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 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.

The total amount recoverable by the Company from reinsurers as at December 31, 2022 was $4,897.7 million (2021 — $3,298.1 million) of which $2,092.4 million was uncollateralized (2021 — $1,981.4 million). As at December 31, 2022, of the Company’s uncollateralized reinsurance recoverables 9.7% (2021 — 10.8%) were with Munich Re which is rated A+ by A.M. Best and AA- by S&P, 16.3% (2021 —15.9% ) were with Everest Re which is rated A+ by A.M Best and A+ by S&P, and 8.2% (2021 — 9.3%) were with Lloyd’s which is rated A by A.M. Best and A+ by S&P. These are the Company’s largest exposures to individual reinsurers.

On June 16, 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)” which introduced a new impairment model, known as the current expected loss model (“CECL”), which is based on expected losses rather than incurred losses. Under the new credit loss model, the Company would recognize an allowance for its estimate of expected credit losses and this would apply to reinsurance receivables. Following the adoption of this ASU with effect from January 1, 2020, the Company recognized a reduction in the Company’s reinsurance recoverables by $3.7 million as at December 31, 2022 (2021 — $3.3 million). For the twelve months

ended December 31, 2022 there was an increase in the CECL allowance on reinsurance recoverables of $0.4 million (December 31, 2021 — $0.5 million decrease).

The total underwriting premium receivable by the Company as at December 31, 2022 was $1,482.4 million (2021 — $1,304.6 million). As at December 31, 2022, $18.3 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. Allowance for credit losses of $25.0 million as at December 31, 2022 (2021 — $30.2 million) for underwriting premiums unlikely to be collected.

The Company’s investment policies include specific provisions that limit the allowable holdings of a single issue and issuer. As at December 31, 2022, there were no investments in any single issuer, other than the U.S. government and the Canadian government in excess of 2% of the aggregate investment portfolio.

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, 2022 and the proportion of gross written premiums from each of those brokers.


	Twelve Months Ended December 31,
	2022			2021			2020

	(in percentages)
Aon Corporation	22.3		%	17.3		%	15.8		%
Marsh & McLennan Companies, Inc.	21.8			17.5			15.4
Willis Group Holdings, Ltd.	8.0			9.6			10.4
Other brokers/non-broker sources (1)	47.9			55.6			58.4
Total	100.0		%	100.0		%	100.0		%

Gross written premiums ($ millions)	$	4,338.7		$	3,938.4		$	3,698.5

At June 30, 2023, the total amount recoverable by the Company from reinsurers was $4,658.0 million (December 31, 2022 — $4,897.7 million). Of the Company’s reinsurance recoverable balance at June 30, 2023, 56.0% is collateralized by our reinsurers, 43.5% is recoverable from reinsurers rated A- or higher by major rating agencies and 0.5% is recoverable from reinsurers rated lower than A- by major rating agencies (December 31, 2022 — 57.9%, 42.0% and 0.1%, respectively). As at June 30, 2023, the Company’s largest collateralized exposures to individual reinsurers represent 16.0% (December 31, 2022 —16.3%), 9.2% (December 31, 2022 — 9.7%), and 7.8% (December 31, 2022 — 8.2%).

Under the current expected credit loss model (“CECL”), the Company recognized a provision against reinsurance recoverables of $3.3 million as at June 30, 2023 (December 31, 2022 — $3.7 million). For the six months ended June 30, 2023 there was a decrease in the CECL allowance on reinsurance recoverables of $0.4 million (December 31, 2022 — $0.4 million increase).

The total underwriting premium receivable by the Company as at June 30, 2023 was $1,676.8 million (December 31, 2022 — $1,482.4 million). As at June 30, 2023, $5.9 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. Allowance for credit losses of $21.6 million as at June 30, 2023 (December 31, 2022 — $25.0 million) for underwriting premiums unlikely to be collected.

The Company’s investment policies include specific provisions that limit the allowable holdings of a single issue and issuer. As at June 30, 2023, there were no investments in any single issuer, other than the U.S. government and the Canadian government in excess of 2% of the aggregate investment portfolio.