,115 $ 5,869 Additions for current-period provision for expected credit losses 27 — 202 229 Additions (reductions) for previously recognized expected credit losses 403 33 (1,996) (1,560) Reductions due to disposals (28) — (577) (605) Balance at end of period $ 2,128 $ 61 $ 1,744 $ 3,933 Nine Months Ended September 30, 2021 Balance at beginning of period $ 1,490 $ 11 $ 896 $ 2,397 Additions for current-period provision for expected credit losses 282 — 2,428 2,710 Additions (reductions) for previously recognized expected credit losses (751) (9) (557) (1,317) Reductions due to disposals (3) (434) — (1,245) (1,679) Balance at end of period $ 587 $ 2 $ 1,522 $ 2,111 Nine Months Ended September 30, 2020 Balance at beginning of period $ — $ — $ — $ — Cumulative effect of accounting change (2) 517 — 117 634 Additions for current-period provision for expected credit losses 2,868 67 7,643 10,578 Additions (reductions) for previously recognized expected credit losses (903) 8 (4,920) (5,815) Reductions due to disposals (354) (14) (1,096) (1,464) Balance at end of period $ 2,128 $ 61 $ 1,744 $ 3,933 (1) Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities. (2) Adoption of ASU 2016-13 |
Summary of restricted assets | The following table details the value of the Company’s restricted assets: September 30, December 31, Assets used for collateral or guarantees: Affiliated transactions $ 4,271,208 $ 4,643,334 Third party agreements 2,594,053 3,083,324 Deposits with U.S. regulatory authorities 803,878 827,552 Deposits with non-U.S. regulatory authorities 469,497 179,099 Total restricted assets $ 8,138,636 $ 8,733,309 |
Reconciliation of cash and restricted cash | The following table details reconciliation of cash and restricted cash within the Consolidated Balance Sheets: September 30, December 31, Cash $ 1,137,721 $ 906,448 Restricted cash (included in ‘other assets’) $ 411,188 $ 384,096 Cash and restricted cash $ 1,548,909 $ 1,290,544 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair value hierarchy | The following table presents the Company’s financial assets and liabilities measured at fair value by level at September 30, 2021: Estimated Fair Value Measurements Using: Estimated Quoted Prices in Significant Significant Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 6,403,617 $ — $ 6,403,604 $ 13 Mortgage backed securities 405,797 — 405,797 — Municipal bonds 382,722 — 382,722 — Commercial mortgage backed securities 579,424 — 579,424 — U.S. government and government agencies 4,460,515 4,431,935 28,580 — Non-U.S. government securities 1,863,734 — 1,863,734 — Asset backed securities 2,672,554 — 2,669,110 3,444 Total 16,768,363 4,431,935 12,332,971 3,457 Short-term investments 3,069,965 2,046,391 1,023,574 — Equity securities, at fair value 1,790,640 1,756,462 31,596 2,582 Derivative instruments (4) 89,958 — 89,958 — Residential mortgage loans 7,701 — 7,701 — Fair value option: Corporate bonds 374,326 — 374,326 — Non-U.S. government bonds 19,829 — 19,829 — Mortgage backed securities — — — — Commercial mortgage backed securities — — — — Asset backed securities 19,852 — 19,852 — U.S. government and government agencies — — — — Short-term investments 115,681 1,190 114,491 — Equity securities 24,522 19,987 — 4,535 Other investments 359,011 17,861 311,393 29,757 Other investments measured at net asset value (2) 1,130,748 Total 2,043,969 39,038 839,891 34,292 Total assets measured at fair value $ 23,770,596 $ 8,273,826 $ 14,325,691 $ 40,331 Liabilities measured at fair value: Contingent consideration liabilities $ (17,811) $ — $ — $ (17,811) Securities sold but not yet purchased (3) — — — — Derivative instruments (4) (43,526) — (43,526) — Total liabilities measured at fair value $ (61,337) $ — $ (43,526) $ (17,811) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See note 8 , “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See note 10 . The following table presents the Company’s financial assets and liabilities measured at fair value by level at December 31, 2020: Estimated Fair Value Measurements Using: Estimated Quoted Prices in Significant Significant Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 7,856,571 $ — $ 7,856,558 $ 13 Mortgage backed securities 630,001 — 630,001 — Municipal bonds 494,522 — 494,522 — Commercial mortgage backed securities 389,900 — 389,900 — U.S. government and government agencies 5,557,077 5,463,356 93,721 — Non-U.S. government securities 2,433,733 — 2,433,733 — Asset backed securities 1,634,804 — 1,631,378 3,426 Total 18,996,608 5,463,356 13,529,813 3,439 Short-term investments 1,924,922 1,920,565 4,357 — Equity securities, at fair value 1,460,959 1,401,653 17,291 42,015 Derivative instruments (4) 177,383 — 177,383 — Fair value option: Corporate bonds 651,294 — 650,309 985 Non-U.S. government bonds 35,263 — 35,263 — Mortgage backed securities 3,282 — 3,282 — Commercial mortgage backed securities 1,090 — 1,090 — Asset backed securities 152,151 — 152,151 — U.S. government and government agencies 274 164 110 — Short-term investments 557,008 420,131 136,877 — Equity securities 92,549 23,373 188 68,988 Other investments 1,134,229 51,149 1,015,977 67,103 Other investments measured at net asset value (2) 1,197,656 Total 3,824,796 494,817 1,995,247 137,076 Total assets measured at fair value $ 26,384,668 $ 9,280,391 $ 15,724,091 $ 182,530 Liabilities measured at fair value: Contingent consideration liabilities $ (461) $ — $ — $ (461) Securities sold but not yet purchased (3) (21,679) — (21,679) — Derivative instruments (4) (108,705) — (108,705) — Total liabilities measured at fair value $ (130,845) $ — $ (130,384) $ (461) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See note 8 , “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See note 10 . |
Rollforward of Level 3 investments | The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs: Assets Liabilities s Available For Sale Fair Value Option Fair Value Structured Securities (1) Corporate Corporate Other Equity Equity Contingent Consideration Liabilities Three Months Ended September 30, 2021 Balance at beginning of period $ 3,424 $ 13 $ 998 $ 73,900 $ 73,678 $ 49,136 $ (466) Total gains or (losses) (realized/unrealized) Included in earnings (2) 10 — — — 38 11 — Included in other comprehensive income 10 — — — — — — Purchases, issuances, sales and settlements Purchases — — — — — 208 (17,345) Issuances — — — — — — — Sales (3) — — (998) (44,143) (69,181) (46,773) — Settlements — — — — — — — Transfers in and/or out of Level 3 — — — — — — — Balance at end of period $ 3,444 $ 13 $ — $ 29,757 $ 4,535 $ 2,582 $ (17,811) Three Months Ended September 30, 2020 Balance at beginning of period $ 3,450 $ 857 $ 998 $ 46,453 $ 61,447 $ 51,981 $ (1,250) Total gains or (losses) (realized/unrealized) Included in earnings (2) (75) (5,872) (34) 885 2,076 (946) — Included in other comprehensive income 191 6,936 — — — — — Purchases, issuances, sales and settlements Purchases — — — 22,436 — — — Issuances — — — — — — — Sales — — — (3,588) — (8,349) — Settlements (11) — — — — — 620 Transfers in and/or out of Level 3 — (1,908) — — — — — Balance at end of period $ 3,555 $ 13 $ 964 $ 66,186 $ 63,523 $ 42,686 $ (630) Nine Months Ended September 30, 2021 Balance at beginning of year $ 3,426 $ 13 $ 985 $ 67,103 $ 68,988 $ 42,015 $ (461) Total gains or (losses) (realized/unrealized) Included in earnings (2) (46) — 13 881 4,728 1,837 — Included in other comprehensive income 67 — — — — — — Purchases, issuances, sales and settlements Purchases — — — 13,003 — 5,503 (17,345) Issuances — — — — — — — Sales (3) — — (998) (51,230) (69,181) (46,773) — Settlements (3) — — — — — (5) Transfers in and/or out of Level 3 — — — — — — — Balance at end of period $ 3,444 $ 13 $ — $ 29,757 $ 4,535 $ 2,582 $ (17,811) Nine Months Ended September 30, 2020 Balance at beginning of year $ 5,216 $ 8,851 $ 932 $ 68,817 $ 58,094 $ 55,889 $ (7,998) Total gains or (losses) (realized/unrealized) Included in earnings (2) (130) (5,865) (34) (129) 5,429 7,132 (72) Included in other comprehensive income (118) 397 — — — — — Purchases, issuances, sales and settlements Purchases — — 66 22,460 — 3,464 — Issuances — — — — — — — Sales — — — (27,946) — (23,799) — Settlements (1,413) (1,462) — — — — 7,440 Transfers in and/or out of Level 3 — (1,908) — 2,984 — — — Balance at end of period $ 3,555 $ 13 $ 964 $ 66,186 $ 63,523 $ 42,686 $ (630) (1) Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities. (2) Gains or losses were included in net realized gains (losses). |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value and notional amount of derivatives | The following table summarizes information on the fair values and notional values of the Company’s derivative instruments: Estimated Fair Value Asset Derivatives Liability Derivatives Notional September 30, 2021 Futures contracts (2) $ 36,010 $ (17,562) $ 2,796,442 Foreign currency forward contracts (2) 7,380 (13,914) 1,234,665 TBAs (3) 49,227 — 47,603 Other (2) 46,568 (12,050) 4,184,225 Total $ 139,185 $ (43,526) December 31, 2020 Futures contracts (2) $ 11,046 $ (4,496) $ 3,099,796 Foreign currency forward contracts (2) 52,716 (6,202) 1,656,729 TBAs (3) — — — Other (2) 113,621 (98,007) 5,763,919 Total $ 177,383 $ (108,705) (1) Represents the absolute notional value of all outstanding contracts, consisting of long and short positions. (2) The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’ (3) The fair value of TBAs are included in ‘fixed maturities available for sale, at fair value.’ |
Summary of net realized gains (losses) recorded in the consolidated statements of income | Realized and unrealized contract gains and losses on the Company’s derivative instruments are reflected in ‘net realized gains (losses)’ in the consolidated statements of income, as summarized in the following table: Derivatives not designated as September 30, hedging instruments: 2021 2020 Three Months Ended Net realized gains (losses): Futures contracts $ (10,073) $ 10,945 Foreign currency forward contracts (16,146) 10,813 TBAs (46) 120 Other (1) 4,830 (1,509) Total $ (21,435) $ 20,369 Nine Months Ended Net realized gains (losses): Futures contracts $ (17,394) $ 105,282 Foreign currency forward contracts (36,922) 3,466 TBAs (46) 1,129 Other (1) 17,934 36,845 Total $ (36,428) $ 146,722 (1) Includes realized gains and losses on swaps, options and other derivatives contracts. |
Variable Interest Entities an_2
Variable Interest Entities and Noncontrolling Interests (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Noncontrolling Interest [Abstract] | |
Carrying value of assets and liabilities of variable interest entity | The following table provides the carrying amount and balance sheet caption in which the assets and liabilities of Watford were reported at December 31, 2020: December 31, 2020 Assets Investments accounted for using the fair value option (1) $ 1,790,385 Fixed maturities available for sale, at fair value 655,249 Equity securities, at fair value 52,410 Cash 211,451 Accrued investment income 14,679 Premiums receivable 224,377 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses 286,590 Ceded unearned premiums 122,339 Deferred acquisition costs 53,705 Receivable for securities sold 37,423 Goodwill and intangible assets 7,650 Other assets 75,801 Total assets of consolidated VIE $ 3,532,059 Liabilities Reserve for losses and loss adjustment expenses $ 1,519,583 Unearned premiums 407,714 Reinsurance balances payable 63,269 Revolving credit agreement borrowings 155,687 Senior notes 172,689 Payable for securities purchased 25,881 Other liabilities 193,494 Total liabilities of consolidated VIE $ 2,538,317 Redeemable noncontrolling interests $ 52,398 |
Activity in non-redeemable noncontrolling interests | The following table sets forth activity in the non-redeemable noncontrolling interests: September 30, 2021 2020 Three Months Ended Balance, beginning of period $ 918,874 $ 679,089 Impact of deconsolidation of Watford (918,874) — Additional paid in capital attributable to noncontrolling interests — 243 Amounts attributable to noncontrolling interests — 67,768 Other comprehensive income (loss) attributable to noncontrolling interests — 10,820 Balance, end of period $ — $ 757,920 Nine Months Ended Balance, beginning of year $ 823,007 $ 762,777 Impact of deconsolidation of Watford (918,874) Additional paid in capital attributable to noncontrolling interests 22,113 715 Repurchases attributable to non-redeemable noncontrolling interests (1) — (2,867) Amounts attributable to noncontrolling interests 78,314 (578) Other comprehensive income (loss) attributable to noncontrolling interests (4,560) (2,127) Balance, end of period $ — $ 757,920 (1) During 2020, Watford’s board of directors authorized the investment in Watford’s common shares through a share repurchase program. |
Activity in redeemable noncontrolling interests | The following table sets forth activity in the redeemable non-controlling interests: September 30, 2021 2020 Three Months Ended Balance, beginning of period $ 57,533 $ 55,986 Impact of deconsolidation of Watford (48,919) — Accretion of preference share issuance costs — 23 Other 1,623 1,826 Balance, end of period $ 10,237 $ 57,835 Nine Months Ended Balance, beginning of year $ 58,548 $ 55,404 Impact of deconsolidation of Watford (48,919) — Accretion of preference share issuance costs — 70 Other 608 2,361 Balance, end of period $ 10,237 $ 57,835 |
Portion of income or loss attributable to third party investors | The portion of income or loss attributable to third party investors, recorded in the Company’s consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests,’ are summarized in the table below: September 30, 2021 2020 Three Months Ended Amounts attributable to non-redeemable noncontrolling interests $ — $ (67,768) Amounts attributable to redeemable noncontrolling interests (1,473) (1,875) Net (income) loss attributable to noncontrolling interests $ (1,473) $ (69,643) Nine Months Ended Amounts attributable to non-redeemable noncontrolling interests $ (78,314) $ 578 Amounts attributable to redeemable noncontrolling interests (3,889) (4,998) Net (income) loss attributable to noncontrolling interests $ (82,203) $ (4,420) |
