Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 07, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ARCH CAPITAL GROUP LTD. | |
Entity Central Index Key | 947,484 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 404,724,220 |
Unaudited Consolidated Balance
Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Investments: | ||
Fixed maturities available for sale, at fair value (amortized cost: $14,510,474 and $13,869,460) | $ 14,331,641 | $ 13,876,003 |
Short-term investments available for sale, at fair value (amortized cost: $961,993 and $1,468,955) | 961,799 | 1,469,042 |
Collateral received under securities lending, at fair value (amortized cost: $306,886 and $476,605) | 306,893 | 476,615 |
Equity securities, at fair value | 444,118 | 495,804 |
Other investments available for sale, at fair value (cost: $0 and $198,163) | 0 | 264,989 |
Investments accounted for using the fair value option | 4,097,735 | 4,216,237 |
Investments accounted for using the equity method | 1,524,242 | 1,041,322 |
Total investments | 21,666,428 | 21,840,012 |
Cash | 651,037 | 606,199 |
Accrued investment income | 106,543 | 113,133 |
Securities pledged under securities lending, at fair value (amortized cost: $316,147 and $463,181) | 299,409 | 464,917 |
Premiums receivable | 1,307,466 | 1,135,249 |
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 2,749,785 | 2,540,143 |
Contractholder receivables | 2,067,268 | 1,978,414 |
Ceded unearned premiums | 1,011,850 | 926,611 |
Deferred acquisition costs net | 572,987 | 535,824 |
Receivable for securities sold | 278,753 | 205,536 |
Goodwill and intangible assets | 566,662 | 652,611 |
Other assets | 974,346 | 1,053,009 |
Total assets | 32,252,534 | 32,051,658 |
Liabilities | ||
Reserve for losses and loss adjustment expenses | 11,554,321 | 11,383,792 |
Unearned premiums | 3,868,379 | 3,622,314 |
Reinsurance balances payable | 404,936 | 323,496 |
Contractholder payables | 2,067,268 | 1,978,414 |
Collateral held for insured obligations | 249,723 | 240,183 |
Senior notes | 1,733,364 | 1,732,884 |
Revolving credit agreement borrowings | 554,756 | 816,132 |
Securities lending payable | 306,886 | 476,605 |
Payable for securities purchased | 255,427 | 449,186 |
Other liabilities | 819,373 | 782,717 |
Total liabilities | 21,814,433 | 21,805,723 |
Commitments and Contingencies | ||
Redeemable noncontrolling interests | 206,199 | 205,922 |
Shareholders' Equity | ||
Non-cumulative preferred shares | 780,000 | 872,555 |
Convertible non-voting common equivalent preferred shares | 0 | 489,627 |
Common shares ($0.0011 par, shares issued: 570,048,156 and 549,872,226) | 633 | 611 |
Additional paid-in capital | 1,775,499 | 1,230,617 |
Retained earnings | 9,300,208 | 8,562,889 |
Accumulated other comprehensive income (loss), net of deferred income tax | (221,041) | 118,044 |
Common shares held in treasury, at cost (shares: 164,523,796 and 156,938,409) | (2,280,151) | (2,077,741) |
Total shareholders' equity available to Arch | 9,355,148 | 9,196,602 |
Non-redeemable noncontrolling interests | 876,754 | 843,411 |
Total shareholders' equity | 10,231,902 | 10,040,013 |
Total liabilities, noncontrolling interests and shareholders' equity | $ 32,252,534 | $ 32,051,658 |
Unaudited Consolidated Balanc_2
Unaudited Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fixed maturities available for sale, at amortized cost | $ 14,510,474 | $ 13,869,460 |
Short-term investments available for sale, at amortized cost | 961,993 | 1,468,955 |
Collateral received under securities lending, at amortized cost | 306,886 | 476,605 |
Other investments available for sale, at cost | 0 | 198,163 |
Securities pledged under securities lending, at amortized cost | $ 316,147 | $ 463,181 |
Common shares, par value per share | $ 0.0011 | $ 0.0011 |
Common shares issued (shares) | 570,048,156 | 549,872,226 |
Common shares held in treasury (shares) | 164,523,796 | 156,938,409 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | ||||
Net premiums written | $ 1,333,553 | $ 1,325,403 | $ 4,044,993 | $ 3,850,358 |
Change in unearned premiums | (42,675) | (63,517) | (182,453) | (230,581) |
Net premiums earned | 1,290,878 | 1,261,886 | 3,862,540 | 3,619,777 |
