v3.20.1
Reinsurance
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12 Months Ended |
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Reinsurance [Abstract] |
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Reinsurance |
11. REINSURANCE The Company utilizes reinsurance agreements to reduce its exposure to large claims and catastrophic loss occurrences. These agreements provide for recovery from reinsurers of a portion of losses and LAE under certain circumstances without relieving the Company of its underlying obligations to the policyholders. Losses and LAE incurred and premiums earned are reported after deduction for reinsurance. In the event that one or more of the reinsurers were unable to meet their obligations under these reinsurance agreements, the Company would not realize the full value of the reinsurance recoverable balances. The Company may hold partial collateral, including letters of credit and funds held, under these agreements. See also Note 1C, Note 3 and Note 8. Premiums written and earned and incurred losses and LAE are comprised of the following for the periods indicated: | Years Ended December 31, | (Dollars in thousands) | 2019 | | 2018 | | 2017 | Written premiums: | | | | | | | | | Direct | $ | 2,449,198 | | $ | 1,996,606 | | $ | 1,873,115 | Assumed | | 4,603,866 | | | 4,577,070 | | | 3,915,374 | Ceded | | (1,278,115) | | | (1,541,814) | | | (3,064,645) | Net written premiums | $ | 5,774,949 | | $ | 5,031,862 | | $ | 2,723,844 | | | | | | | | | | Premiums earned: | | | | | | | | | Direct | $ | 2,255,388 | | $ | 1,903,576 | | $ | 1,655,023 | Assumed | | 4,427,006 | | | 4,447,862 | | | 3,842,836 | Ceded | | (1,193,359) | | | (1,512,380) | | | (3,548,264) | Net premiums earned | $ | 5,489,035 | | $ | 4,839,058 | | $ | 1,949,595 | | | | | | | | | | Incurred losses and LAE: | | | | | | | | | Direct | $ | 1,401,251 | | $ | 1,182,399 | | $ | 1,196,323 | Assumed | | 2,913,987 | | | 4,162,776 | | | 3,108,753 | Ceded | | (486,116) | | | (534,157) | | | (2,265,325) | Net incurred losses and LAE | $ | 3,829,122 | | $ | 4,811,018 | | $ | 2,039,751 |
The Company has engaged in reinsurance transactions with Bermuda Re, Everest International Reinsurance, Ltd. (“Everest International”), Mt. Logan Re, Everest Insurance Company of Canada (“Everest Canada”) and Lloyd’s Syndicate 2786, which are affiliated companies primarily driven by enterprise risk and capital management considerations under which business is ceded at market rates and terms. The table below represents affiliated quota share reinsurance agreements ("whole account quota share") for all new and renewal business for the indicated coverage period: (Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | Single | | | | | | | | Percent | | Assuming | | | | Occurrence | | Aggregate | | Coverage Period | | Ceding Company | | Ceded | | Company | | Type of Business | | Limit | | Limit | | 01/01/2010-12/31/2010 | | Everest Re | | 44.0 | % | | Bermuda Re | | property / casualty business | | 150,000 | | 325,000 | | 01/01/2011-12/31/2011 | | Everest Re | | 50.0 | % | | Bermuda Re | | property / casualty business | | 150,000 | | 300,000 | | 01/01/2012-12/31/2014 | | Everest Re | | 50.0 | % | | Bermuda Re | | property / casualty business | | 100,000 | | 200,000 | | 01/01/2015-12/31/2016 | | Everest Re | | 50.0 | % | | Bermuda Re | | property / casualty business | | 162,500 | | 325,000 | | 01/01/2017-12/31/2017 | | Everest Re | | 60.0 | % | | Bermuda Re | | property / casualty business | | 219,000 | | 438,000 | | 01/01/2010-12/31/2010 | | Everest Re- Canadian Branch | | 60.0 | % | | Bermuda Re | | property business | | 350,000 | (1) | - | | 01/01/2011-12/31/2011 | | Everest Re- Canadian Branch | | 60.0 | % | | Bermuda Re | | property business | | 350,000 | (1) | - | | 01/01/2012-12/31/2012 | | Everest Re- Canadian Branch | | 75.0 | % | | Bermuda Re | | property / casualty business | | 206,250 | (1) | 412,500 | (1) | 01/01/2013-12/31/2013 | | Everest Re- Canadian Branch | | 75.0 | % | | Bermuda Re | | property / casualty business | | 150,000 | (1) | 412,500 | (1) | 01/01/2014-12/31/2017 | | Everest Re- Canadian Branch | | 75.0 | % | | Bermuda Re | | property / casualty business | | 262,500 | (1) | 412,500 | (1) | 01/01/2012-12/31/2017 | | Everest Canada | | 80.0 | % | | Everest Re- Canadian Branch | | property business | | - | | - | | | | | | | | | | | | | | | | | (1) Amounts shown are Canadian dollars. |