Total assets and maximum exposure to loss associated with VIEs | The following table presents the total assets of the Bellemeade entities, as well as the Company’s maximum exposure to loss associated with these VIEs, calculated as the maximum historical observable spread between the benchmark index for each respective transaction and short term invested trust asset yields. The benchmark index for agreements effective prior to 2021 is based on one-month LIBOR, while the 2021 agreements benchmark index is based on the Secured Overnight Financing Rate (“SOFR”). SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. September 30, 2021 December 31, 2020 Maximum Exposure to Loss Maximum Exposure to Loss Bellemeade Entities (Issue Date) Total VIE Assets On-Balance Sheet (Asset) Liability Off-Balance Sheet Total Total VIE Assets On-Balance Sheet (Asset) Liability Off-Balance Sheet Total Bellemeade 2017-1 Ltd. (Oct-17) $ 145,573 $ (214) $ 585 $ 371 $ 145,573 $ (245) $ 844 $ 599 Bellemeade 2018-1 Ltd. (Apr-18) 228,938 (764) 1,683 919 250,095 (903) 2,245 1,342 Bellemeade 2018-2 Ltd. (Aug-18) — — — — 108,395 (138) 280 142 Bellemeade 2018-3 Ltd. (Oct-18) 302,563 (1,049) 2,328 1,279 302,563 (1,320) 3,262 1,942 Bellemeade 2019-1 Ltd. (Mar-19) 210,529 (931) 8,142 7,211 219,256 (1,361) 8,461 7,100 Bellemeade 2019-2 Ltd. (Apr-19) 398,316 (787) 5,658 4,871 398,316 (730) 5,201 4,471 Bellemeade 2019-3 Ltd. (Jul-19) 491,634 (826) 3,971 3,145 528,084 (861) 5,079 4,218 Bellemeade 2019-4 Ltd. (Oct-19) 468,737 (682) 4,761 4,079 468,737 (890) 6,676 5,786 Bellemeade 2020-1 Ltd. (Jun-20) (1) — — — — 275,068 (178) 1,012 834 Bellemeade 2020-2 Ltd. (Sep-20) (2) 266,704 (279) 2,629 2,350 423,420 (556) 6,839 6,283 Bellemeade 2020-3 Ltd. (Nov-20) (3) 381,410 (395) 6,646 6,251 418,158 (631) 9,605 8,974 Bellemeade 2020-4 Ltd. (Dec-20) (4) 226,916 (100) 2,190 2,090 321,393 (156) 6,816 6,660 Bellemeade 2021-1 Ltd. (Mar-21) (5) 579,717 229 4,217 4,446 — — — — Bellemeade 2021-2 Ltd. (Jun-21) (6) 522,807 906 5,090 5,996 — — — — Bellemeade 2021-3 Ltd. (Sep-21) (7) 507,873 182 4,561 4,743 — — — — Total $ 4,731,717 $ (4,710) $ 52,461 $ 47,751 $ 3,859,058 $ (7,969) $ 56,320 $ 48,351 (1) An additional $79 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (2) An additional $26 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (3) An additional $34 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (4) An additional $16 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (5) An additional $64 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (6) An additional $93 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. |
Other Comprehensive Income (L_2
Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Comprehensive Income Note Disclosure [Abstract] | |
Details about amounts reclassified from AOCI | The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss): Amounts Reclassified from AOCI Consolidated Statement of Income Three Months Ended Nine Months Ended Details About Line Item That Includes September 30, September 30, AOCI Components Reclassification 2021 2020 2021 2020 Unrealized appreciation on available-for-sale investments Net realized gains (losses) $ 68,373 $ 87,871 $ 135,291 $ 416,432 Provision for credit losses (457) 1,333 (1,208) (4,762) Other-than-temporary impairment losses — — — (533) Total before tax 67,916 89,204 134,083 411,137 Income tax (expense) benefit (5,262) (9,401) (13,579) (42,714) Net of tax $ 62,654 $ 79,803 $ 120,504 $ 368,423 |
Schedule of comprehensive income (loss) | Before Tax Amount Tax Expense (Benefit) Net of Tax Amount Three Months Ended September 30, 2021 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ (104,607) $ (8,684) $ (95,923) Less reclassification of net realized gains (losses) included in net income 67,916 5,262 62,654 Foreign currency translation adjustments (32,060) (350) (31,710) Other comprehensive income (loss) $ (204,583) $ (14,296) $ (190,287) Three Months Ended September 30, 2020 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 119,265 $ 8,483 $ 110,782 Less reclassification of net realized gains (losses) included in net income 89,204 9,401 79,803 Foreign currency translation adjustments 16,918 209 16,709 Other comprehensive income (loss) $ 46,979 $ (709) $ 47,688 Nine Months Ended September 30, 2021 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ (307,910) $ (28,808) $ (279,102) Less reclassification of net realized gains (losses) included in net income 134,083 13,579 120,504 Foreign currency translation adjustments (54,083) 6 (54,089) Other comprehensive income (loss) $ (496,076) $ (42,381) $ (453,695) Nine Months Ended September 30, 2020 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 611,390 $ 65,099 $ 546,291 Less reclassification of net realized gains (losses) included in net income 411,137 42,714 368,423 Foreign currency translation adjustments (5,911) (182) (5,729) Other comprehensive income (loss) $ 194,342 $ 22,203 $ 172,139 |
Basis of Presentation and Rec_3
Basis of Presentation and Recent Accounting Pronouncements (Details) - Greysbridge | Jul. 01, 2021 |
Schedule of Equity Method Investments [Line Items] | |
Percentage ownership after merger transaction | 40.00% |
Kelso And Company | |
Schedule of Equity Method Investments [Line Items] | |
Noncontrolling interest, ownership percentage by noncontrolling owners | 30.00% |
Warburg Pincus LLC | |
Schedule of Equity Method Investments [Line Items] | |
Noncontrolling interest, ownership percentage by noncontrolling owners | 30.00% |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Millions | Aug. 31, 2021 | Sep. 30, 2021 |
Business Acquisition [Line Items] | ||
Increase in goodwill and intangible assets as a result of acquisitions during the period | $ 337.4 | |
WLMI | ||
Business Acquisition [Line Items] | ||
Term of exclusivity agreement | 10 years |
Share Transactions - Share repu
Share Transactions - Share repurchases (Details) - Common shares - USD ($) shares in Millions, $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Class of Stock [Line Items] | ||
Cumulative number of shares acquired since inception of share repurchase program | 412 | |
Aggregate purchase price of shares acquired since inception of share repurchase program | $ 4,920 | |
Treasury stock, shares acquired (shares) | 22.8 | 2.6 |
Shares repurchased for treasury | $ 872.2 | $ 75.5 |
Remaining authorized repurchase amount | $ 44.3 |
Share Transactions - Issuance o
Share Transactions - Issuance of preferred shares (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 1 Months Ended | 9 Months Ended | |
Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | |
Class of Stock [Line Items] | |||
Proceeds from issuance of preferred shares, net | $ 485,821 | $ 0 | |
Series G Preferred Shares | |||
Class of Stock [Line Items] | |||
Preferred shares issued | $ 500,000 | ||
Preferred shares, dividend rate (as a percent) | 4.55% | ||
Preferred shares, par value per share | $ 0.01 | ||
Liquidation preference per share | 25,000 | ||
Preferred shares, redemption price per share | $ 25,000 | ||
Proceeds from issuance of preferred shares, net | $ 485,800 | ||
Series G Depositary Share Equivalent | |||
Class of Stock [Line Items] | |||
Preference shares, number of shares issued | 20 | ||
Proportionate interest of preference shares, per depositary share | 0.10% | ||
Liquidation preference per share | $ 25 | ||
Preferred shares, redemption price per share | $ 25 | ||
Depositary Series E Preferred Stock | |||
Class of Stock [Line Items] | |||
Preferred shares, dividend rate (as a percent) | 5.25% | ||
Preferred shares, redemption price per share | $ 25 |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Numerator: | |||||
Net income (loss) | $ 421,415 | $ 488,682 | $ 1,615,787 | $ 866,397 | |
Amounts attributable to noncontrolling interests | (1,473) | (69,643) | (82,203) | (4,420) | |
Net income available to Arch | 419,942 | 419,039 | 1,533,584 | 861,977 | |
Preferred dividends | (16,090) | (10,403) | (38,159) | (31,209) | |
Loss on redemption of preferred shares | (15,101) | 0 | (15,101) | 0 | |
Net income (loss) available to Arch common shareholders | $ 388,751 | $ 408,636 | $ 1,480,324 | $ 830,768 | |
Denominator: | |||||
Weighted average common shares outstanding — basic | 389,274,220 | 402,850,485 | 395,899,591 | 403,081,266 | |
Effect of dilutive common share equivalents: | |||||
Nonvested restricted shares | 2,131,915 | 1,580,791 | 1,877,930 | 1,690,447 | |
Stock options | [1] | 6,497,212 | 4,763,381 | 6,482,964 | 5,543,184 |
Weighted average common shares and common share equivalents outstanding — diluted | 397,903,347 | 409,194,657 | 404,260,485 | 410,314,897 | |
Earnings per common share: | |||||
Basic (per share) | $ 1 | $ 1.01 | $ 3.74 | $ 2.06 | |
Diluted (per share) | $ 0.98 | $ 1 | $ 3.66 | $ 2.02 | |
Stock options | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per common share (shares) | 1,948,006 | 4,713,241 | 2,397,507 | 2,361,413 | |
[1] | Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2021 third quarter and 2020 third quarter, the number of stock options excluded were 1,948,006 and 4,713,241, respectively. For the nine months ended September 30, 2021 and 2020 period, the number of stock options excluded were 2,397,507 and 2,361,413, respectively. |
Segment Information - Summary o
Segment Information - Summary of underwriting income or loss by segment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)segment | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | ||
Segment Reporting Information [Line Items] | ||||||
Gross premiums written | $ 3,207,415 | $ 2,681,032 | $ 9,890,912 | $ 7,831,554 | ||
Premiums ceded | (1,131,486) | (806,888) | (2,907,002) | (2,151,853) | ||
Net premiums written | 2,075,929 | 1,874,144 | 6,983,910 | 5,679,701 | ||
Change in unearned premiums | (146,592) | (103,052) | (985,242) | (498,811) | ||
Net premiums earned | 1,929,337 | 1,771,092 | 5,998,668 | 5,180,890 | ||
Other underwriting income (loss) | 7,274 | 5,413 | 18,913 | 18,932 | ||
Losses and loss adjustment expenses | (1,226,019) | (1,216,273) | (3,588,950) | (3,562,214) | ||
Acquisition expenses | (306,015) | (247,942) | (945,639) | (750,014) | ||
Other operating expenses | (230,832) | (215,686) | (736,808) | (659,479) | ||
Underwriting income (loss) | 173,745 | 96,604 | 746,184 | 228,115 | ||
Net investment income | 88,195 | 128,512 | 298,664 | 405,150 | ||
Net realized gains (losses) | (25,040) | 280,499 | 320,328 | 470,127 | ||
Equity in net income (loss) of investment funds accounted for using the equity method | 105,398 | 126,735 | 299,270 | 57,407 | ||
Other income (loss) | (3,960) | 0 | 1,151 | 65 | ||
Corporate expenses | (18,636) | (16,263) | (59,279) | (51,407) | ||
Transaction costs and other | (1,036) | (1,674) | (1,728) | (5,246) | ||
Amortization of intangible assets | (20,135) | (16,715) | (49,823) | (49,835) | ||
Interest expense | (33,176) | (41,343) | (107,222) | (105,037) | ||
Net foreign exchange gains (losses) | 36,078 | (44,885) | 38,366 | (11,425) | ||
Income (loss) before income taxes and income (loss) from operating affiliates | 301,433 | 511,470 | 1,485,911 | 937,914 | ||
Income tax expense (benefit) | (4,137) | (23,707) | (94,176) | (77,779) | ||
Income (loss) from operating affiliates | 124,119 | 919 | 224,052 | 6,262 | ||
Net income (loss) | 421,415 | 488,682 | 1,615,787 | 866,397 | ||
Amounts attributable to redeemable noncontrolling interests | (1,473) | (1,875) | (3,889) | (4,998) | ||
Amounts attributable to non-redeemable noncontrolling interests | 0 | (67,768) | (78,314) | 578 | ||
Net income (loss) available to Arch | 419,942 | 419,039 | 1,533,584 | 861,977 | ||
Preferred dividends | (16,090) | (10,403) | (38,159) | (31,209) | ||
Loss on redemption of preferred shares | (15,101) | 0 | (15,101) | 0 | ||
Net income (loss) available to Arch common shareholders | $ 388,751 | $ 408,636 | $ 1,480,324 | $ 830,768 | ||
Underwriting Ratios | ||||||
Loss ratio | 63.50% | 68.70% | 59.80% | 68.80% | ||
Acquisition expense ratio | 15.90% | 14.00% | 15.80% | 14.50% | ||
Other operating expense ratio | 12.00% | 12.20% | 12.30% | 12.70% | ||
Combined ratio | 91.40% | 94.90% | 87.90% | 96.00% | ||
Goodwill and intangible assets | $ 963,322 | $ 713,777 | $ 963,322 | $ 713,777 | $ 692,863 | |
Operating segments | Underwriting Segments | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of segments | segment | 3 | |||||
Gross premiums written | [1] | 3,207,415 | 2,556,914 | $ 9,602,213 | 7,461,860 | |
Premiums ceded | (1,131,486) | (830,086) | (2,973,005) | (2,222,031) | ||
Net premiums written | 2,075,929 | 1,726,828 | 6,629,208 | 5,239,829 | ||
Change in unearned premiums | (146,592) | (101,767) | (962,508) | (476,544) | ||
Net premiums earned | 1,929,337 | 1,625,061 | 5,666,700 | 4,763,285 | ||
Other underwriting income (loss) | 7,274 | 4,867 | 18,174 | 17,385 | ||
Losses and loss adjustment expenses | (1,226,019) | (1,100,460) | (3,329,908) | (3,230,939) | ||
Acquisition expenses | (306,015) | (223,524) | (882,898) | (681,248) | ||
Other operating expenses | (230,832) | (201,067) | (703,939) | (616,956) | ||
Underwriting income (loss) | $ 173,745 | $ 104,877 | $ 768,129 | $ 251,527 | ||
Underwriting Ratios | ||||||
Loss ratio | 63.50% | 67.70% | 58.80% | 67.80% | ||
Acquisition expense ratio | 15.90% | 13.80% | 15.60% | 14.30% | ||
Other operating expense ratio | 12.00% | 12.40% | 12.40% | 13.00% | ||
Combined ratio | 91.40% | 93.90% | 86.80% | 95.10% | ||
Goodwill and intangible assets | $ 963,322 | $ 706,127 | $ 963,322 | $ 706,127 | ||
Operating segments | Insurance | ||||||
Segment Reporting Information [Line Items] | ||||||
Gross premiums written | [1] | 1,596,619 | 1,206,328 | 4,381,372 | 3,444,335 | |
Premiums ceded | (442,806) | (382,167) | (1,269,165) | (1,119,165) | ||
Net premiums written | 1,153,813 | 824,161 | 3,112,207 | 2,325,170 | ||
Change in unearned premiums | (215,143) | (105,007) | (488,636) | (202,188) | ||
Net premiums earned | 938,670 | 719,154 | 2,623,571 | 2,122,982 | ||
Other underwriting income (loss) | 0 | (31) | 0 | (31) | ||
