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Loss and Loss Adjustment Expense Reserves
 6 Months Ended
Jun. 30, 2023
Insurance Loss Reserves [Abstract]  
Loss and Loss Adjustment Expense Reserves Loss and Loss Adjustment Expense Reserves
P&C Insurance and Reinsurance

The following table summarizes the loss and loss adjustment expense (“LAE”) reserve activity of the Ark/WM Outrigger segment for the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30,Six Months Ended June 30,
Millions2023202220232022
Gross beginning balance$1,345.6 $999.6 $1,296.5 $894.7 
Less: beginning reinsurance recoverable on unpaid losses (1)
(348.9)(396.0)(505.0)(428.9)
Net loss and LAE reserves996.7 603.6 791.5 465.8 
Loss and LAE incurred relating to:
Current year losses156.5 143.2 295.7 268.9 
Prior year losses11.0 (22.7)19.6 (26.4)
Net incurred losses and LAE167.5 120.5 315.3 242.5 
Loss and LAE paid relating to:
Current year losses(5.6)(14.1)(9.6)(14.7)
Prior year losses(103.0)(54.4)(190.7)(93.8)
Net paid loss and LAE(108.6)(68.5)(200.3)(108.5)
Change in TPC Providers’ participation (2)
— — 145.4 57.5 
Foreign currency translation and other adjustments to loss
   and LAE reserves		2.7 (9.0)6.4 (10.7)
Net ending balance1,058.3 646.6 1,058.3 646.6 
Plus: ending reinsurance recoverable on unpaid losses (3)
362.7 375.5 362.7 375.5 
Gross ending balance$1,421.0 $1,022.1 $1,421.0 $1,022.1 
(1) The beginning reinsurance recoverable on unpaid losses includes amounts attributable to TPC Providers of $0.0 and $207.3 for the three months ended June 30, 2023 and 2022 and $145.4 and $276.8 for the six months ended June 30, 2023 and 2022.
(2) Amount represents the impact to net loss and LAE reserves due to a change in the TPC Providers’ participation related to the annual reinsurance to close process.
(3) The ending reinsurance recoverable on unpaid losses includes amounts attributable to TPC Providers of $0.0 and $182.4 as of June 30, 2023 and 2022.

For the three and six months ended June 30, 2023, the Ark/WM Outrigger segment recognized $11.0 million and $19.6 million of net unfavorable prior year loss reserve development at Ark, driven primarily by Winter Storm Elliot and three large claims in the property and marine & energy lines of business. For the three and six months ended June 30, 2022, the Ark/WM Outrigger segment recognized $22.7 million and $26.4 million of net favorable prior year loss reserve development at Ark, driven primarily by the property and specialty lines of business, including favorable claims experience on prior year catastrophe events in the second quarter.

Impact of Third-Party Capital
For the years of account prior to the Ark Transaction, a significant proportion of the Syndicates’ underwriting capital was provided by TPC Providers using whole account reinsurance contracts with Ark’s corporate member. For the years of account subsequent to the Ark Transaction, Ark is no longer using TPC Providers to provide underwriting capital for the Syndicates.
A reinsurance to close (“RITC”) agreement is generally put in place after the third year of operations for a year of account such that the outstanding loss and LAE reserves, including future development thereon, are reinsured into the next year of account. As a result, and in combination with the changing participation provided by TPC Providers, Ark’s participation on outstanding loss and LAE reserves reinsured into the next year of account may change, perhaps significantly. During the first quarter of 2023, an RITC agreement was executed such that the outstanding loss and LAE reserves for claims arising out of the 2020 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 42.8%, were reinsured into the 2021 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 0.0%. During the first quarter of 2022, an RITC agreement was executed such that the outstanding loss and LAE reserves for claims arising out of the 2019 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 58.3%, were reinsured into the 2020 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 42.8%.

Municipal Bond Guarantee Insurance

HG Re and BAM do not have any outstanding loss and LAE reserves related to BAM’s municipal bond guarantee insurance business.