XML 45 R24.htm IDEA: XBRL DOCUMENT v3.24.0.1
Related Party Transactions
 12 Months Ended
Dec. 31, 2023
Related Party Transactions [Abstract]  
Related Party Transactions [Text Block] Related Party Transactions
The Company engages in certain related party transactions in the normal course of business at arm's length.

Insurance-Linked Securities

Within the Company's insurance-linked securities operations, the Company provides investment and insurance management services through Nephila Holdings Ltd. (together with its subsidiaries, Nephila). Nephila serves as the investment manager to several Bermuda based private funds (the Nephila Funds). To provide access for the Nephila Funds to a variety of insurance-linked securities in the property catastrophe, climate and specialty markets, Nephila also acts as an insurance manager to certain Bermuda Class 3 and 3A reinsurance companies, Lloyd's Syndicate 2357 and Lloyd's Syndicate 2358 (collectively, the Nephila Reinsurers). Nephila receives management fees for investment and insurance management services provided through its insurance-linked securities operations primarily based on the net asset value of the accounts managed, and, for certain funds, incentive fees based on their annual performance. Prior to the disposition of Velocity in February 2022, Nephila also provided managing general agent services to the Nephila Reinsurers in exchange for commissions. For the years ended December 31, 2023, 2022 and 2021, total revenues attributed to unconsolidated entities managed by Nephila were $97.5 million, $79.5 million and $141.9 million, respectively.
Through the Company's program services and other fronting operations, the Company has programs with Nephila through which the Company writes insurance policies that are fully ceded to Nephila Reinsurers. Through these programs, Nephila utilizes certain of the Company's licensed insurance companies to write U.S. catastrophe-exposed property and specialty risks that are then ceded to Nephila Reinsurers. A portion of this business is placed by Velocity, which the Company retained a minority interest in following its disposition. Additionally, through the Company's insurance underwriting operations, the Company has a quota share agreement with Nephila through which it cedes a portion of its property business to Nephila Reinsurers. The following table summarizes the premiums ceded to Nephila Reinsurers.
Years Ended December 31,
(dollars in thousands)202320222021
Program services and other fronting:
Gross and ceded written premiums attributable to Nephila programs
$1,064,121 $1,008,851 $689,153 
Underwriting:
Premiums ceded to Nephila Reinsurers
$52,295 $65,648 $54,970 

As of December 31, 2023 and 2022, reinsurance recoverables on the consolidated balance sheets included $794.3 million and $1.4 billion, respectively, due from Nephila Reinsurers. Under its programs with Nephila Reinsurers, the Company bears underwriting risk for annual aggregate agreement year losses in excess of a limit the Company believes is unlikely to be exceeded. To the extent losses under these programs exceed the prescribed limits, the Company is obligated to pay such losses to the cedents without recourse to the Nephila Reinsurers. While the Company believes losses under these programs are unlikely, those losses, if incurred, could be material to the Company's consolidated results of operations and financial condition.

The Company has also entered into other assumed and ceded reinsurance transactions with the Nephila Reinsurers in the normal course of business, which are not material to the Company's consolidated financial statements.

In June 2023, the Company sold ISIC, one of the licensed insurance subsidiaries within its program services operations, to Velocity, which resulted in a gain of $16.9 million during the second quarter of 2023.

Hagerty

The Company holds a minority ownership interest in Hagerty, which operates primarily as a managing general agent and also includes Hagerty Reinsurance Limited (Hagerty Re), a Bermuda Class 3 reinsurance company. Through the Company's underwriting operations, the Company underwrites insurance for Hagerty, a portion of which is ceded to Hagerty Re. The amounts attributed to these arrangements are summarized in the following table.

Years Ended December 31,
(dollars in thousands)202320222021
Gross written premiums attributable to Hagerty$805,673 $689,670 $596,904 
Premiums ceded to Hagerty Re$616,491 $456,637 $338,850 

As of December 31, 2023 and 2022, reinsurance recoverables on the consolidated balance sheets included $214.8 million and $159.7 million, respectively, due from Hagerty Re.