Losses and loss adjustment expenses | (668,630) | (525,321) | (1,750,257) | (1,550,632) | ||
Acquisition expenses | (152,467) | (102,420) | (417,541) | (317,428) | ||
Other operating expenses | (138,931) | (122,541) | (409,386) | (370,947) | ||
Underwriting income (loss) | $ (21,358) | $ (31,159) | $ 46,387 | $ (116,056) | ||
Underwriting Ratios | ||||||
Loss ratio | 71.20% | 73.00% | 66.70% | 73.00% | ||
Acquisition expense ratio | 16.20% | 14.20% | 15.90% | 15.00% | ||
Other operating expense ratio | 14.80% | 17.00% | 15.60% | 17.50% | ||
Combined ratio | 102.20% | 104.20% | 98.20% | 105.50% | ||
Goodwill and intangible assets | $ 261,103 | $ 282,146 | $ 261,103 | $ 282,146 | ||
Operating segments | Reinsurance | ||||||
Segment Reporting Information [Line Items] | ||||||
Gross premiums written | [1] | 1,251,760 | 1,004,590 | 4,080,840 | 2,934,174 | |
Premiums ceded | (630,371) | (400,388) | (1,535,607) | (967,698) | ||
Net premiums written | 621,389 | 604,202 | 2,545,233 | 1,966,476 | ||
Change in unearned premiums | 57,313 | (49,704) | (484,607) | (388,321) | ||
Net premiums earned | 678,702 | 554,498 | 2,060,626 | 1,578,155 | ||
Other underwriting income (loss) | 3,293 | 298 | 3,148 | 1,767 | ||
Losses and loss adjustment expenses | (545,846) | (422,084) | (1,494,539) | (1,235,586) | ||
Acquisition expenses | (129,450) | (85,388) | (381,060) | (255,516) | ||
Other operating expenses | (45,647) | (41,818) | (150,856) | (125,831) | ||
Underwriting income (loss) | $ (38,948) | $ 5,506 | $ 37,319 | $ (37,011) | ||
Underwriting Ratios | ||||||
Loss ratio | 80.40% | 76.10% | 72.50% | 78.30% | ||
Acquisition expense ratio | 19.10% | 15.40% | 18.50% | 16.20% | ||
Other operating expense ratio | 6.70% | 7.50% | 7.30% | 8.00% | ||
Combined ratio | 106.20% | 99.00% | 98.30% | 102.50% | ||
Goodwill and intangible assets | $ 176,128 | $ 20,319 | $ 176,128 | $ 20,319 | ||
Operating segments | Mortgage | ||||||
Segment Reporting Information [Line Items] | ||||||
Gross premiums written | [1] | 360,934 | 346,248 | 1,143,691 | 1,084,337 | |
Premiums ceded | (60,207) | (47,783) | (171,923) | (136,154) | ||
Net premiums written | 300,727 | 298,465 | 971,768 | 948,183 | ||
Change in unearned premiums | 11,238 | 52,944 | 10,735 | 113,965 | ||
Net premiums earned | 311,965 | 351,409 | 982,503 | 1,062,148 | ||
Other underwriting income (loss) | 3,981 | 4,600 | 15,026 | 15,649 | ||
Losses and loss adjustment expenses | (11,543) | (153,055) | (85,112) | (444,721) | ||
Acquisition expenses | (24,098) | (35,716) | (84,297) | (108,304) | ||
Other operating expenses | (46,254) | (36,708) | (143,697) | (120,178) | ||
Underwriting income (loss) | $ 234,051 | $ 130,530 | $ 684,423 | $ 404,594 | ||
Underwriting Ratios | ||||||
Loss ratio | 3.70% | 43.60% | 8.70% | 41.90% | ||
Acquisition expense ratio | 7.70% | 10.20% | 8.60% | 10.20% | ||
Other operating expense ratio | 14.80% | 10.40% | 14.60% | 11.30% | ||
Combined ratio | 26.20% | 64.20% | 31.90% | 63.40% | ||
Goodwill and intangible assets | $ 526,091 | $ 403,662 | $ 526,091 | $ 403,662 | ||
Operating segments | Corporate and Other Segments | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of segments | segment | 2 | |||||
Operating segments | Corporate | ||||||
Segment Reporting Information [Line Items] | ||||||
Net investment income | 88,195 | 99,857 | $ 256,354 | 313,916 | ||
Net realized gains (losses) | (25,040) | 210,984 | 239,690 | 523,964 | ||
Equity in net income (loss) of investment funds accounted for using the equity method | 105,398 | 126,735 | 299,270 | 57,407 | ||
Other income (loss) | (3,960) | 0 | 1,151 | 65 | ||
Corporate expenses | [2] | (18,636) | (16,263) | (59,279) | (51,407) | |
Transaction costs and other | [2] | (1,036) | (1,674) | (793) | (5,246) | |
Amortization of intangible assets | (20,135) | (16,715) | (48,925) | (49,835) | ||
Interest expense | (33,176) | (36,224) | (98,812) | (86,599) | ||
Net foreign exchange gains (losses) | 36,078 | (38,681) | 39,691 | (17,812) | ||
Income (loss) before income taxes and income (loss) from operating affiliates | 301,433 | 432,896 | 1,396,476 | 935,980 | ||
Income tax expense (benefit) | (4,137) | (23,638) | (93,942) | (78,112) | ||
Income (loss) from operating affiliates | 124,119 | 919 | 224,052 | 6,262 | ||
Net income (loss) | 421,415 | 410,177 | 1,526,586 | 864,130 | ||
Amounts attributable to redeemable noncontrolling interests | (1,473) | (882) | (1,936) | (1,873) | ||
Amounts attributable to non-redeemable noncontrolling interests | 0 | 0 | 0 | 0 | ||
Net income (loss) available to Arch | 419,942 | 409,295 | 1,524,650 | 862,257 | ||
Preferred dividends | (16,090) | (10,403) | (38,159) | (31,209) | ||
Loss on redemption of preferred shares | (15,101) | (15,101) | ||||
Net income (loss) available to Arch common shareholders | 388,751 | 398,892 | 1,471,390 | 831,048 | ||
Operating segments | Other | ||||||
Segment Reporting Information [Line Items] | ||||||
Gross premiums written | [1] | 0 | 197,480 | 457,465 | 590,309 | |
Premiums ceded | 0 | (50,164) | (102,763) | (150,437) | ||
Net premiums written | 0 | 147,316 | 354,702 | 439,872 | ||
Change in unearned premiums | 0 | (1,285) | (22,734) | (22,267) | ||
Net premiums earned | 0 | 146,031 | 331,968 | 417,605 | ||
Other underwriting income (loss) | 0 | 546 | 739 | 1,547 | ||
Losses and loss adjustment expenses | 0 | (115,813) | (259,042) | (331,275) | ||
Acquisition expenses | 0 | (24,418) | (62,741) | (68,766) | ||
Other operating expenses | 0 | (14,619) | (32,869) | (42,523) | ||
Underwriting income (loss) | 0 | (8,273) | (21,945) | (23,412) | ||
Net investment income | 0 | 28,655 | 42,310 | 91,234 | ||
Net realized gains (losses) | 0 | 69,515 | 80,638 | (53,837) | ||
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 | ||
Other income (loss) | 0 | 0 | 0 | 0 | ||
Corporate expenses | [2] | 0 | 0 | 0 | 0 | |
Transaction costs and other | [2] | 0 | 0 | (935) | 0 | |
Amortization of intangible assets | 0 | 0 | (898) | 0 | ||
Interest expense | 0 | (5,119) | (8,410) | (18,438) | ||
Net foreign exchange gains (losses) | 0 | (6,204) | (1,325) | 6,387 | ||
Income (loss) before income taxes and income (loss) from operating affiliates | 0 | 78,574 | 89,435 | 1,934 | ||
Income tax expense (benefit) | 0 | (69) | (234) | 333 | ||
Income (loss) from operating affiliates | 0 | 0 | 0 | 0 | ||
Net income (loss) | 0 | 78,505 | 89,201 | 2,267 | ||
Amounts attributable to redeemable noncontrolling interests | 0 | (993) | (1,953) | (3,125) | ||
Amounts attributable to non-redeemable noncontrolling interests | 0 | (67,768) | (78,314) | 578 | ||
Net income (loss) available to Arch | 0 | 9,744 | 8,934 | (280) | ||
Preferred dividends | 0 | 0 | 0 | 0 | ||
Loss on redemption of preferred shares | 0 | 0 | ||||
Net income (loss) available to Arch common shareholders | $ 0 | $ 9,744 | $ 8,934 | $ (280) | ||
Underwriting Ratios | ||||||
Loss ratio | 0.00% | 79.30% | 78.00% | 79.30% | ||
Acquisition expense ratio | 0.00% | 16.70% | 18.90% | 16.50% | ||
Other operating expense ratio | 0.00% | 10.00% | 9.90% | 10.20% | ||
Combined ratio | 0.00% | 106.00% | 106.80% | 106.00% | ||
Goodwill and intangible assets | $ 0 | $ 7,650 | $ 0 | $ 7,650 | ||
[1] | Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. | |||||
[2] | Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ |
Reserve for Losses and Loss A_3
Reserve for Losses and Loss Adjustment Expenses - Reconciliation of beginning and ending balances of losses and loss adjustment reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | ||||||
Reserve for losses and loss adjustment expenses at beginning of period | $ 17,196,648 | $ 15,044,874 | $ 16,513,929 | $ 16,513,929 | $ 13,891,842 | |
Unpaid losses and loss adjustment expenses recoverable | 4,146,020 | 4,156,157 | 4,314,855 | 4,314,855 | 4,082,650 | |
Net reserve for losses and loss adjustment expenses at beginning of period | 13,050,628 | 10,888,717 | 12,199,074 | 12,199,074 | 9,809,192 | |
Net incurred losses and loss adjustment expenses relating to losses occurring in: | ||||||
Current year | 1,348,528 | 1,264,315 | 3,812,381 | 3,673,346 | ||
Prior years | (122,509) | (48,042) | (223,431) | (111,132) | ||
Total net incurred losses and loss adjustment expenses | 1,226,019 | 1,216,273 | 3,588,950 | 3,562,214 | ||
Net losses and loss adjustment expense reserves of acquired business | [1] | 104,307 | 0 | 104,307 | 0 | |
Retroactive reinsurance transaction | [2] | 0 | 0 | (183,893) | 60,635 | |
Impact of deconsolidation of Watford | (1,460,611) | 0 | (1,460,611) | 0 | ||
Net foreign exchange (gains) losses | (78,152) | 114,122 | 10,818 | 22,706 | ||
Net paid losses and loss adjustment expenses relating to losses occurring in: | ||||||
Current year | (208,923) | (189,961) | (432,348) | (359,395) | ||
Prior years | (417,368) | (512,263) | (1,610,397) | (1,578,464) | ||
Total net paid losses and loss adjustment expenses | (626,291) | (702,224) | (2,042,745) | (1,937,859) | ||
Net reserve for losses and loss adjustment expenses at end of period | 12,215,900 | 11,516,888 | 13,050,628 | 12,215,900 | 11,516,888 | |
Unpaid losses and loss adjustment expenses recoverable | 5,115,147 | 4,383,638 | 4,146,020 | 5,115,147 | 4,383,638 | |
Reserve for losses and loss adjustment expenses at end of period | $ 17,331,047 | $ 15,900,526 | $ 17,196,648 | $ 17,331,047 | $ 15,900,526 | |
[1] | Represents activity related to the Company’s acquisitions in the 2021 period. | |||||
[2] | During the 2021 first quarter, the Company entered into a reinsurance to close and other related agreements with Premia Managing Agency Limited (“Premia”), in connection with the 2018 and prior years of account related to the acquisition of Barbican Group Holdings Limited (“Barbican”). During the 2020 first quarter, the Company entered into a reinsurance to close agreement of the 2017 and prior years of account previously covered by a third party arrangement. |
Reserve for Losses and Loss A_4
Reserve for Losses and Loss Adjustment Expenses - Prior year development (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | $ 122,509 | $ 48,042 | $ 223,431 | $ 111,132 | |
Operating segments | Insurance | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | $ 5,100 | $ 2,300 | $ 13,100 | $ 5,900 | |
Percentage of prior year development | 0.50% | 0.30% | 0.50% | 0.30% | |
Operating segments | Insurance | Short tailed lines | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | $ 11,800 | $ 65,300 | $ 27,200 | ||
Operating segments | Insurance | Short tailed lines | Property excluding marine | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | $ 5,400 | 8,000 | 27,000 | 17,500 | |
Operating segments | Insurance | Short tailed lines | Travel and accident | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 5,100 | 3,400 | 14,400 | 6,200 | |
Operating segments | Insurance | Short tailed lines | Lenders products | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 5,400 | 24,000 | 3,500 | ||
Operating segments | Insurance | Medium tailed lines | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | (43,900) | (10,600) | (89,400) | (35,700) | |
Operating segments | Insurance | Medium tailed lines | Programs | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | (7,100) | (6,900) | (13,500) | ||
Operating segments | Insurance | Medium tailed lines | Professional liability | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | (26,200) | ||||
Operating segments | Insurance | Medium tailed lines | Contract binding | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | (37,000) | (3,700) | (57,100) | (23,000) | |
Operating segments | Insurance | Long tailed lines | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 1,100 | 37,100 | 14,400 | ||
Operating segments | Insurance | Long tailed lines | Construction and national accounts | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 26,300 | 8,700 | |||
Operating segments | Insurance | Long tailed lines | Executive assurance and casualty | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | (11,700) | ||||
Operating segments | Insurance | Long tailed lines | Other product lines | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 6,700 | 4,200 | 11,700 | ||
Operating segments | Insurance | Short tailed and long tailed lines | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 49,000 | 12,900 | 102,500 | 41,600 | |
Operating segments | Reinsurance | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | $ 72,300 | $ 42,000 | $ 119,600 | $ 93,800 | |
Percentage of prior year development | 10.70% | 7.60% | 5.80% | 5.90% | |
Operating segments | Reinsurance | Short tailed lines | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | $ 65,400 | $ 132,600 | $ 101,800 | ||
Operating segments | Reinsurance | Short tailed lines | Property catastrophe and property other than property catastrophe | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 46,100 | $ 27,600 | 71,700 | 52,100 | |
Operating segments | Reinsurance | Short tailed lines | Property catastrophe | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | (36,300) | ||||
Operating segments | Reinsurance | Short tailed lines | Other specialty lines | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 18,900 | 7,800 | 97,100 | 47,100 | |
Operating segments | Reinsurance | Medium tailed lines | Marine and aviation | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 9,400 | ||||
Operating segments | Reinsurance | Long tailed lines | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | (3,600) | (20,100) | (19,200) | ||
Operating segments | Reinsurance | Long tailed lines | Casualty | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | (3,600) | (19,200) | |||
Operating segments | Reinsurance | Short tailed and medium tailed lines | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 45,600 | 139,700 | 113,000 | ||
Operating segments | Reinsurance | Medium tailed and long tailed lines | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 6,900 | ||||
Operating segments | Reinsurance | Medium tailed and long tailed lines | Casualty | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | 4,700 | ||||
Operating segments | Mortgage | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | $ 45,100 | $ 4,500 | $ 99,100 | $ 10,800 | |