Net investment income | 144,024 | 116,459 | 406,416 | 345,457 |
Net realized gains (losses) | (51,705) | 66,275 | (239,314) | 122,163 |
Other-than-temporary impairment losses | (492) | (1,878) | (1,124) | (5,415) |
Less investment impairments recognized in other comprehensive income, before taxes | 0 | 0 | 0 | 0 |
Net impairment losses recognized in earnings | (492) | (1,878) | (1,124) | (5,415) |
Other underwriting income | 5,823 | 6,064 | 15,046 | 15,519 |
Equity in net income (loss) of investment funds accounted for using the equity method | 15,982 | 31,090 | 52,523 | 111,884 |
Other income (loss) | (726) | (342) | 2,461 | (3,118) |
Total revenues | 1,403,784 | 1,479,554 | 4,098,548 | 4,206,267 |
Expenses | ||||
Losses and loss adjustment expenses | 699,420 | 1,046,141 | 2,062,433 | 2,288,571 |
Acquisition expenses | 201,602 | 193,854 | 595,816 | 566,579 |
Other operating expenses | 161,098 | 170,127 | 512,294 | 514,827 |
Corporate expenses | 14,335 | 17,098 | 52,159 | 69,766 |
Amortization of intangible assets | 26,315 | 31,824 | 79,523 | 93,942 |
Interest expense | 29,730 | 29,510 | 90,710 | 86,935 |
Net foreign exchange (gains) losses | (10,838) | 28,028 | (44,823) | 86,975 |
Total expenses | 1,121,662 | 1,516,582 | 3,348,112 | 3,707,595 |
Income (loss) before income taxes | 282,122 | (37,028) | 750,436 | 498,672 |
Income tax expense | (33,356) | (8,189) | (78,939) | (70,755) |
Net income (loss) | 248,766 | (45,217) | 671,497 | 427,917 |
Net (income) loss attributable to noncontrolling interests | (21,358) | 11,561 | (50,020) | (23,279) |
Net income (loss) available to Arch | 227,408 | (33,656) | 621,477 | 404,638 |
Preferred dividends | (10,402) | (12,369) | (31,242) | (34,936) |
Loss on redemption of preferred shares | 0 | (6,735) | (2,710) | (6,735) |
Net income (loss) available to Arch common shareholders | $ 217,006 | $ (52,760) | $ 587,525 | $ 362,967 |
Net income (loss) per common share and common share equivalent | ||||
Basic (per share) | $ 0.54 | $ (0.13) | $ 1.45 | $ 0.90 |
Diluted (per share) | $ 0.53 | $ (0.13) | $ 1.42 | $ 0.87 |
Weighted average common shares and common share equivalents outstanding | ||||
Basic (shares) | 402,939,092 | 404,656,353 | 405,076,228 | 403,416,387 |
Diluted (shares) | 411,721,214 | 404,656,353 | 413,993,192 | 417,666,972 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Comprehensive Income | ||||
Net income (loss) | $ 248,766 | $ (45,217) | $ 671,497 | $ 427,917 |
Unrealized appreciation (decline) in value of available-for-sale investments: | ||||
Unrealized holding gains (losses) arising during period | (53,308) | 66,462 | (305,256) | 260,223 |
Reclassification of net realized (gains) losses, net of income taxes, included in net income (loss) | 23,203 | (23,912) | 122,307 | (46,180) |
Foreign currency translation adjustments | 2,063 | 8,280 | (9,250) | 29,701 |
Comprehensive income | 220,724 | 5,613 | 479,298 | 671,661 |
Net (income) loss attributable to noncontrolling interests | (21,358) | 11,561 | (50,020) | (23,279) |
Other comprehensive (income) loss attributable to noncontrolling interests | 1,158 | 411 | 2,908 | 479 |
Comprehensive income available to Arch | $ 200,524 | $ 17,585 | $ 432,186 | $ 648,861 |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Total | Non-cumulative preferred shares | Common shares | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss), net of deferred income tax | Unrealized appreciation (decline) in value of available-for-sale securities, net of deferred income tax | Foreign currency translation adjustments | Common shares held in treasury, at cost | Convertible non-voting common equivalent preferred shares |
Balance at beginning of period, as adjusted | $ 7,996,387 | $ (27,641) | ||||||||
Balance at beginning of period at Dec. 31, 2016 | $ 772,555 | $ 582 | $ 531,687 | 7,996,701 | $ (114,541) | (27,641) | $ (86,900) | $ (2,034,570) | $ 1,101,304 | |
Cumulative effect of an accounting change at Dec. 31, 2016 | (314) | 0 | ||||||||
Preferred shares issued | 230,000 | |||||||||
Preferred shares redeemed | (230,000) | |||||||||
Preferred shares converted to common shares | 611,653 | (611,677) | ||||||||
Common shares issued, net | 28 | |||||||||
