Reinsurance

12 Months Ended

Dec. 31, 2023

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

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


	Year Ended December 31,
	2023		2022		2021
Premiums Written
Direct	$	9,652	$	8,542	$	7,707
Assumed	8,751		6,785		5,045
Ceded	(4,935)		(4,249)		(3,735)
Net	$	13,468	$	11,078	$	9,017

Premiums Earned
Direct	$	9,131	$	8,058	$	7,150
Assumed	7,890		5,768		4,334
Ceded	(4,581)		(4,147)		(3,402)
Net	$	12,440	$	9,679	$	8,082

Losses and Loss Adjustment Expenses
Direct	$	4,739	$	3,991	$	4,267
Assumed	3,975		3,558		2,826
Ceded	(2,468)		(2,521)		(2,508)
Net	$	6,246	$	5,028	$	4,585

Bellemeade Re

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

The following table summarizes the respective coverages and retentions at December 31, 2023:


Bellemeade Entities (Issue Date)	Initial Coverage at Issuance		Current Coverage		Remaining Retention, Net
2019-1 Ltd. (1)	342		71		134
2019-3 Ltd. (2)	701		99		218
2021-3 Ltd. (3)	639		541		134
2022-1 Ltd. (4)	317		282		141
2022-2 Ltd. (5)	327		327		205
2023-1 Ltd. (6)	233		233		185
Total	$	2,559	$	1,553	$	1,017

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

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

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

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

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

(6) Issued in October 2023, covering in-force policies issued between January 1, 2023 and September 30, 2023. $187 million was directly funded by Bellemeade Re 2023-1 Ltd. via insurance-linked notes, with an additional $47 million capacity provided directly to Arch MI U.S. by a separate panel of reinsurers.