Effective January 1, 2018, Everest Re entered into a twelve month whole account aggregate stop loss reinsurance contract (“stop loss agreement”) with Bermuda Re. The stop loss agreement provides coverage for ultimate net losses on applicable net earned premiums above a retention level, subject to certain other coverage limits and conditions. The stop loss agreement was renewed effective January 1, 2019. In addition, Everest Re entered into a property catastrophe excess of loss reinsurance contract with Bermuda Re, effective January 1, 2019. The contract provides $100,000 thousand of reinsurance coverage for property catastrophe losses above certain attachment points. The table below represents loss portfolio transfer (“LPT”) reinsurance agreements whereby net insurance exposures and reserves were transferred to an affiliate. (Dollars in thousands) | Effective | | Transferring | | Assuming | | | % of Business or | | | Covered Period | Date | | Company | | Company | | | Amount of Transfer | | | of Transfer | 10/01/2001 | | Everest Re (Belgium Branch) | | Bermuda Re | | | 100 | % | | | All years | 10/01/2008 | | Everest Re | | Bermuda Re | | $ | 747,022 | | | | 01/01/2002-12/31/2007 | 12/31/2017 | | Everest Re | | Bermuda Re | | $ | 970,000 | | | | All years |
On December 31, 2017, the Company entered into a LPT agreement with Bermuda Re. The LPT agreement covers subject loss reserves of $2,336,242 thousand for accident years 2017 and prior. As a result of the LPT agreement, the Company transferred $1,000,000 thousand of cash and fixed maturity securities and transferred $970,000 thousand of loss reserves to Bermuda Re. As part of the LPT agreement, Bermuda Re will provide an additional $500,000 thousand of adverse development coverage on the subject loss reserves. The following tables summarize the premiums and losses ceded by the Company to Bermuda Re and Everest International, respectively, and premiums and losses assumed by the Company from Everest Canada and Lloyd’s syndicate 2786 for the periods indicated: | | Bermuda Re | Years Ended December 31, | (Dollars in thousands) | 2019 | | 2018 | | 2017 | Ceded written premiums | $ | 100,084 | | $ | 572,620 | | $ | 2,219,352 | Ceded earned premiums | | 101,681 | | | 586,120 | | | 2,796,939 | Ceded losses and LAE | | (51,686) | | | (49,955) | | | 1,687,659 |
| | Everest International | Years Ended December 31, | (Dollars in thousands) | 2019 | | 2018 | | 2017 | Ceded written premiums | $ | - | | $ | - | | $ | 10 | Ceded earned premiums | | - | | | - | | | 44 | Ceded losses and LAE | | 324 | | | (753) | | | (990) |
| | Everest Canada | Years Ended December 31, | (Dollars in thousands) | 2019 | | 2018 | | 2017 | Assumed written premiums | $ | - | | $ | - | | $ | 25,871 | Assumed earned premiums | | - | | | - | | | 54,558 | Assumed losses and LAE | | 3,024 | | | 6,238 | | | 29,389 |
| | Lloyd's Syndicate 2786 | Years Ended December 31, | (Dollars in thousands) | 2019 | | 2018 | | 2017 | Assumed written premiums | $ | (11,470) | | $ | 10,800 | | $ | 35,607 | Assumed earned premiums | | (18,650) | | | 35,826 | | | 33,590 | Assumed losses and LAE | | 8,355 | | | 27,550 | | | 17,688 |
In 2013, Group established Mt. Logan Re, which is a Class 3 insurer based in Bermuda. Mt. Logan Re then established separate segregated accounts for its business activity, which invest in a diversified set of catastrophe exposures. The following table summarizes the premiums and losses that are ceded by the Company to Mt. Logan Re segregated accounts and assumed by the Company from Mt. Logan Re segregated accounts. | | Mt. Logan Re Segregated Accounts | Years Ended December 31, | (Dollars in thousands) | 2019 | | 2018 | | 2017 | Ceded written premiums | $ | 240,721 | | $ | 207,439 | | $ | 192,928 | Ceded earned premiums | | 235,500 | | | 212,046 | | | 192,573 | Ceded losses and LAE | | 171,900 | | | 234,471 | | | 283,511 | Assumed written premiums | | - | | | 10,582 | | | 11,984 | Assumed earned premiums | | - | | | 10,582 | | | 11,984 | Assumed losses and LAE | | - | | | - | | | - |
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- DefinitionThe entire disclosure pertaining to the existence, magnitude and information about insurance that has been ceded to or assumed from another insurance company, including the methodologies and assumptions used in determining recorded amounts.
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