Loss on redemption of preferred shares | $ (6,735) | (6,735) | ||||||||
Other changes | 69,620 | |||||||||
Net income | 427,917 | 427,917 | ||||||||
Net (income) loss attributable to noncontrolling interests | (23,279) | (23,279) | ||||||||
Preferred share dividends | (34,936) | (34,936) | ||||||||
Unrealized holding gains (losses) during period, net of reclassification adj. | 214,043 | |||||||||
Unrealized holding gains (losses) during period attrib. to noncontrolling int. | 0 | |||||||||
Foreign currency translation adjustments | 29,701 | 29,701 | ||||||||
Foreign currency translation adjustments attributable to noncontrolling int. | 479 | |||||||||
Shares repurchased for treasury | (19,074) | |||||||||
Balance at end of period at Sep. 30, 2017 | 8,911,144 | 772,555 | 610 | 1,212,960 | 8,359,354 | 129,682 | 186,402 | (56,720) | (2,053,644) | 489,627 |
Non-redeemable noncontrolling interests, end of period at Sep. 30, 2017 | 860,898 | |||||||||
Total shareholders’ equity at Sep. 30, 2017 | 9,772,042 | |||||||||
Balance at beginning of period, as adjusted | 8,412,114 | 143,852 | ||||||||
Balance at beginning of period at Jun. 30, 2017 | 772,555 | 609 | 1,196,884 | 8,412,114 | 78,441 | 143,852 | (65,411) | (2,051,343) | 489,627 | |
Cumulative effect of an accounting change at Jun. 30, 2017 | 0 | 0 | ||||||||
Preferred shares issued | 230,000 | |||||||||
Preferred shares redeemed | (230,000) | |||||||||
Preferred shares converted to common shares | 0 | 0 | ||||||||
Common shares issued, net | 1 | |||||||||
Loss on redemption of preferred shares | (6,735) | (6,735) | ||||||||
Other changes | 16,076 | |||||||||
Net income | (45,217) | (45,217) | ||||||||
Net (income) loss attributable to noncontrolling interests | 11,561 | 11,561 | ||||||||
Preferred share dividends | (12,369) | (12,369) | ||||||||
Unrealized holding gains (losses) during period, net of reclassification adj. | 42,550 | |||||||||
Unrealized holding gains (losses) during period attrib. to noncontrolling int. | 0 | |||||||||
Foreign currency translation adjustments | 8,280 | 8,280 | ||||||||
Foreign currency translation adjustments attributable to noncontrolling int. | 411 | |||||||||
Shares repurchased for treasury | (2,301) | |||||||||
Balance at end of period at Sep. 30, 2017 | 8,911,144 | 772,555 | 610 | 1,212,960 | 8,359,354 | 129,682 | 186,402 | (56,720) | (2,053,644) | 489,627 |
Non-redeemable noncontrolling interests, end of period at Sep. 30, 2017 | 860,898 | |||||||||
Total shareholders’ equity at Sep. 30, 2017 | 9,772,042 | |||||||||
Balance at beginning of period, as adjusted | 8,712,683 | 7,606 | ||||||||
Balance at beginning of period at Dec. 31, 2017 | 9,196,602 | 872,555 | 611 | 1,230,617 | 8,562,889 | 118,044 | 157,400 | (39,356) | (2,077,741) | 489,627 |
Cumulative effect of an accounting change at Dec. 31, 2017 | 149,794 | (149,794) | ||||||||
Preferred shares issued | 0 | |||||||||
Preferred shares redeemed | (92,555) | |||||||||
Preferred shares converted to common shares | 489,608 | (489,627) | ||||||||
Common shares issued, net | 22 | |||||||||
Loss on redemption of preferred shares | (2,710) | (2,710) | ||||||||
Other changes | 55,274 | |||||||||
Net income | 671,497 | 671,497 | ||||||||
Net (income) loss attributable to noncontrolling interests | (50,020) | (50,020) | ||||||||
Preferred share dividends | (31,242) | (31,242) | ||||||||
Unrealized holding gains (losses) during period, net of reclassification adj. | (182,949) | |||||||||
Unrealized holding gains (losses) during period attrib. to noncontrolling int. | 3,123 | |||||||||
Foreign currency translation adjustments | (9,250) | (9,250) | ||||||||
Foreign currency translation adjustments attributable to noncontrolling int. | (215) | |||||||||
Shares repurchased for treasury | (184,500) | (202,410) | ||||||||
Balance at end of period at Sep. 30, 2018 | 9,355,148 | 780,000 | 633 | 1,775,499 | 9,300,208 | (221,041) | (172,220) | (48,821) | (2,280,151) | 0 |
Non-redeemable noncontrolling interests, end of period at Sep. 30, 2018 | 876,754 | |||||||||
Total shareholders’ equity at Sep. 30, 2018 | 10,231,902 | |||||||||
Balance at beginning of period, as adjusted | 9,083,202 | (143,353) | ||||||||
