Third Party Reinsurance

9 Months Ended

Sep. 30, 2021

Third-Party Reinsurance

In the normal course of business, Ark may seek to limit losses that may arise from catastrophes or other events by reinsuring certain risks with third-party reinsurers. Ark remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts. The following table summarizes the effects of reinsurance on written and earned premiums and on losses and LAE for Ark.


	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Millions
Written premiums:
Gross	$	162.4	$	895.0


Ceded	(41.5)		(169.5)
Net written premiums	$	120.9	$	725.5
Earned premiums:
Gross	$	284.5	$	622.0


Ceded	(71.1)		(186.2)
Net earned premiums	$	213.4	$	435.8
Losses and LAE:
Gross	$	193.5	$	372.7


Ceded	(64.3)		(124.9)
Net Losses and LAE	$	129.2	$	247.8

As of September 30, 2021, Ark had $457.5 million and $8.1 million of reinsurance recoverables on unpaid and paid losses. As reinsurance contracts do not relieve Ark of its obligation to its policyholders, Ark seeks to reduce the credit risk associated with reinsurance balances by avoiding over-reliance on specific reinsurers through the application of concentration limits and thresholds. Ark is selective with its reinsurers, placing reinsurance with only those reinsurers having a strong financial condition. Ark monitors the financial strength of its reinsurers on an ongoing basis.

As of September 30, 2021, Ark’s reinsurance recoverables of $465.6 million included $299.9 million related to TPC Providers, which are collateralized. The following table provides a listing of Ark’s remaining gross and net reinsurance recoverables, excluding amounts related to TPC Providers, by the reinsurer’s A.M. Best Company, Inc (“A.M. Best”) rating and the percentage of total recoverables.


	As of September 30, 2021
A.M. Best Rating(1)	Gross		Collateral		Net		% of Total
A+ or better	$	122.8	$	23.9	$	98.9	84.2	%
A- to A	32.7		15.6		17.1		14.6
B++ or lower and not rated	10.2		8.8		1.4		1.2
Total	$	165.7	$	48.3	$	117.4	100.0	%

(1) A.M. Best ratings as detailed above are: “A+ or better” (Superior) “A- to A” (Excellent), “B++” (Good).

See Note 10 — “Municipal Bond Guarantee Insurance” for third-party reinsurance balances related to White Mountains financial guarantee business.