Percentage of prior year development | 14.50% | 1.30% | 10.10% | 1.00% | |
Operating segments | Other | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||||
Prior year development favorable (unfavorable) | $ (700) | $ (8,400) | $ 600 |
Allowance for Expected Credit_3
Allowance for Expected Credit Losses - Premiums receivable (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Credit Loss [Abstract] | |||||
Balance at beginning of period | $ 2,866,578 | $ 2,203,753 | $ 2,064,586 | $ 1,778,717 | |
Balance at end of period | 2,807,720 | 2,225,311 | 2,807,720 | 2,225,311 | |
Allowance for Expected Credit Losses | |||||
Balance at beginning of period | 35,979 | 36,054 | 37,781 | 21,003 | |
Cumulative effect of accounting change | [1] | 6,539 | |||
Change for provision of expected credit losses | [2] | 2,736 | 1,046 | 934 | 9,558 |
Balance at end of period | 38,715 | 37,100 | 38,715 | 37,100 | |
Write-offs charged against the allowance | $ 1,200 | $ 0 | $ 2,400 | $ 2,300 | |
Accounting Standards Update | Accounting Standards Update 2016-13 [Member] | ||||
[1] | Adoption of ASU 2016-13 | ||||
[2] | Amounts deemed uncollectible are written-off in operating expenses. For the 2021 third quarter and 2020 third quarter, amounts written off were $1.2 million and nil, respectively. For the nine months ended September 30, 2021 and 2020 period, amounts written off were were $2.4 million and $2.3 million, respectively. |
Allowance for Expected Credit_4
Allowance for Expected Credit Losses - Reinsurance recoverables (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Credit Loss [Abstract] | |||||
Balance at beginning of period | $ 4,314,515 | $ 4,363,507 | $ 4,500,802 | $ 4,346,816 | |
Balance at end of period | 5,358,852 | 4,621,937 | 5,358,852 | 4,621,937 | |
Allowance for Expected Credit Losses | |||||
Balance at beginning of period | 11,029 | 13,595 | 11,636 | 1,364 | |
Cumulative effect of accounting change | [1] | 12,010 | |||
Change for provision of expected credit losses | 1,802 | 399 | 1,195 | 620 | |
Balance at end of period | $ 12,831 | $ 13,994 | $ 12,831 | $ 13,994 | |
[1] | Adoption of ASU 2016-13 |
Allowance for Expected Credit_5
Allowance for Expected Credit Losses - Ceded credit risk (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | ||
Ceded Credit Risk [Line Items] | |||
Reinsurance recoverable on unpaid and paid losses and LAE | $ 5,358,852 | $ 4,500,802 | |
Reinsurance recoverable | Reinsurer concentration risk | AM Best A minus Or Better Rating | |||
Ceded Credit Risk [Line Items] | |||
Concentration risk percentage | 69.10% | 63.90% | |
Reinsurance recoverable | Reinsurer concentration risk | Not Rated | |||
Ceded Credit Risk [Line Items] | |||
Concentration risk percentage | [1] | 30.90% | 36.10% |
Reinsurance recoverable | Reinsurer concentration risk | Not Rated | Reinsurance trusts or letters of credit | |||
Ceded Credit Risk [Line Items] | |||
Concentration risk percentage | 93.00% | 94.00% | |
Stockholders' equity | Reinsurer concentration risk | Single Reinsurer | |||
Ceded Credit Risk [Line Items] | |||
Concentration risk percentage | 6.50% | 1.80% | |
[1] | At September 30, 2021 and December 31, 2020 over 93% and 94% of such amount were collateralized through reinsurance trusts, funds withheld arrangements, letters of credit or other, respectively |
Allowance for Expected Credit_6
Allowance for Expected Credit Losses - Contractholder receivables (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Credit Loss [Abstract] | |||||
Balance at beginning of period | $ 1,882,948 | $ 2,179,124 | $ 1,986,924 | $ 2,119,460 | |
Balance at end of period | 1,824,990 | 2,185,614 | 1,824,990 | 2,185,614 | |
Allowance for Expected Credit Losses | |||||
Balance at beginning of period | 4,471 | 6,290 | 8,638 | 0 | |
Cumulative effect of accounting change | [1] | 6,663 | |||
Change for provision of expected credit losses | (987) | (389) | (5,154) | (762) | |
Balance at end of period | $ 3,484 | $ 5,901 | $ 3,484 | $ 5,901 | |
[1] | Adoption of ASU 2016-13 |
Investment Information - Summar
Investment Information - Summary of available for sale securities (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2021 | Dec. 31, 2020 | |||
Debt Securities, Available-for-sale [Line Items] | ||||
Estimated Fair Value | $ 16,768,363 | $ 18,717,825 | ||
Estimated Fair Value | 3,069,965 | 1,924,922 | ||
Estimated Fair Value | 19,838,328 | 20,921,530 | ||
Gross Unrealized Gains | 255,815 | 657,620 | ||
Gross Unrealized Losses | (115,117) | (79,654) | ||
Allowance for expected credit losses | (2,111) | (2,397) | ||
Amortized cost | 16,629,621 | 18,143,305 | ||
Cost | 3,070,120 | 1,924,292 | ||
Cost or Amortized Cost | $ 19,699,741 | 20,345,961 | ||
Accounting Standards Update | Accounting Standards Update 2016-13 [Member] | |||
Fixed maturities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Estimated Fair Value | [1] | $ 16,768,363 | 18,996,608 | |
Gross Unrealized Gains | [1] | 254,190 | 654,927 | |
Gross Unrealized Losses | [1] | (113,337) | (77,591) | |
Allowance for expected credit losses | [2] | (2,111) | [1] | (2,397) |
Amortized cost | [1] | 16,629,621 | 18,421,669 | |
Fixed maturities | Corporate bonds | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Estimated Fair Value | 6,403,617 | 7,856,571 | ||
Gross Unrealized Gains | [1] | 155,246 | 414,247 | |
Gross Unrealized Losses | [1] | (40,649) | (34,388) | |
Allowance for expected credit losses | [2] | (1,440) | [1] | (896) |
Amortized cost | [1] | 6,290,460 | 7,477,608 | |
Fixed maturities | Mortgage backed securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Estimated Fair Value | 405,797 | 630,001 | ||
Gross Unrealized Gains | [1] | 3,384 | 8,939 | |
Gross Unrealized Losses | [1] | (3,966) | (5,028) | |
Allowance for expected credit losses | [2] | (24) | [1] | (278) |
Amortized cost | [1] | 406,403 | 626,368 | |
Fixed maturities | Municipal bonds | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Estimated Fair Value | 382,722 | 494,522 | ||
Gross Unrealized Gains | [1] | 20,096 | 27,291 | |
Gross Unrealized Losses | [1] | (1,206) | (3,835) | |
Allowance for expected credit losses | [2] | (2) | [1] | (11) |
Amortized cost | [1] | 363,834 | 471,077 | |
Fixed maturities | Commercial mortgage backed securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Estimated Fair Value | 579,424 | 389,900 | ||
Gross Unrealized Gains | [1] | 3,598 | 8,722 | |
Gross Unrealized Losses | [1] | (548) | (2,954) | |
Allowance for expected credit losses | [2] | (3) | [1] | (122) |
Amortized cost | [1] | 576,377 | 384,254 | |
Fixed maturities | US government and government agencies | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Estimated Fair Value | 4,460,515 | 5,557,077 | ||
Gross Unrealized Gains | [1] | 12,912 | 22,612 | |
Gross Unrealized Losses | [1] | (30,320) | (12,611) | |
Allowance for expected credit losses | [2] | 0 | [1] | 0 |
Amortized cost | [1] | 4,477,923 | 5,547,076 | |
Fixed maturities | Non-US government securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Estimated Fair Value | 1,863,734 | 2,433,733 | ||
Gross Unrealized Gains | [1] | 46,378 | 153,891 | |
Gross Unrealized Losses | [1] | (28,948) | (8,060) | |
Allowance for expected credit losses | [2] | (82) | [1] | 0 |
Amortized cost | [1] | 1,846,386 | 2,287,902 | |
Fixed maturities | Asset backed securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Estimated Fair Value | 2,672,554 | 1,634,804 | ||
Gross Unrealized Gains | [1] | 12,576 | 19,225 | |
Gross Unrealized Losses | [1] | (7,700) | (10,715) | |
Allowance for expected credit losses | [2] | (560) | [1] | (1,090) |
Amortized cost | [1] | 2,668,238 | 1,627,384 | |
Short-term investments | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Estimated Fair Value | 3,069,965 | 1,924,922 | ||
Gross Unrealized Gains | 1,625 | 2,693 | ||
Gross Unrealized Losses | (1,780) | (2,063) | ||
Allowance for expected credit losses | [2] | 0 | 0 | |
Cost | $ 3,070,120 | $ 1,924,292 | ||
[1] | In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. | |||
[2] | Effective January 1, 2020, the Company adopted ASU 2016-13 and as a result any credit impairment losses on the Company’s available-for-sale investments are recorded as an allowance, subject to reversal. |
Investment Information - Aging
Investment Information - Aging of available for sale securities in an unrealized loss position (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | |
Debt Securities, Available-for-sale, Unrealized Loss Position, Estimated Fair Value [Abstract] | |||
Estimated Fair Value - Less than 12 Months | $ 9,415,006 | $ 3,788,763 | |
Estimated Fair Value - 12 Months or More | 174,082 | 70,404 | |
Estimated Fair Value | 9,589,088 | 3,859,167 | |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | |||
Gross Unrealized Losses - Less than 12 Months | (106,319) | (76,067) | |
Gross Unrealized Losses - 12 Months or More | (8,798) | (3,587) | |
Gross Unrealized Losses | (115,117) | (79,654) | |
Fixed maturities | |||
Debt Securities, Available-for-sale, Unrealized Loss Position, Estimated Fair Value [Abstract] | |||
Estimated Fair Value - Less than 12 Months | [1] | 9,149,995 | 3,690,843 |
Estimated Fair Value - 12 Months or More | [1] | 174,082 | 70,404 |
Estimated Fair Value | [1] | 9,324,077 | 3,761,247 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | |||
Gross Unrealized Losses - Less than 12 Months | [1] | (104,539) | (74,004) |
Gross Unrealized Losses - 12 Months or More | [1] | (8,798) | (3,587) |
Gross Unrealized Losses | [1] | (113,337) | (77,591) |
Fixed maturities | Corporate bonds | |||
Debt Securities, Available-for-sale, Unrealized Loss Position, Estimated Fair Value [Abstract] | |||
Estimated Fair Value - Less than 12 Months | [1] | 2,744,615 | 747,442 |
Estimated Fair Value - 12 Months or More | [1] | 68,450 | 3,934 |
Estimated Fair Value | [1] | 2,813,065 | 751,376 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | |||
Gross Unrealized Losses - Less than 12 Months | [1] | (36,595) | (33,086) |
Gross Unrealized Losses - 12 Months or More | [1] | (4,054) | (1,302) |
Gross Unrealized Losses | [1] | (40,649) | (34,388) |
Fixed maturities | Mortgage backed securities | |||
Debt Securities, Available-for-sale, Unrealized Loss Position, Estimated Fair Value [Abstract] | |||
Estimated Fair Value - Less than 12 Months | [1] | 257,789 | 284,619 |
Estimated Fair Value - 12 Months or More | [1] | 22,769 | 3,637 |
Estimated Fair Value | [1] | 280,558 | 288,256 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | |||
Gross Unrealized Losses - Less than 12 Months | [1] | (3,113) | (4,788) |
Gross Unrealized Losses - 12 Months or More | [1] | (853) | (240) |
Gross Unrealized Losses | [1] | (3,966) | (5,028) |
Fixed maturities | Municipal bonds | |||
Debt Securities, Available-for-sale, Unrealized Loss Position, Estimated Fair Value [Abstract] | |||
Estimated Fair Value - Less than 12 Months | [1] | 46,450 | 67,937 |
Estimated Fair Value - 12 Months or More | [1] | 7,148 | 0 |
Estimated Fair Value | [1] | 53,598 | 67,937 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | |||
Gross Unrealized Losses - Less than 12 Months | [1] | (731) | (3,835) |
Gross Unrealized Losses - 12 Months or More | [1] | (475) | 0 |
Gross Unrealized Losses | [1] | (1,206) | (3,835) |
Fixed maturities | Commercial mortgage backed securities | |||
Debt Securities, Available-for-sale, Unrealized Loss Position, Estimated Fair Value [Abstract] | |||
Estimated Fair Value - Less than 12 Months | [1] | 76,518 | 126,624 |
Estimated Fair Value - 12 Months or More | [1] | 6,578 | 2,655 |
Estimated Fair Value | [1] | 83,096 | 129,279 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | |||
Gross Unrealized Losses - Less than 12 Months | [1] | (256) | (2,916) |
Gross Unrealized Losses - 12 Months or More | [1] | (292) | (38) |
Gross Unrealized Losses | [1] | (548) | (2,954) |
Fixed maturities | US government and government agencies | |||
Debt Securities, Available-for-sale, Unrealized Loss Position, Estimated Fair Value [Abstract] | |||
Estimated Fair Value - Less than 12 Months | [1] | 3,621,719 | 1,285,907 |
Estimated Fair Value - 12 Months or More | [1] | 9,755 | 0 |
Estimated Fair Value | [1] | 3,631,474 | 1,285,907 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | |||
Gross Unrealized Losses - Less than 12 Months | [1] | (29,797) | (12,611) |
Gross Unrealized Losses - 12 Months or More | [1] | (523) | 0 |
Gross Unrealized Losses | [1] | (30,320) | (12,611) |
Fixed maturities | Non-US government securities | |||
Debt Securities, Available-for-sale, Unrealized Loss Position, Estimated Fair Value [Abstract] | |||
Estimated Fair Value - Less than 12 Months | [1] | 1,283,266 | 543,844 |
Estimated Fair Value - 12 Months or More | [1] | 22,304 | 2,441 |
Estimated Fair Value | [1] | 1,305,570 | 546,285 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | |||
Gross Unrealized Losses - Less than 12 Months | [1] | (27,523) | (7,658) |
Gross Unrealized Losses - 12 Months or More | [1] | (1,425) | (402) |
Gross Unrealized Losses | [1] | (28,948) | (8,060) |
Fixed maturities | Asset backed securities | |||
Debt Securities, Available-for-sale, Unrealized Loss Position, Estimated Fair Value [Abstract] | |||
Estimated Fair Value - Less than 12 Months | [1] | 1,119,638 | 634,470 |
Estimated Fair Value - 12 Months or More | [1] | 37,078 | 57,737 |
Estimated Fair Value | [1] | 1,156,716 | 692,207 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | |||
Gross Unrealized Losses - Less than 12 Months | [1] | (6,524) | (9,110) |
Gross Unrealized Losses - 12 Months or More | [1] | (1,176) | (1,605) |
Gross Unrealized Losses | [1] | (7,700) | (10,715) |
Short-term investments | |||
Debt Securities, Available-for-sale, Unrealized Loss Position, Estimated Fair Value [Abstract] | |||
Estimated Fair Value - Less than 12 Months | 265,011 | 97,920 | |
Estimated Fair Value - 12 Months or More | 0 | 0 | |
Estimated Fair Value | 265,011 | 97,920 | |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | |||
Gross Unrealized Losses - Less than 12 Months | (1,780) | (2,063) | |