Balance at beginning of period at Jun. 30, 2018 | 780,000 | 633 | 1,760,606 | 9,083,202 | (194,157) | (143,353) | (50,804) | (2,266,529) | 0 | |
Cumulative effect of an accounting change at Jun. 30, 2018 | 0 | 0 | ||||||||
Preferred shares issued | 0 | |||||||||
Preferred shares redeemed | 0 | |||||||||
Preferred shares converted to common shares | 0 | 0 | ||||||||
Common shares issued, net | 0 | |||||||||
Loss on redemption of preferred shares | 0 | 0 | ||||||||
Other changes | 14,893 | |||||||||
Net income | 248,766 | 248,766 | ||||||||
Net (income) loss attributable to noncontrolling interests | (21,358) | (21,358) | ||||||||
Preferred share dividends | (10,402) | (10,402) | ||||||||
Unrealized holding gains (losses) during period, net of reclassification adj. | (30,105) | |||||||||
Unrealized holding gains (losses) during period attrib. to noncontrolling int. | 1,238 | |||||||||
Foreign currency translation adjustments | 2,063 | 2,063 | ||||||||
Foreign currency translation adjustments attributable to noncontrolling int. | (80) | |||||||||
Shares repurchased for treasury | (13,622) | |||||||||
Balance at end of period at Sep. 30, 2018 | 9,355,148 | $ 780,000 | $ 633 | $ 1,775,499 | $ 9,300,208 | $ (221,041) | $ (172,220) | $ (48,821) | $ (2,280,151) | $ 0 |
Non-redeemable noncontrolling interests, end of period at Sep. 30, 2018 | 876,754 | |||||||||
Total shareholders’ equity at Sep. 30, 2018 | $ 10,231,902 |
Unaudited Consolidated Statem_4
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating Activities | ||
Net income | $ 671,497 | $ 427,917 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Net realized (gains) losses | 224,757 | (141,944) |
Net impairment losses recognized in earnings | 1,124 | 5,415 |
Equity in net income or loss of investment funds accounted for using the equity method and other income or loss | 6,357 | (63,784) |
Amortization of intangible assets | 79,523 | 93,942 |
Share-based compensation | 45,806 | 58,308 |
Changes in: | ||
Reserve for losses and loss adjustment expenses, net of unpaid losses and loss adjustment expenses recoverable | 68,245 | 602,652 |
Unearned premiums, net of ceded unearned premiums | 182,453 | 230,581 |
Premiums receivable | (203,247) | (167,143) |
Deferred acquisition costs | (36,074) | (73,631) |
Reinsurance balances payable | 83,696 | 37,528 |
Other items, net | (3,150) | 50,868 |
Net cash provided by operating activities | 1,120,987 | 1,060,709 |
Investing Activities | ||
Purchases of fixed maturity investments | (24,837,917) | (28,079,129) |
Purchases of equity securities | (819,342) | (667,135) |
Purchases of other investments | (1,543,332) | (1,406,528) |
Proceeds from sales of fixed maturity investments | 23,310,203 | 27,629,474 |
Proceeds from sales of equity securities | 866,919 | 751,873 |
Proceeds from sales, redemptions and maturities of other investments | 1,178,035 | 938,581 |
Proceeds from redemptions and maturities of fixed maturity investments | 724,021 | 747,621 |
Net settlements of derivative instruments | 765 | (20,952) |
Net sales (purchases) of short-term investments | 554,315 | (964,653) |
Change in cash collateral related to securities lending | 137,073 | 148,692 |
Purchases of fixed assets | (19,050) | (16,862) |
Acquisitions, net of cash | 0 | (27,709) |
Other | 58,227 | 94,089 |
Net cash provided by (used for) investing activities | (390,083) | (872,638) |
Financing Activities | ||
Proceeds from issuance of preferred shares, net | 0 | 222,054 |
Redemption of preferred shares | (92,555) | (230,000) |
Purchases of common shares under share repurchase program | (184,529) | 0 |
Proceeds from common shares issued, net | (12,029) | (7,484) |
Proceeds from borrowings | 167,259 | 238,915 |
Repayments of borrowings | (427,000) | (172,000) |
Change in cash collateral related to securities lending | (137,073) | (148,692) |
Dividends paid to redeemable noncontrolling interests | (13,491) | (13,491) |
Other | (6,084) | (49,280) |
Preferred dividends paid | (31,242) | (34,936) |
Net cash provided by (used for) financing activities | (736,744) | (194,914) |
Effects of exchange rate changes on foreign currency cash and restricted cash | (11,625) | 17,888 |
