Concentrations of Credit Risk

The Company is potentially exposed to concentrations of credit risk in respect of amounts recoverable from reinsurers, investments and cash and cash equivalents, and insurance and reinsurance balances owed by the brokers with whom the Company transacts business.

The Company’s Reinsurance Credit Committee defines credit risk tolerances in line with the risk appetite set by our Board and they, together with the group’s risk management function, monitor exposures to individual counterparties. Any exceptions are reported to senior management and the Risk Committee of the Board of Directors.

Reinsurance recoverables

The total amount recoverable by the Company from reinsurers as at December 31, 2018 was $2,077.6 million (2017 — $1,515.2 million) of which $1,497.8 million was uncollateralized (2017 — $1,001.9 million). As at December 31, 2018, of the Company’s uncollateralized reinsurance recoverables 15.7% (2017 — 17.0%) were with Munich Re which is rated A+ by A.M. Best and AA- by S&P, 10.2% (2017 — 13.8%) were with Lloyd’s of London Syndicates which are rated A by A.M. Best and A+ by S&P and 10.2% (2017 —7.7% ) were with Everest Re which is rated A+ by A.M Best and A+ by S&P. These are the Company’s largest exposures to individual reinsurers. The Company has made no provision for doubtful debts from any of its reinsurers as at December 31, 2018.

Underwriting premium receivables

The total underwriting premium receivable by the Company as at December 31, 2018 was $1,459.3 million (2017 — $1,496.5 million). As at December 31, 2018, $12.4 million of the total underwriting premium receivable balance has been due for settlement for more than one year. The Company assesses the recoverability of premium receivables through a review of policies and the concentration of receivables by broker. A bad debt provision was included of $16.2 million as at December 31, 2018 (2017 — $5.2 million) for underwriting premiums unlikely to be collected.

Investments and cash and cash equivalents

The Company’s investment policies include specific provisions that limit the allowable holdings of a single issue and issuer. As at December 31, 2018, there were no investments in any single issuer, other than the U.S. government, U.S. government agencies, U.S. government sponsored enterprises, the Canadian government and the U.K. government in excess of 2% of the aggregate investment portfolio.

Balances owed by brokers

The Company underwrites a significant amount of its business through brokers and a credit risk exists should any of these brokers be unable to fulfill their contractual obligations in respect of insurance or reinsurance balances due to the Company. The following table shows the largest brokers that the Company transacted business within the three years ended December 31, 2018 and the proportion of gross written premiums from each of those brokers.



	Twelve Months Ended December 31,
	2018			2017			2016
	(in percentages)
Aon Corporation	15.8		%	16.4		%	18.4		%
Marsh & McLennan Companies, Inc.	15.8			16.0			14.7
Willis Group Holdings, Ltd.	12.4			13.1			13.7
Other brokers/non-broker sources⁽¹⁾	56.0			54.5			53.2
Total	100.0		%	100.0		%	100.0		%

Gross written premiums ($ millions)	$	3,446.9		$	3,360.9		$	3,147.0

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⁽¹⁾	No other individual broker accounted for more than 10% of total gross written premiums.