Gross Unrealized Losses - 12 Months or More | 0 | 0 | |
Gross Unrealized Losses | $ (1,780) | $ (2,063) | |
[1] | In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. |
Investment Information - Maturi
Investment Information - Maturity profile of available for sale securities) (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | |
Estimated Fair Value | |||
Estimated Fair Value | $ 16,768,363 | $ 18,717,825 | |
Amortized Cost | |||
Amortized cost | 16,629,621 | 18,143,305 | |
Fixed maturities | |||
Estimated Fair Value | |||
Due in one year or less | 416,601 | 348,200 | |
Due after one year through five years | 7,862,472 | 10,629,959 | |
Due after five years through 10 years | 4,483,025 | 4,881,564 | |
Due after 10 years | 348,490 | 482,180 | |
Single maturity date | 13,110,588 | 16,341,903 | |
Estimated Fair Value | [1] | 16,768,363 | 18,996,608 |
Amortized Cost | |||
Due in one year or less | 410,373 | 339,951 | |
Due after one year through five years | 7,772,773 | 10,340,819 | |
Due after five years through 10 years | 4,453,526 | 4,654,754 | |
Due after 10 years | 341,931 | 448,139 | |
Single maturity date | 12,978,603 | 15,783,663 | |
Amortized cost | [1] | 16,629,621 | 18,421,669 |
Fixed maturities | Mortgage backed securities | |||
Estimated Fair Value | |||
Securities without single maturity date | 405,797 | 630,001 | |
Estimated Fair Value | 405,797 | 630,001 | |
Amortized Cost | |||
Securities without single maturity date | 406,403 | 626,368 | |
Amortized cost | [1] | 406,403 | 626,368 |
Fixed maturities | Commercial mortgage backed securities | |||
Estimated Fair Value | |||
Securities without single maturity date | 579,424 | 389,900 | |
Estimated Fair Value | 579,424 | 389,900 | |
Amortized Cost | |||
Securities without single maturity date | 576,377 | 384,254 | |
Amortized cost | [1] | 576,377 | 384,254 |
Fixed maturities | Asset backed securities | |||
Estimated Fair Value | |||
Securities without single maturity date | 2,672,554 | 1,634,804 | |
Estimated Fair Value | 2,672,554 | 1,634,804 | |
Amortized Cost | |||
Securities without single maturity date | 2,668,238 | 1,627,384 | |
Amortized cost | [1] | $ 2,668,238 | $ 1,627,384 |
[1] | In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. |
Investment Information - Securi
Investment Information - Securities lending agreements (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Disclosure Investment Information [Abstract] | ||
Fair value of cash collateral received on securities lending | $ 0 | $ 0 |
Fair value of non-cash collateral received on securities lending | 0 | 301,100 |
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 301,089 |
Gross amount of recognized liabilities for securities lending in offsetting disclosure in note 10 | 0 | |
Amounts related to securities lending not included in offsetting disclosure in note 10 | 301,089 | |
Fair value of cash collateral received on securities lending | 0 | 0 |
Fair value of non-cash collateral received on securities lending | $ 0 | 301,100 |
US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 281,607 | |
Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 3,021 | |
Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 16,461 | |
Overnight and continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 161,799 | |
Overnight and continuous | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 142,317 | |
Overnight and continuous | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 3,021 | |
Overnight and continuous | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 16,461 | |
Less than 30 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | |
Less than 30 days | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | |
Less than 30 days | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | |
Less than 30 days | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | |
30 - 90 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 139,290 | |
30 - 90 days | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 139,290 | |
30 - 90 days | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | |
30 - 90 days | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | |
90 days or more | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | |
90 days or more | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | |
90 days or more | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | |
90 days or more | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | $ 0 |
Investment Information - Other
Investment Information - Other investments (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | |
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | $ 2,043,970 | $ 3,824,796 | |
Other investable assets | [1] | 0 | 500,000 |
Other investments (portion measured at fair value: $2,043,970 and $3,824,796) | 2,043,970 | 4,324,796 | |
Fair value option | Fixed maturities | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | 414,007 | 843,354 | |
Fair value option | Other investments | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | 1,489,759 | 2,331,885 | |
Fair value option | Other investments | Term loan investments | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | 528,585 | 1,231,731 | |
Fair value option | Other investments | Lending | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | 579,563 | 572,636 | |
Fair value option | Other investments | Credit related funds | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | 56,997 | 90,780 | |
Fair value option | Other investments | Energy | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | 84,880 | 65,813 | |
Fair value option | Other investments | Investment grade fixed income | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | 131,910 | 138,646 | |
Fair value option | Other investments | Infrastructure | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | 26,359 | 165,516 | |
Fair value option | Other investments | Private equity | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | 81,465 | 48,750 | |
Fair value option | Other investments | Real estate | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | 0 | 18,013 | |
Fair value option | Short-term investments | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | 115,681 | 557,008 | |
Fair value option | Equity securities | |||
Schedule Of Other Investments [Line Items] | |||
Other investments measured at fair value | $ 24,523 | $ 92,549 | |
[1] | Participation interests in a receivable of a reverse repurchase agreement |
Investment Information - Equity
Investment Information - Equity method investments (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Schedule of Equity Method Investments [Line Items] | ||
Investments accounted for using the equity method | $ 2,741,293 | $ 2,047,889 |
Credit related funds | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments accounted for using the equity method | 952,794 | 740,060 |
Equity securities | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments accounted for using the equity method | 414,322 | 343,058 |
Real estate | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments accounted for using the equity method | 340,510 | 258,518 |
Lending | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments accounted for using the equity method | 330,368 | 179,629 |
Private equity | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments accounted for using the equity method | 365,840 | 235,289 |
Infrastructure | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments accounted for using the equity method | 222,484 | 175,882 |
Energy | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments accounted for using the equity method | $ 114,975 | $ 115,453 |
Investment Information - Limite
Investment Information - Limited partnership interests (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | |
Schedule of Equity Method Investments [Line Items] | |||
Maximum Exposure to Loss | $ 2,918,177 | $ 2,232,609 | |
Aggregate unfunded commitments | 2,600,000 | 2,100,000 | |
Equity method investments | |||
Schedule of Equity Method Investments [Line Items] | |||
Maximum Exposure to Loss | [1] | 2,741,293 | 2,047,889 |
Aggregate unfunded commitments | 2,300,000 | 1,800,000 | |
Fair value option | |||
Schedule of Equity Method Investments [Line Items] | |||
Maximum Exposure to Loss | [2] | 176,884 | 184,720 |
Aggregate unfunded commitments | $ 22,900 | $ 35,600 | |
[1] | Aggregate unfunded commitments were $2.3 billion at September 30, 2021, compared to $1.8 billion at December 31, 2020. | ||
[2] | Aggregate unfunded commitments were $22.9 million at September 30, 2021, compared to $35.6 million at December 31, 2020. |
Investment Information - Net in
Investment Information - Net investment income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Net investment income: | |||||
Gross investment income | $ 106,803 | $ 150,854 | $ 367,945 | $ 471,145 | |
Investment expenses | (18,608) | (22,342) | (69,281) | (65,995) | |
Net investment income | 88,195 | 128,512 | 298,664 | 405,150 | |
Fixed maturities | |||||
Net investment income: | |||||
Gross investment income | 75,964 | 98,344 | 255,215 | 318,582 | |
Term loans | |||||
Net investment income: | |||||
Gross investment income | 1,736 | 22,459 | 33,343 | 66,141 | |
Equity securities | |||||
Net investment income: | |||||
Gross investment income | 9,867 | 6,659 | 24,101 | 18,885 | |
Short-term investments | |||||
Net investment income: | |||||
Gross investment income | 1,858 | 1,332 | 3,603 | 9,611 | |
Other | |||||
Net investment income: | |||||
Gross investment income | [1] | $ 17,378 | $ 22,060 | $ 51,683 | $ 57,926 |
[1] | Includes income distributions from investment funds and other items. |
Investment Information - Net re
Investment Information - Net realized gains and losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Available for sale securities: | |||||
Available for sale securities, gross gains on investment sales | $ 86,819 | $ 104,733 | $ 267,362 | $ 515,086 | |
Available for sale securities, gross losses on investment sales | (18,446) | (16,862) | (132,071) | (98,654) | |
Equity securities, at fair value: | |||||
Net realized gains (losses) on sales during the period | 14,736 | 26,549 | 86,155 | 7,760 | |
Net unrealized gains (losses) on equity securities still held at reporting date | (40,155) | 33,562 | 45,400 | 3,682 | |
Allowance for credit losses: | |||||
Allowance for credit losses - underwriting related | (3,985) | 351 | 2,664 | (8,753) | |
Net impairment losses | 0 | (533) | |||
Derivative instruments | [1] | (21,435) | 20,369 | (36,428) | 146,722 |
Other | [2] | (41,495) | 7,303 | (54,316) | (1,309) |
Net realized gains (losses) | (25,040) | 280,499 | 320,328 | 470,127 | |
Net loss on deconsolidation | 33,100 | 33,100 | |||
Fixed maturities | |||||
Available for sale securities: | |||||
Change in fair value of assets and liabilities accounted for using the fair value option | (7,492) | 34,115 | 19,973 | (25,370) | |
Allowance for credit losses: | |||||
Allowance for credit losses - investment related | (456) | 1,332 | (1,208) | (4,763) | |
Other investments | |||||
Available for sale securities: | |||||
Change in fair value of assets and liabilities accounted for using the fair value option | 3,811 | 61,622 | 111,550 | (67,608) | |
Equity securities | |||||
Available for sale securities: | |||||
Change in fair value of assets and liabilities accounted for using the fair value option | 3,042 | 4,048 | 10,599 | 5,803 | |
Short-term investments | |||||
Available for sale securities: | |||||
Change in fair value of assets and liabilities accounted for using the fair value option | $ 16 | $ 3,377 | $ 648 | $ (1,936) | |
[1] | See note 10 for information on the Company’s derivative instruments. | ||||
[2] | 2021 periods reflected $33.1 million of losses related to the Company’s deconsolidation of Watford. |
Investment Information - Invest
Investment Information - Investment in operating affiliates (Details) € / shares in Units, $ / shares in Units, € in Thousands, $ in Thousands | Jul. 01, 2021USD ($)$ / shares | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2021EUR (€) | Sep. 30, 2020USD ($) | Sep. 30, 2021€ / shares | Dec. 31, 2020USD ($) |
Schedule of Equity Method Investments [Line Items] | ||||||||
Payments to Acquire Interest in Subsidiaries and Affiliates | $ 753,916 | $ 0 | ||||||
Investment in operating affiliates | $ 1,111,825 | 1,111,825 | $ 129,291 | |||||
Income (loss) from operating affiliates | 124,119 | $ 919 | 224,052 | $ 6,262 | ||||
Net loss on deconsolidation | 33,100 | 33,100 | ||||||
Watford Holdings Ltd | Merger Agreement | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Business acquisition, share price (per share) | $ / shares | $ 35 | |||||||
Business Acquisition Consideration Paid By Acquirer | $ 278,900 | |||||||
Gain on merger transaction | $ 95,700 | |||||||
Greysbridge | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Percentage ownership after merger transaction | 40.00% | |||||||
Watford Merger Transaction | Watford Holdings Ltd | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Net loss on deconsolidation | $ 33,100 | $ 33,100 | ||||||
Kelso And Company | Greysbridge | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 30.00% | |||||||
Warburg Pincus LLC | Greysbridge | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 30.00% | |||||||
Coface | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Percentage ownership | 29.50% | 29.50% | ||||||
Consideration paid per share | € / shares | € 9.95 | |||||||
Payments to Acquire Interest in Subsidiaries and Affiliates | $ 546,000 | € 453,000 | ||||||
Investment in operating affiliates | $ 615,900 | 615,900 | ||||||
Income (loss) from operating affiliates | 74,500 | |||||||
Purchase Of Affiliate, Deferred Gain | $ 36,000 | $ 36,000 | ||||||
Purchase Of Operating Affiliate, Deferred Gain, Period Of Recognition | 5 years | 5 years | ||||||
Coface | Issued Common Stock | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Percentage ownership | 29.86% | 29.86% | ||||||
Coface | Outstanding Common Stock | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Percentage ownership | 30.10% | 30.10% | ||||||