Increase (decrease) in cash and restricted cash | (17,465) | 11,045 |
Cash and restricted cash, beginning of year | 727,284 | 969,569 |
Cash and restricted cash, end of period | $ 709,819 | $ 980,614 |
Basis of Presentation and Recen
Basis of Presentation and Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Recent Accounting Pronouncements | Basis of Presentation and Recent Accounting Pronouncements Basis of Presentation Arch Capital Group Ltd. (“Arch Capital”) is a Bermuda public limited liability company which provides insurance, reinsurance and mortgage insurance on a worldwide basis through its wholly-owned subsidiaries. As used herein, the “Company” means Arch Capital and its subsidiaries. The Company’s consolidated financial statements include the results of Watford Holdings Ltd. and its wholly owned subsidiaries. See Note 10 . The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (“2017 Form 10-K”), including the Company’s audited consolidated financial statements and related notes. The Company has reclassified the presentation of certain prior year information to conform to the current presentation. Such reclassifications had no effect on the Company’s net income, comprehensive income, shareholders’ equity or cash flows. Tabular amounts are in U.S. Dollars in thousands, except share amounts, unless otherwise noted. Recent Accounting Pronouncements Recently Issued Accounting Standards Adopted The Company adopted ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities,” which enhances the reporting model for financial instruments and provides improved financial information to readers of the financial statements. Among other provisions focused on improving the recognition and measurement of financial instruments, the ASU significantly changes the income statement impact of equity instruments and the recognition of changes in fair value of financial liabilities attributable to an entity's own credit risk when the fair value option is elected. The ASU requires equity instruments that do not result in consolidation and are not accounted for under the equity method to be measured at fair value with any changes in fair value recognized in net income rather than other comprehensive income. Upon adoption of this ASU, the Company recorded a cumulative effect adjustment of $149.8 million in retained earnings and an offsetting decrease in accumulated other comprehensive income. The adoption of this ASU did not have a material impact on the Company's financial position, cash flows, or total comprehensive income, but may increase volatility in the Company's results of operations in future periods. The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606),” which creates a new comprehensive revenue recognition standard that serves as a single source of revenue guidance for all companies in all industries. The guidance applies to all companies that either enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other standards, such as insurance contracts or financial instruments. The ASU also requires enhanced disclosures about revenue. The Company adopted the ASU using the modified retrospective method, whereby the cumulative effect of adoption was recognized as an adjustment to retained earnings at the date of initial application. The impact of the adoption of this ASU was not material, mostly because the accounting for insurance contracts is outside of the scope of ASU 2014-09. The Company adopted ASU 2016-18, “Statement of Cash Flows (Topic 230) - Restricted Cash,” which requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents in the reconciliation of beginning and ending cash on the statements of cash flows. As a result, transfers between cash and cash equivalents and restricted cash and restricted cash equivalents will no longer be presented on the statement of cash flows. The revised presentation required in this ASU is reflected in the Company’s consolidated statements of cash flows for both periods presented. The adoption of this ASU did not have any effect on the Company’s results of operations, financial position or comprehensive income. Recently Issued Accounting Standards Not Yet Adopted In July 2018, the FASB issued ASU 2018-11, “Leases: Targeted Improvements (Topic 842),” which will ease implementation of the lease standard (ASU 2016-02). The guidance provides an alternative transition method by which leases are recognized at the date of adoption. Entities that elect this transition option will still be required to adopt the new leases standard using the modified retrospective transition method required by the standard, but they will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The Company will adopt this alternative transition method when adopting the new lease standard as of January 1, 2019. