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Third-Party Reinsurance | 9 Months Ended
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Sep. 30, 2022
Reinsurance Disclosures [Abstract] |
Third-Party Reinsurance | 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 for the three and nine months ended September 30, 2022 and 2021:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |
Millions |  | 2022 |  | 2021 |  | 2022 |  | 2021 |
Written premiums: |  |  |  |  |  |  |  |  |
Gross |  | $ | 215.5 |  |  | $ | 162.4 |  |  | $ | 1,252.5 |  |  | $ | 895.0 |  |
Ceded |  | (22.9) |  |  | (41.5) |  |  | (246.0) |  |  | (169.5) |  |
Net written premiums |  | $ | 192.6 |  |  | $ | 120.9 |  |  | $ | 1,006.5 |  |  | $ | 725.5 |  |
Earned premiums: |  |  |  |  |  |  |  |  |
Gross |  | $ | 454.9 |  |  | $ | 284.5 |  |  | $ | 966.6 |  |  | $ | 622.0 |  |
Ceded |  | (108.8) |  |  | (71.1) |  |  | (208.8) |  |  | (186.2) |  |
Net earned premiums |  | $ | 346.1 |  |  | $ | 213.4 |  |  | $ | 757.8 |  |  | $ | 435.8 |  |
Losses and loss adjustment expenses: |  |  |  |  |  |  |  |  |
Gross |  | $ | 391.4 |  |  | $ | 193.5 |  |  | $ | 712.9 |  |  | $ | 372.7 |  |
Ceded |  | (177.7) |  |  | (64.3) |  |  | (256.7) |  |  | (124.9) |  |
Net losses and loss adjustment expenses |  | $ | 213.7 |  |  | $ | 129.2 |  |  | $ | 456.2 |  |  | $ | 247.8 |  |
As of September 30, 2022, Ark had $521.4 million and $29.5 million of reinsurance recoverables on unpaid and paid losses. 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, 2022, Ark’s reinsurance recoverables of $550.9 million included $168.0 million attributable to TPC Providers, which are collateralized. 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 attributable 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, 2022:
$ in Millions |  | As of September 30, 2022
A.M. Best Rating(1) |  | Gross |  | Collateral |  | Net |  | % of Total
A+ or better |  | $ | 178.3 |  |  | $ | — |  |  | $ | 178.3 |  |  | 67.7 | %
A- to A |  | 78.9 |  | — |  |  | 78.9 |  | 29.9 |
B++ or lower and not rated |  | 125.7 |  | 119.4 |  | 6.3 |  |  | 2.4 |
Total |  | $ | 382.9 |  |  | $ | 119.4 |  |  | $ | 263.5 |  |  | 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’s financial guarantee business. Reinsurance Contracts Accounted for as Deposits Ark has an aggregate excess of loss contract with SiriusPoint Ltd. (“SiriusPoint”), which is accounted for using the deposit method and recorded within other assets. Ark earns an annual crediting rate of 3.0%, which is recorded within other revenue. During the fourth quarter of 2021, Ark negotiated a reduction of $31.7 million, including accrued interest, to the aggregate excess of loss contract with SiriusPoint. As of September 30, 2022, the carrying value of Ark’s deposit in SiriusPoint, including accrued interest, was $20.3 million. See Note 10 — “Municipal Bond Guarantee Insurance” for reinsurance contracts accounted for as deposits related to White Mountains’s financial guarantee business.

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