Greysbridge | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Investment in operating affiliates | $ 363,300 | $ 363,300 |
Investment Information - Allowa
Investment Information - Allowance for expected credit losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||||
Allowance for expected credit losses | |||||||
Balance at beginning of period | $ 2,397 | ||||||
Balance at end of period | $ 2,111 | $ 2,111 | |||||
Accounting Standards Update | Accounting Standards Update 2016-13 [Member] | ||||||
Available for sale | |||||||
Allowance for expected credit losses | |||||||
Balance at beginning of period | 2,124 | $ 5,869 | $ 2,397 | $ 0 | |||
Cumulative effect of accounting change | [1] | 634 | |||||
Additions for current-period provision for expected credit losses | 48 | 229 | 2,710 | 10,578 | |||
Additions (reductions) for previously recognized expected credit losses | 405 | (1,560) | (1,317) | (5,815) | |||
Reductions due to disposals (3) | (466) | [2] | (605) | (1,679) | [2] | (1,464) | |
Balance at end of period | 2,111 | 3,933 | 2,111 | 3,933 | |||
Available for sale | Structured securities | |||||||
Allowance for expected credit losses | |||||||
Balance at beginning of period | [3] | 759 | 1,726 | 1,490 | 0 | ||
Cumulative effect of accounting change | [1],[3] | 517 | |||||
Additions for current-period provision for expected credit losses | [3] | 48 | 27 | 282 | 2,868 | ||
Additions (reductions) for previously recognized expected credit losses | [3] | 14 | 403 | (751) | (903) | ||
Reductions due to disposals (3) | [3] | (234) | [2] | (28) | (434) | [2] | (354) |
Balance at end of period | 587 | 2,128 | 587 | 2,128 | |||
Available for sale | Municipal bonds | |||||||
Allowance for expected credit losses | |||||||
Balance at beginning of period | 6 | 28 | 11 | 0 | |||
Cumulative effect of accounting change | [1] | 0 | |||||
Additions for current-period provision for expected credit losses | 0 | 0 | 0 | 67 | |||
Additions (reductions) for previously recognized expected credit losses | (4) | 33 | (9) | 8 | |||
Reductions due to disposals (3) | 0 | [2] | 0 | 0 | [2] | (14) | |
Balance at end of period | 2 | 61 | 2 | 61 | |||
Available for sale | Corporate bonds | |||||||
Allowance for expected credit losses | |||||||
Balance at beginning of period | 1,359 | 4,115 | 896 | 0 | |||
Cumulative effect of accounting change | [1] | 117 | |||||
Additions for current-period provision for expected credit losses | 0 | 202 | 2,428 | 7,643 | |||
Additions (reductions) for previously recognized expected credit losses | 395 | (1,996) | (557) | (4,920) | |||
Reductions due to disposals (3) | (232) | [2] | (577) | (1,245) | [2] | (1,096) | |
Balance at end of period | $ 1,522 | $ 1,744 | $ 1,522 | $ 1,744 | |||
[1] | Adoption of ASU 2016-13 | ||||||
[2] | Reduction for the 2021 periods primarily related to the Company’s deconsolidation of Watford. | ||||||
[3] | Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities. |
Investment Information - Restri
Investment Information - Restricted assets (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Restricted Assets [Line Items] | ||
Restricted assets | $ 8,138,636 | $ 8,733,309 |
Collateral or guarantees - affiliated transactions | ||
Restricted Assets [Line Items] | ||
Restricted assets | 4,271,208 | 4,643,334 |
Collateral or guarantees - third party agreements | ||
Restricted Assets [Line Items] | ||
Restricted assets | 2,594,053 | 3,083,324 |
Deposits with US regulatory authorities | ||
Restricted Assets [Line Items] | ||
Restricted assets | 803,878 | 827,552 |
Deposits with non-US regulatory authorities | ||
Restricted Assets [Line Items] | ||
Restricted assets | $ 469,497 | $ 179,099 |
Investment Information - Cash a
Investment Information - Cash and restricted cash (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Disclosure Investment Information [Abstract] | ||||
Cash | $ 1,137,721 | $ 906,448 | ||
Restricted cash (included in ‘other assets’) | 411,188 | 384,096 | ||
Cash and restricted cash | $ 1,548,909 | $ 1,290,544 | $ 1,186,973 | $ 903,698 |
Investment Information - Narrat
Investment Information - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021USD ($)lots | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)lots | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($)lots | |
Narrative items: | |||||
Equity in net (loss) income of investment funds accounted for using the equity method | $ 105,398 | $ 126,735 | $ 299,270 | $ 57,407 | |
Equity securities, at fair value | $ 1,790,640 | $ 1,790,640 | $ 1,444,830 | ||
Continuous unrealized loss, qualitative disclosures: | |||||
Number of positions in an unrealized loss position (lots) | lots | 3,910 | 3,910 | 2,320 | ||
Total number of positions (lots) | lots | 10,020 | 10,020 | 11,180 | ||
Largest single loss | $ 2,500 | $ 2,500 | $ 900 | ||
Minimum | |||||
Narrative items: | |||||
Time lag for reporting | 1 month | ||||
Maximum | |||||
Narrative items: | |||||
Time lag for reporting | 3 months |
Fair Value - Fair Value Hierarc
Fair Value - Fair Value Hierarchy (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | $ 8,273,826 | $ 9,280,391 | |
Liabilities measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Residential mortgage loans | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 4,431,935 | 5,463,356 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 4,431,935 | 5,463,356 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 2,046,391 | 1,920,565 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,756,462 | 1,401,653 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 39,038 | 494,817 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 164 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,190 | 420,131 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 19,987 | 23,373 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 17,861 | 51,149 | |
Significant Other Observable Inputs (Level 2) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 14,325,691 | 15,724,091 | |
Liabilities measured at fair value | (43,526) | (130,384) | |
Significant Other Observable Inputs (Level 2) | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | 0 | (21,679) |
Significant Other Observable Inputs (Level 2) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (43,526) | (108,705) | |
Significant Other Observable Inputs (Level 2) | Residential mortgage loans | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 7,701 | ||
Significant Other Observable Inputs (Level 2) | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 12,332,971 | 13,529,813 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 6,403,604 | 7,856,558 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 405,797 | 630,001 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 382,722 | 494,522 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 579,424 | 389,900 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 28,580 | 93,721 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 1,863,734 | 2,433,733 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 2,669,110 | 1,631,378 |
Significant Other Observable Inputs (Level 2) | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,023,574 | 4,357 | |
Significant Other Observable Inputs (Level 2) | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 31,596 | 17,291 | |
Significant Other Observable Inputs (Level 2) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 89,958 | 177,383 | |
Significant Other Observable Inputs (Level 2) | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 839,891 | 1,995,247 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 374,326 | 650,309 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 3,282 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 1,090 | |
Significant Other Observable Inputs (Level 2) | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 110 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 19,829 | 35,263 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 19,852 | 152,151 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 114,491 | 136,877 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 188 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 311,393 | 1,015,977 | |
Significant Unobservable Inputs (Level 3) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 40,331 | 182,530 | |
Liabilities measured at fair value | (17,811) | (461) | |
Significant Unobservable Inputs (Level 3) | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (17,811) | (461) | |
Significant Unobservable Inputs (Level 3) | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Residential mortgage loans | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | ||
Significant Unobservable Inputs (Level 3) | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 3,457 | 3,439 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 13 | 13 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 3,444 | 3,426 |
Significant Unobservable Inputs (Level 3) | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 2,582 | 42,015 | |
Significant Unobservable Inputs (Level 3) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 34,292 | 137,076 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 985 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 4,535 | 68,988 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 29,757 | 67,103 | |
Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 23,770,596 | 26,384,668 | |
Liabilities measured at fair value | (61,337) | (130,845) | |
Estimated Fair Value | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (17,811) | (461) | |
Estimated Fair Value | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | 0 | (21,679) |
Estimated Fair Value | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (43,526) | (108,705) | |
Estimated Fair Value | Residential mortgage loans | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 7,701 | ||
Estimated Fair Value | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 16,768,363 | 18,996,608 | |
Estimated Fair Value | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 6,403,617 | 7,856,571 | |
Estimated Fair Value | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 405,797 | 630,001 | |
Estimated Fair Value | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 382,722 | 494,522 | |
Estimated Fair Value | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 579,424 | 389,900 | |
Estimated Fair Value | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 4,460,515 | 5,557,077 | |
Estimated Fair Value | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,863,734 | 2,433,733 | |
Estimated Fair Value | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 2,672,554 | 1,634,804 | |
Estimated Fair Value | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 3,069,965 | 1,924,922 | |
Estimated Fair Value | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,790,640 | 1,460,959 | |
Estimated Fair Value | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 89,958 | 177,383 | |
Estimated Fair Value | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 2,043,969 | 3,824,796 | |
Estimated Fair Value | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 374,326 | 651,294 | |
Estimated Fair Value | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 3,282 | |
Estimated Fair Value | Fair value option | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 1,090 | |
Estimated Fair Value | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 274 | |
Estimated Fair Value | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 19,829 | 35,263 | |
Estimated Fair Value | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 19,852 | 152,151 | |
Estimated Fair Value | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 115,681 | 557,008 | |
Estimated Fair Value | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 24,522 | 92,549 | |
Estimated Fair Value | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 359,011 | 1,134,229 | |
Estimated Fair Value | Fair value option | Other investments measured at net asset value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [3] | $ 1,130,748 | $ 1,197,656 |
[1] | Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. | ||
[2] | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See note 8 , “—Securities Lending Agreements.” In September 2021, the Company terminated its securities lending program and no longer enters into securities lending agreements with financial institutions. | ||
[3] | In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. |
Fair Value - Rollforward of Lev
Fair Value - Rollforward of Level 3 assets and liabilities (Details) - Recurring - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||||
Contingent consideration liability | |||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | $ (466) | $ (1,250) | $ (461) | $ (7,998) | |||
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 0 | 0 | 0 | (72) | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | (17,345) | 0 | (17,345) | 0 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | 0 | [2] | 0 | 0 | [2] | 0 | |
Settlements | 0 | 620 | (5) | 7,440 | |||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 | |||
Balance at end of period | (17,811) | (630) | (17,811) | (630) | |||
Available for sale | Structured securities | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | [3] | 3,424 | 3,450 | 3,426 | 5,216 | ||
Total gains or (losses) (realized/unrealized) - included in earnings | [1],[3] | 10 | (75) | (46) | (130) | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | [3] | 10 | 191 | 67 | (118) | ||
Purchases, issuances, sales and settlements | |||||||
Purchases | [3] | 0 | 0 | 0 | 0 | ||
Issuances | [3] | 0 | 0 | 0 | 0 | ||
Sales | [3] | 0 | [2] | 0 | 0 | [2] | 0 |
Settlements | [3] | 0 | (11) | (3) | (1,413) | ||
Transfers in and/or out of Level 3 | [3] | 0 | 0 | 0 | 0 | ||
Balance at end of period | [3] | 3,444 | 3,555 | 3,444 | 3,555 | ||