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40),” to align the requirements for capitalizing certain implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The guidance provides flexibility in adoption, allowing for either retrospective adjustment or prospective adjustment for all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements. For information regarding additional accounting standards that the Company has not yet adopted, see note 3(q), “Significant Accounting Policies—Recent Accounting Pronouncements,” of the notes to consolidated financial statements in the Company’s 2017 Form 10-K. |
Share Transactions
Share Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Share Transactions | Share Transactions Three-For-One Common Share Split In May 2018, shareholders approved a proposal to amend the memorandum of association by sub-dividing the authorized common shares of Arch Capital to effect a three -for-one split of Arch Capital’s common shares. The share split changed the Company’s authorized common shares to 1.8 billion common shares ( 600 million previously), with a par value of $.0011 per share ( $.0033 previously). Information pertaining to the composition of the Company’s shareholders’ equity accounts, shares and earnings per share has been retroactively restated in the accompanying financial statements and notes to the consolidated financial statements to reflect the share split. Share Repurchases The board of directors of Arch Capital has authorized the investment in Arch Capital’s common shares through a share repurchase program. Since the inception of the share repurchase program, Arch Capital has repurchased 382.6 million common shares for an aggregate purchase price of $3.87 billion . For the nine months ended September 30, 2018 , Arch Capital repurchased 6.9 million shares under the share repurchase program with an aggregate purchase price of $184.5 million . Arch Capital did not repurchase any shares under the share repurchase program during the nine months ended September 30, 2017 . At September 30, 2018 , $262.0 million of share repurchases were available under the program, which may be effected from time to time in open market or privately negotiated transactions through December 31, 2019. The timing and amount of the repurchase transactions under this program will depend on a variety of factors, including market conditions and corporate and regulatory considerations. Conversion of Convertible Non-Voting Common Equivalent Preferred Shares In March 2018, Arch Capital completed an underwritten public secondary offering of 17.0 million common shares (split adjusted) by American International Group, Inc. (“AIG”) following transfer of 0.6 million Series D convertible non-voting common equivalent preferred shares (“Series D Preferred Shares”). Proceeds from the sale of common shares pursuant to the public offering were received by AIG. At September 30, 2018 , no Series D Preferred Shares were outstanding. Series C Preferred Shares On January 2, 2018, Arch Capital redeemed all outstanding 6.75% Series C non-cumulative preferred shares. The preferred shares were redeemed at a redemption price equal to $25 per share, plus all declared and unpaid dividends to (but excluding) the redemption date. In accordance with GAAP, following the redemption, original issuance costs related to such shares have been removed from additional paid-in capital and recorded as a “loss on redemption of preferred shares.” Such adjustment had no impact on total shareholders’ equity or cash flows. |
Earnings (Loss) Per Common Shar
