Allowance for Expected Credit Losses

12 Months Ended

Dec. 31, 2020

Premiums Receivable

The following table provides a roll forward of the allowance for expected credit losses of the Company’s premium receivables:


	December 31, 2020
	Premium Receivables, Net of Allowance		Allowance for Expected Credit Losses









Balance at beginning of period	$	1,778,717	$	21,003
Cumulative effect of accounting change (1)			6,539
Change for provision of expected credit losses (2)			10,239

Balance at end of period	$	2,064,586	$	37,781

(1) Adoption of ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)” See note 3.

(2) Amounts deemed uncollectible are written-off in operating expenses. For the 2020 period, amounts written off totaled $2.8 million.

Reinsurance Recoverables

The Company monitors the financial condition of its reinsurers and attempts to place coverages only with substantial, financially sound carriers. Although the Company has not experienced any material credit losses to date, an inability of its reinsurers or retrocessionaires to meet their obligations to it over the relevant exposure periods for any reason could have a material adverse effect on its financial condition and results of operations.

The following table provides a roll forward of the allowance for expected credit losses of the Company’s reinsurance recoverables:


	December 31, 2020
	Reinsurance Recoverables, Net of Allowance		Allowance for Expected Credit Losses









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			(1,738)


Balance at end of period	$	4,500,802	$	11,636

(1) Adoption of ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)” See note 3.

The following table summarizes the Company’s reinsurance recoverables on paid and unpaid losses (not including ceded unearned premiums) at December 31, 2020 and 2019:


	December 31,
	2020			2019
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses	$	4,500,802		$	4,346,816
% due from carriers with A.M. Best rating of “A-” or better	63.9		%	61.2		%

% due from all other carriers with no A.M. Best rating (1)	36.1		%	38.8		%
Largest balance due from any one carrier as % of total shareholders’ equity	1.8		%	1.7		%

(1) Over 94% of such amount is collateralized through reinsurance trusts, funds withheld arrangements, letters of credit or other.

Contractholder Receivables

The following table provides a roll forward of the allowance for expected credit losses of the Company’s contractholder receivables:


	December 31, 2020
	Contractholder Receivables, Net of Allowance		Allowance for Expected Credit Losses









Balance at beginning of period	$	2,119,460	$	0
Cumulative effect of accounting change (1)			6,663
Change for provision of expected credit losses			1,975


Balance at end of period	$	1,986,924	$	8,638

(1) Adoption of ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)” See note 3.