Available for sale | Corporate bonds | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | 13 | 857 | 13 | 8,851 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 0 | (5,872) | 0 | (5,865) | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 6,936 | 0 | 397 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 0 | 0 | 0 | 0 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | 0 | [2] | 0 | 0 | [2] | 0 | |
Settlements | 0 | 0 | 0 | (1,462) | |||
Transfers in and/or out of Level 3 | 0 | (1,908) | 0 | (1,908) | |||
Balance at end of period | 13 | 13 | 13 | 13 | |||
Fair value option | Corporate bonds | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | 998 | 998 | 985 | 932 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 0 | (34) | 13 | (34) | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 0 | 0 | 0 | 66 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | (998) | [2] | 0 | (998) | [2] | 0 | |
Settlements | 0 | 0 | 0 | 0 | |||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 | |||
Balance at end of period | 0 | 964 | 0 | 964 | |||
Fair value option | Other investments | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | 73,900 | 46,453 | 67,103 | 68,817 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 0 | 885 | 881 | (129) | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 0 | 22,436 | 13,003 | 22,460 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | (44,143) | [2] | (3,588) | (51,230) | [2] | (27,946) | |
Settlements | 0 | 0 | 0 | 0 | |||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 2,984 | |||
Balance at end of period | 29,757 | 66,186 | 29,757 | 66,186 | |||
Fair value option | Equity securities | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | 73,678 | 61,447 | 68,988 | 58,094 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 38 | 2,076 | 4,728 | 5,429 | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 0 | 0 | 0 | 0 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | (69,181) | [2] | 0 | (69,181) | [2] | 0 | |
Settlements | 0 | 0 | 0 | 0 | |||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 | |||
Balance at end of period | 4,535 | 63,523 | 4,535 | 63,523 | |||
Equity securities | |||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||
Balance at beginning of period | 49,136 | 51,981 | 42,015 | 55,889 | |||
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 11 | (946) | 1,837 | 7,132 | ||
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements | |||||||
Purchases | 208 | 0 | 5,503 | 3,464 | |||
Issuances | 0 | 0 | 0 | 0 | |||
Sales | (46,773) | [2] | (8,349) | (46,773) | [2] | (23,799) | |
Settlements | 0 | 0 | 0 | 0 | |||
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 | |||
Balance at end of period | $ 2,582 | $ 42,686 | $ 2,582 | $ 42,686 | |||
[1] | Gains or losses were included in net realized gains (losses). | ||||||
[2] | Sales for the 2021 periods primarily related to the Company’s deconsolidation of Watford. | ||||||
[3] | Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities. |
Fair Value - Narrative (Details
Fair Value - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Fair Value Disclosures [Abstract] | ||
Total assets and liabilities measured at fair value | $ 23,800,000 | $ 26,500,000 |
Total assets and liabilities measured at fair value priced using non-binding broker quotes | $ 9,000 | $ 150,100 |
Total assets and liabilities measured at fair value priced using non-binding broker quotes (percentage) | 0.00% | 0.60% |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Senior notes | $ 2,724,149 | $ 2,861,113 |
Estimated fair value of senior notes | $ 3,300,000 | $ 3,700,000 |
Derivative Instruments - Fair v
Derivative Instruments - Fair value and notional amount of derivatives (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | |
Derivative offsetting | |||
Derivative assets subject to master netting agreements | $ 133,100 | $ 138,800 | |
Derivative liabilities subject to master netting agreements | 42,200 | 93,000 | |
Not designated as hedging instrument | |||
Derivative [Line Items] | |||
Asset derivatives - fair value | 139,185 | 177,383 | |
Liability derivatives - fair value | (43,526) | (108,705) | |
Not designated as hedging instrument | Futures contracts | |||
Derivative [Line Items] | |||
Net derivatives - notional value | [1],[2] | 2,796,442 | 3,099,796 |
Not designated as hedging instrument | Futures contracts | Other assets | |||
Derivative [Line Items] | |||
Asset derivatives - fair value | [2] | 36,010 | 11,046 |
Not designated as hedging instrument | Futures contracts | Other liabilities | |||
Derivative [Line Items] | |||
Liability derivatives - fair value | [2] | (17,562) | (4,496) |
Not designated as hedging instrument | Foreign currency forward contracts | |||
Derivative [Line Items] | |||
Net derivatives - notional value | [1],[2] | 1,234,665 | 1,656,729 |
Not designated as hedging instrument | Foreign currency forward contracts | Other assets | |||
Derivative [Line Items] | |||
Asset derivatives - fair value | [2] | 7,380 | 52,716 |
Not designated as hedging instrument | Foreign currency forward contracts | Other liabilities | |||
Derivative [Line Items] | |||
Liability derivatives - fair value | [2] | (13,914) | (6,202) |
Not designated as hedging instrument | TBAs | |||
Derivative [Line Items] | |||
Net derivatives - notional value | [1],[3] | 47,603 | 0 |
Not designated as hedging instrument | TBAs | Fixed maturities available for sale | |||
Derivative [Line Items] | |||
Asset derivatives - fair value | [3] | 49,227 | 0 |
Liability derivatives - fair value | [3] | 0 | 0 |
Not designated as hedging instrument | Other | |||
Derivative [Line Items] | |||
Net derivatives - notional value | [1],[2] | 4,184,225 | 5,763,919 |
Not designated as hedging instrument | Other | Other assets | |||
Derivative [Line Items] | |||
Asset derivatives - fair value | [2] | 46,568 | 113,621 |
Not designated as hedging instrument | Other | Other liabilities | |||
Derivative [Line Items] | |||
Liability derivatives - fair value | [2] | $ (12,050) | $ (98,007) |
[1] | Represents the absolute notional value of all outstanding contracts, consisting of long and short positions. | ||
[2] | The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’ | ||
[3] | The fair value of TBAs are included in ‘fixed maturities available forsale, at fair value.’ |
Derivative Instruments - Summar
Derivative Instruments - Summary of net realized gains (losses) recorded in the consolidated statements of income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | [1] | $ (21,435) | $ 20,369 | $ (36,428) | $ 146,722 |
Not designated as hedging instrument | |||||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | (21,435) | 20,369 | (36,428) | 146,722 | |
Futures contracts | Not designated as hedging instrument | |||||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | (10,073) | 10,945 | (17,394) | 105,282 | |
Foreign currency forward contracts | Not designated as hedging instrument | |||||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | (16,146) | 10,813 | (36,922) | 3,466 | |
TBAs | Not designated as hedging instrument | |||||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | (46) | 120 | (46) | 1,129 | |
Other | Not designated as hedging instrument | |||||
Net realized gains (losses) on derivative instruments | |||||
Net realized gains (losses) on derivative instruments | [2] | $ 4,830 | $ (1,509) | $ 17,934 | $ 36,845 |
[1] | See note 10 for information on the Company’s derivative instruments. | ||||
[2] | Includes realized gains and losses on swaps, options and other derivatives contracts |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Investment commitments | $ 2,600 | $ 2,100 | |
Interest paid on senior notes and other borrowings | $ 75.8 | $ 60.6 |
Variable Interest Entities an_3
Variable Interest Entities and Noncontrolling Interests - Variable interest entity (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 01, 2021 | Mar. 31, 2014 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 |
Variable Interest Entity [Line Items] | |||||
Net cash provided by (used for) operating activities | $ 2,627,551 | $ 2,331,450 | |||
Net cash provided by (used for) investing activities | (1,453,284) | (2,608,418) | |||
Net cash (used for) provided by financing activities | $ (881,879) | 566,090 | |||
Watford Holdings Ltd | Merger Agreement | |||||
Variable Interest Entity [Line Items] | |||||
Business acquisition, share price (per share) | $ 35 | ||||
Greysbridge | |||||
Variable Interest Entity [Line Items] | |||||
Percentage ownership after merger transaction | 40.00% | ||||
Greysbridge | Kelso And Company | |||||
Variable Interest Entity [Line Items] | |||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 30.00% | ||||
Greysbridge | Warburg Pincus LLC | |||||
Variable Interest Entity [Line Items] | |||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 30.00% | ||||
Variable Interest Entity, Primary Beneficiary | Watford Holdings Ltd | |||||
Variable Interest Entity [Line Items] | |||||
Initial investment contribution amount | $ 100,000 | ||||
Ownership percentage | 11.00% | ||||
Net cash provided by (used for) operating activities | $ 47,000 | 133,600 | |||
Net cash provided by (used for) investing activities | 96,300 | 242,000 | |||
Net cash (used for) provided by financing activities | $ (2,000) | $ (279,700) |
Variable Interest Entities an_4
Variable Interest Entities and Noncontrolling Interests - Carrying amount of assets and liabilities of variable interest entity (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | |
Variable Interest Entity [Line Items] | |||||||
Other investments measured at fair value | $ 2,043,970 | $ 3,824,796 | |||||
Fixed maturities available for sale, at fair value | 16,768,363 | 18,717,825 | |||||
Equity securities, at fair value | 1,790,640 | 1,444,830 | |||||
Cash | 1,137,721 | 906,448 | |||||
Accrued investment income | 75,832 | 103,299 | |||||
Premiums receivable | 2,807,720 | $ 2,866,578 | 2,064,586 | $ 2,225,311 | $ 2,203,753 | $ 1,778,717 | |
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 5,358,852 | 4,314,515 | 4,500,802 | 4,621,937 | 4,363,507 | 4,346,816 | |
Ceded unearned premiums | 1,824,910 | 1,234,075 | |||||
Deferred acquisition costs | 893,665 | 790,708 | |||||
Receivable for securities sold | 84,019 | 92,743 | |||||
Goodwill and intangible assets | 963,322 | 692,863 | 713,777 | ||||
Other assets | 2,286,649 | 1,724,288 | |||||
Total VIE Assets | 44,783,736 | 43,282,297 | |||||
Reserve for losses and loss adjustment expenses | 17,331,047 | 17,196,648 | 16,513,929 | 15,900,526 | 15,044,874 | 13,891,842 | |
Unearned premiums | 6,165,114 | 4,838,965 | |||||
Reinsurance balances payable | 1,403,929 | 683,263 | |||||
Revolving credit agreement borrowings | 0 | 155,687 | |||||
Senior notes | 2,724,149 | 2,861,113 | |||||
Payable for securities purchased | 357,531 | 218,779 | |||||
Other liabilities | 1,321,470 | 1,510,888 | |||||
Total liabilities | 31,385,973 | 29,294,856 | |||||
Redeemable noncontrolling interests | 10,237 | 58,548 | |||||
Watford Holdings Ltd | |||||||
Variable Interest Entity [Line Items] | |||||||
Redeemable noncontrolling interests | $ 10,237 | $ 57,533 | 58,548 | $ 57,835 | $ 55,986 | $ 55,404 | |
Variable Interest Entity, Primary Beneficiary | Watford Holdings Ltd | |||||||
Variable Interest Entity [Line Items] | |||||||
Other investments measured at fair value | [1] | 1,790,385 | |||||
Fixed maturities available for sale, at fair value | 655,249 | ||||||
Equity securities, at fair value | 52,410 | ||||||
Cash | 211,451 | ||||||
Accrued investment income | 14,679 | ||||||
Premiums receivable | 224,377 | ||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 286,590 | ||||||
Ceded unearned premiums | 122,339 | ||||||
Deferred acquisition costs | 53,705 | ||||||
Receivable for securities sold | 37,423 | ||||||
Goodwill and intangible assets | 7,650 | ||||||
Other assets | 75,801 | ||||||
Total VIE Assets | 3,532,059 | ||||||
Reserve for losses and loss adjustment expenses | 1,519,583 | ||||||
Unearned premiums | 407,714 | ||||||
Reinsurance balances payable | 63,269 | ||||||
Revolving credit agreement borrowings | 155,687 | ||||||
Senior notes | 172,689 | ||||||
Payable for securities purchased | 25,881 | ||||||
Other liabilities | 193,494 | ||||||
Total liabilities | 2,538,317 | ||||||
Redeemable noncontrolling interests | $ 52,398 | ||||||
[1] | Included in “other investments” on the Company’s balance sheet. |
Variable Interest Entities an_5
Variable Interest Entities and Noncontrolling Interests - Non-redeemable noncontrolling interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | ||
Noncontrolling Interest [Line Items] | |||||
Non-redeemable noncontrolling interests, beginning of period | $ 823,007 | ||||
Amounts attributable to noncontrolling interests | $ 0 | $ 67,768 | 78,314 | $ (578) | |
Other comprehensive (income) loss attributable to noncontrolling interests | (9,423) | 10,820 | (13,983) | (2,127) | |
Non-redeemable noncontrolling interests, end of period | 0 | 757,920 | 0 | 757,920 | |
Watford Holdings Ltd | |||||
Noncontrolling Interest [Line Items] | |||||
Non-redeemable noncontrolling interests, beginning of period | 918,874 | 679,089 | 823,007 | 762,777 | |
Impact of deconsolidation of Watford | (918,874) | 0 | (918,874) | ||
Additional paid in capital attributable to noncontrolling interests | 0 | 243 | 22,113 | 715 | |
Repurchases attributable to non-redeemable noncontrolling interests | [1] | 0 | (2,867) | ||
Amounts attributable to noncontrolling interests | 0 | 67,768 | 78,314 | (578) | |
Other comprehensive (income) loss attributable to noncontrolling interests | 0 | 10,820 | (4,560) | (2,127) | |
Non-redeemable noncontrolling interests, end of period | $ 0 | $ 757,920 | $ 0 | $ 757,920 | |
[1] | During 2020, Watford’s board of directors authorized the investment in Watford’s common shares through a share repurchase program. |
Variable Interest Entities an_6
Variable Interest Entities and Noncontrolling Interests - Redeemable noncontrolling interests (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Mar. 31, 2014 | |
Redeemable Noncontrolling Interest [Line Items] | |||||
Redeemable noncontrolling interests, beginning of period | $ 58,548 | ||||
Redeemable noncontrolling interests, end of period | $ 10,237 | 10,237 | |||