Earnings (Loss) Per Common Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Earnings (Loss) Per Common Share Due to the net loss recorded in the 2017 third quarter, diluted weighted average common shares and common share equivalents outstanding for the 2017 third quarter do not include the effect of 4.7 million otherwise dilutive securities since the inclusion of such securities is anti-dilutive to per share results. Since the Company reported net income for the other periods presented, the computation of diluted average shares outstanding includes dilutive securities for such periods. The following table sets forth the computation of basic and diluted earnings per common share: Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net income (loss) $ 248,766 $ (45,217 ) $ 671,497 $ 427,917 Amounts attributable to noncontrolling interests (21,358 ) 11,561 (50,020 ) (23,279 ) Net income (loss) available to Arch 227,408 (33,656 ) 621,477 404,638 Preferred dividends (10,402 ) (12,369 ) (31,242 ) (34,936 ) Loss on redemption of preferred shares — (6,735 ) (2,710 ) (6,735 ) Net income (loss) available to Arch common shareholders $ 217,006 $ (52,760 ) $ 587,525 $ 362,967 Denominator: Weighted average common shares outstanding 402,939,092 387,633,753 400,649,105 373,579,833 Series D preferred shares (1) — 17,022,600 4,427,123 29,836,554 Weighted average common shares and common share equivalents outstanding — basic 402,939,092 404,656,353 405,076,228 403,416,387 Effect of dilutive common share equivalents: Nonvested restricted shares 1,619,286 — 1,568,044 4,379,637 Stock options (2) 7,162,836 — 7,348,920 9,870,948 Weighted average common shares and common share equivalents outstanding — diluted 411,721,214 404,656,353 413,993,192 417,666,972 Earnings (loss) per common share: Basic $ 0.54 $ (0.13 ) $ 1.45 $ 0.90 Diluted $ 0.53 $ (0.13 ) $ 1.42 $ 0.87 (1) Such shares are convertible non-voting common equivalent preferred shares issued in connection with the UGC acquisition. See Note 2 . (2) Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2018 third quarter and 2017 third quarter , the number of stock options excluded were 4,396,352 and 0 , respectively. For the nine months ended September 30, 2018 and 2017 , the number of stock options excluded were 5,481,584 and 2,516,604 , respectively. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company classifies its businesses into three underwriting segments — insurance, reinsurance and mortgage — and two other operating segments — ‘other’ and corporate (non-underwriting). The Company determined its reportable segments using the management approach described in accounting guidance regarding disclosures about segments of an enterprise and related information. The accounting policies of the segments are the same as those used for the preparation of the Company’s consolidated financial statements. Intersegment business is allocated to the segment accountable for the underwriting results. The Company’s insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company’s chief operating decision makers, the President and Chief Executive Officer of Arch Capital, and the Chief Financial Officer of Arch Capital. The chief operating decision makers do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for its three underwriting segments based on underwriting income or loss. The Company does not manage its assets by underwriting segment, with the exception of goodwill and intangible assets, and, accordingly, investment income is not allocated to each underwriting segment. The insurance segment consists of the Company’s insurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: construction and national accounts; excess and surplus casualty; lenders products; professional lines; programs; property, energy, marine and aviation; travel, accident and health; and other (consisting of alternative markets, excess workers' compensation and surety business). The reinsurance segment consists of the Company’s reinsurance underwriting units which offer specialty product lines on a worldwide basis. Product lines include: casualty; marine and aviation; other specialty; property catastrophe; property