Watford Holdings Ltd | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Redeemable noncontrolling interests, beginning of period | 57,533 | $ 55,986 | 58,548 | $ 55,404 | |
Impact of deconsolidation of Watford | (48,919) | 0 | (48,919) | 0 | |
Accretion of preference share issuance costs | 0 | 23 | 0 | 70 | |
Other | 1,623 | 1,826 | 608 | 2,361 | |
Redeemable noncontrolling interests, end of period | $ 10,237 | $ 57,835 | $ 10,237 | $ 57,835 | |
Cumulative redeemable preference shares | Watford Holdings Ltd | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Par value per share | $ 0.01 | ||||
Liquidation preference per share | 25 | ||||
Issue price per share | $ 24.50 |
Variable Interest Entities an_7
Variable Interest Entities and Noncontrolling Interests - Income or loss attributable to third party investors (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Noncontrolling Interest [Abstract] | ||||
Amounts attributable to non-redeemable noncontrolling interests | $ 0 | $ (67,768) | $ (78,314) | $ 578 |
Amounts attributable to redeemable noncontrolling interests | (1,473) | (1,875) | (3,889) | (4,998) |
Net (income) loss attributable to noncontrolling interests | $ (1,473) | $ (69,643) | $ (82,203) | $ (4,420) |
Variable Interest Entities an_8
Variable Interest Entities and Noncontrolling Interests - Other variable interest entity disclosures (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | ||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | $ 44,783,736 | $ 43,282,297 | ||
Maximum Exposure to Loss, Total | 2,918,177 | 2,232,609 | ||
Variable Interest Entity, Not Primary Beneficiary | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 4,731,717 | 3,859,058 | ||
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | (4,710) | (7,969) | ||
Maximum Exposure to Loss - Off-Balance Sheet | 52,461 | 56,320 | ||
Maximum Exposure to Loss, Total | 47,751 | 48,351 | ||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2017-1 Ltd. (Oct-17) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 145,573 | 145,573 | ||
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | (214) | (245) | ||
Maximum Exposure to Loss - Off-Balance Sheet | 585 | 844 | ||
Maximum Exposure to Loss, Total | 371 | 599 | ||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2018-1 Ltd. (Apr-18) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 228,938 | 250,095 | ||
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | (764) | (903) | ||
Maximum Exposure to Loss - Off-Balance Sheet | 1,683 | 2,245 | ||
Maximum Exposure to Loss, Total | 919 | 1,342 | ||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2018-2 Ltd. (Aug-18) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 0 | 108,395 | ||
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | 0 | (138) | ||
Maximum Exposure to Loss - Off-Balance Sheet | 0 | 280 | ||
Maximum Exposure to Loss, Total | 0 | 142 | ||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2018-3 Ltd. (Oct-18) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 302,563 | 302,563 | ||
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | (1,049) | (1,320) | ||
Maximum Exposure to Loss - Off-Balance Sheet | 2,328 | 3,262 | ||
Maximum Exposure to Loss, Total | 1,279 | 1,942 | ||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2019-1 Ltd. (Mar-19) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 210,529 | 219,256 | ||
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | (931) | (1,361) | ||
Maximum Exposure to Loss - Off-Balance Sheet | 8,142 | 8,461 | ||
Maximum Exposure to Loss, Total | 7,211 | 7,100 | ||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2019-2 Ltd. (Apr-19) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 398,316 | 398,316 | ||
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | (787) | (730) | ||
Maximum Exposure to Loss - Off-Balance Sheet | 5,658 | 5,201 | ||
Maximum Exposure to Loss, Total | 4,871 | 4,471 | ||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2019-3 Ltd. (Jul-19) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 491,634 | 528,084 | ||
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | (826) | (861) | ||
Maximum Exposure to Loss - Off-Balance Sheet | 3,971 | 5,079 | ||
Maximum Exposure to Loss, Total | 3,145 | 4,218 | ||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2019-4 Ltd. (Oct-19) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 468,737 | 468,737 | ||
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | (682) | (890) | ||
Maximum Exposure to Loss - Off-Balance Sheet | 4,761 | 6,676 | ||
Maximum Exposure to Loss, Total | 4,079 | 5,786 | ||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2020-1 Ltd. (Jun-20) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | [1] | 0 | 275,068 | |
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | [1] | 0 | (178) | |
Maximum Exposure to Loss - Off-Balance Sheet | [1] | 0 | 1,012 | |
Maximum Exposure to Loss, Total | [1] | 0 | 834 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2020-1 Ltd. (Jun-20) | Funded by directly provided capacity | ||||
Variable Interest Entity [Line Items] | ||||
Initial Coverage, Amount | 79,000 | |||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2020-2 Ltd (Sep-20) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | [2] | 266,704 | 423,420 | |
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | [2] | (279) | (556) | |
Maximum Exposure to Loss - Off-Balance Sheet | [2] | 2,629 | 6,839 | |
Maximum Exposure to Loss, Total | [2] | 2,350 | 6,283 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2020-2 Ltd (Sep-20) | Funded by directly provided capacity | ||||
Variable Interest Entity [Line Items] | ||||
Initial Coverage, Amount | 26,000 | |||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2020-3 Ltd. (Nov-20) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | [3] | 381,410 | 418,158 | |
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | [3] | (395) | (631) | |
Maximum Exposure to Loss - Off-Balance Sheet | [3] | 6,646 | 9,605 | |
Maximum Exposure to Loss, Total | [3] | 6,251 | 8,974 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2020-3 Ltd. (Nov-20) | Funded by directly provided capacity | ||||
Variable Interest Entity [Line Items] | ||||
Initial Coverage, Amount | 34,000 | |||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2020-4 Ltd. (Dec-20) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | [4] | 226,916 | 321,393 | |
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | [4] | (100) | (156) | |
Maximum Exposure to Loss - Off-Balance Sheet | [4] | 2,190 | 6,816 | |
Maximum Exposure to Loss, Total | [4] | 2,090 | 6,660 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2020-4 Ltd. (Dec-20) | Funded by directly provided capacity | ||||
Variable Interest Entity [Line Items] | ||||
Initial Coverage, Amount | 16,000 | |||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2021-1 Ltd. (Mar-21) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 579,717 | [5] | 0 | |
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | 229 | [5] | 0 | |
Maximum Exposure to Loss - Off-Balance Sheet | 4,217 | [5] | 0 | |
Maximum Exposure to Loss, Total | 4,446 | [5] | 0 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2021-1 Ltd. (Mar-21) | Funded by directly provided capacity | ||||
Variable Interest Entity [Line Items] | ||||
Initial Coverage, Amount | 64,000 | |||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2021-2 Ltd. (Jun-21) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 522,807 | [6] | 0 | |
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | 906 | [6] | 0 | |
Maximum Exposure to Loss - Off-Balance Sheet | 5,090 | [6] | 0 | |
Maximum Exposure to Loss, Total | 5,996 | [6] | 0 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2021-2 Ltd. (Jun-21) | Funded by directly provided capacity | ||||
Variable Interest Entity [Line Items] | ||||
Initial Coverage, Amount | 93,000 | |||
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2021-3 Ltd. (Sep-21) | ||||
Variable Interest Entity [Line Items] | ||||
Total VIE Assets | 507,873 | [7] | 0 | |
Maximum Exposure to Loss - On-Balance Sheet (Asset) Liability | 182 | [7] | 0 | |
Maximum Exposure to Loss - Off-Balance Sheet | 4,561 | [7] | 0 | |
Maximum Exposure to Loss, Total | 4,743 | [7] | $ 0 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2021-3 Ltd. (Sep-21) | Funded by directly provided capacity | ||||
Variable Interest Entity [Line Items] | ||||
Initial Coverage, Amount | $ 131,000 | |||
[1] | An additional $79 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table | |||
[2] | An additional $26 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. | |||
[3] | An additional $34 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. | |||
[4] | An additional $16 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. | |||
[5] | An additional $64 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table | |||
[6] | An additional $93 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. | |||
[7] | An additional $131 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table |
Other Comprehensive Income (L_3
Other Comprehensive Income (Loss) - Amounts reclassified from accumulated other comprehensive income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Other-than-temporary impairment losses | $ 0 | $ (533) | ||
Income (loss) before income taxes and income (loss) from operating affiliates | $ 301,433 | $ 511,470 | 1,485,911 | 937,914 |
Income tax expense | (4,137) | (23,707) | (94,176) | (77,779) |
Net of tax | 419,942 | 419,039 | 1,533,584 | 861,977 |
Reclassification out of accumulated other comprehensive income | Unrealized appreciation on available-for-sale investments | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net realized gains (losses) | 68,373 | 87,871 | 135,291 | 416,432 |
Provision for credit losses | (457) | 1,333 | (1,208) | (4,762) |
Other-than-temporary impairment losses | 0 | 0 | 0 | (533) |
Income (loss) before income taxes and income (loss) from operating affiliates | 67,916 | 89,204 | 134,083 | 411,137 |
Income tax expense | (5,262) | (9,401) | (13,579) | (42,714) |
Net of tax | $ 62,654 | $ 79,803 | $ 120,504 | $ 368,423 |
Other Comprehensive Income (L_4
Other Comprehensive Income (Loss) - Components of other comprehensive income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Before tax amount: | ||||
Unrealized holding gains (losses) arising during period, before tax | $ (104,607) | $ 119,265 | $ (307,910) | $ 611,390 |
Less reclassification of net realized gains included in net income, before tax | 67,916 | 89,204 | 134,083 | 411,137 |
Foreign currency translation adjustments, before tax | (32,060) | 16,918 | (54,083) | (5,911) |
Other comprehensive income (loss), before tax | (204,583) | 46,979 | (496,076) | 194,342 |
Tax expense (benefit): | ||||
Unrealized holding gains (losses) arising during period, tax | (8,684) | 8,483 | (28,808) | 65,099 |
Less reclassification of net realized gains included in net income, tax | 5,262 | 9,401 | 13,579 | 42,714 |
Foreign currency translation adjustments, tax | (350) | 209 | 6 | (182) |
Other comprehensive income (loss), tax | (14,296) | (709) | (42,381) | 22,203 |
Net of tax amount: | ||||
Unrealized holding gains (losses) arising during period, net of tax | (95,923) | 110,782 | (279,102) | 546,291 |
Less reclassification of net realized gains included in net income, net of tax | 62,654 | 79,803 | 120,504 | 368,423 |
Foreign currency translation adjustments, net of tax | (31,710) | 16,709 | (54,089) | (5,729) |
Net current period other comprehensive income (loss) | $ (190,287) | $ 47,688 | $ (453,695) | $ 172,139 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate on income before income taxes (percentage) | (5.50%) | (8.20%) | |
Net deferred tax asset | $ 162,500 | $ 15,700 | |
Income taxes paid | 202,400 | $ 146,800 | |
Tax benefit from change in valuation allowance on certain UK deferred tax assets | $ 28,700 | ||
Decrease in effective tax rate due to change in valuation allowance on certain UK deferred tax assets | 1.70% |
Transactions With Related Par_2
Transactions With Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | Jan. 01, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | |||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | $ 5,358,852 | $ 4,621,937 | $ 5,358,852 | $ 4,621,937 | $ 4,314,515 | $ 4,500,802 | $ 4,363,507 | $ 4,346,816 | |
Ceded Premiums Written | 1,131,486 | $ 806,888 | 2,907,002 | $ 2,151,853 | |||||
Reinsurance balances payable | 1,403,929 | 1,403,929 | 683,263 | ||||||
Operating affilicates | Watford Holdings Ltd | |||||||||
Related Party Transaction [Line Items] | |||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 874,900 | 874,900 | |||||||
Senior notes, face amount | $ 35,000 | $ 35,000 | |||||||
Senior notes, stated percentage | 6.50% | 6.50% | |||||||
Ceded Premiums Written | $ 316,200 | ||||||||
Reinsurance balances payable | 281,200 | $ 281,200 | |||||||
Operating affilicates | Watford Holdings Ltd | Non-cumulative preferred shares | |||||||||
Related Party Transaction [Line Items] | |||||||||
Ownership percentage | 6.60% | ||||||||
Operating affilicates | Premia Holdings Ltd | |||||||||
Related Party Transaction [Line Items] | |||||||||
Legacy business, amount of liabilities transferred | $ 380,000 | ||||||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 0 | $ 0 | 199,800 | ||||||
Funds held liability | $ 8,800 | $ 8,800 | $ 149,600 |
Subsequent Events (Details)
Subsequent Events (Details) - Common shares - USD ($) shares in Millions, $ in Millions | Oct. 13, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Oct. 27, 2021 | Oct. 01, 2021 |
Subsequent Event [Line Items] | |||||
Treasury stock, shares acquired (shares) | 22.8 | 2.6 | |||
Shares repurchased for treasury | $ 872.2 | $ 75.5 | |||
Remaining authorized repurchase amount | $ 44.3 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Share repurchase authorization, amount | $ 1,500 | ||||
Treasury stock, shares acquired (shares) | 1.2 | ||||
Shares repurchased for treasury | $ 45.5 | ||||
Remaining authorized repurchase amount | $ 1,500 |