excluding property catastrophe (losses on a single risk, both excess of loss and pro rata); and other (consisting of life reinsurance, casualty clash and other). The mortgage segment includes the Company’s U.S. and international mortgage insurance and reinsurance operations as well as government sponsored enterprise (“GSE”) credit-risk sharing transactions. Arch Mortgage Insurance Company and United Guaranty Residential Insurance Company (combined “Arch MI U.S.”) are approved as eligible mortgage insurers by Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”), each a GSE. The corporate (non-underwriting) segment results include net investment income, other income (loss), corporate expenses, transaction costs and other, interest expense, items related to the Company’s non-cumulative preferred shares, net realized gains or losses, net impairment losses included in earnings, equity in net income or loss of investment funds accounted for using the equity method, net foreign exchange gains or losses and income taxes. Such amounts exclude the results of the ‘other’ segment. The ‘other’ segment includes the results of Watford Re (see Note 10 ). Watford Re has its own management and board of directors that is responsible for the overall profitability of the ‘other’ segment. For the ‘other’ segment, performance is measured based on net income or loss. The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to Arch common shareholders: Three Months Ended September 30, 2018 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 836,820 $ 435,396 $ 350,559 $ 1,622,532 $ 185,033 $ 1,731,328 Premiums ceded (259,968 ) (123,705 ) (57,226 ) (440,656 ) (33,356 ) (397,775 ) Net premiums written 576,852 311,691 293,333 1,181,876 151,677 1,333,553 Change in unearned premiums (15,794 ) (18,418 ) 7,591 (26,621 ) (16,054 ) (42,675 ) Net premiums earned 561,058 293,273 300,924 1,155,255 135,623 1,290,878 Other underwriting income (loss) — 1,387 3,733 5,120 703 5,823 Losses and loss adjustment expenses (409,435 ) (183,413 ) (9,615 ) (602,463 ) (96,957 ) (699,420 ) Acquisition expenses (88,255 ) (50,367 ) (33,361 ) (171,983 ) (29,619 ) (201,602 ) Other operating expenses (90,081 ) (29,936 ) (31,122 ) (151,139 ) (9,959 ) (161,098 ) Underwriting income (loss) $ (26,713 ) $ 30,944 $ 230,559 234,790 (209 ) 234,581 Net investment income 114,328 29,696 144,024 Net realized gains (losses) (47,010 ) (4,695 ) (51,705 ) Net impairment losses recognized in earnings (492 ) — (492 ) Equity in net income (loss) of investment funds accounted for using the equity method 15,982 — 15,982 Other income (loss) (726 ) — (726 ) Corporate expenses (2) (13,244 ) — (13,244 ) Transaction costs and other (2) (1,091 ) — (1,091 ) Amortization of intangible assets (26,315 ) — (26,315 ) Interest expense (24,666 ) (5,064 ) (29,730 ) Net foreign exchange gains (losses) 7,130 3,708 10,838 Income before income taxes 258,686 23,436 282,122 Income tax expense (33,356 ) — (33,356 ) Net income 225,330 23,436 248,766 Dividends attributable to redeemable noncontrolling interests — (4,599 ) (4,599 ) Amounts attributable to nonredeemable noncontrolling interests — (16,759 ) (16,759 ) Net income available to Arch 225,330 2,078 227,408 Preferred dividends (10,402 ) — (10,402 ) Net income available to Arch common shareholders $ 214,928 $ 2,078 $ 217,006 Underwriting Ratios Loss ratio 73.0 % 62.5 % 3.2 % 52.1 % 71.5 % 54.2 % Acquisition expense ratio 15.7 % 17.2 % 11.1 % 14.9 % 21.8 % 15.6 % Other operating expense ratio 16.1 % 10.2 % 10.3 % 13.1 % 7.3 % 12.5 % Combined ratio 104.8 % 89.9 % 24.6 % 80.1 % 100.6 % 82.3 % Goodwill and intangible assets $ 20,141 $ — $ 538,871 $ 559,012 $ 7,650 $ 566,662 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Three Months Ended September 30, 2017 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 787,447 $ 422,083 $ 347,951 $ 1,557,179 $ 166,198 $ 1,648,246 Premiums ceded (222,516 ) (105,389 ) (57,900 ) (385,503 ) (12,471 ) (322,843 ) Net premiums written 564,931 316,694 290,051 1,171,676 153,727 1,325,403 Change in unearned premiums (29,766 ) 6,879 (15,533 ) (38,420 ) (25,097 ) (63,517 ) Net premiums earned 535,165 323,573 274,518 1,133,256 128,630 1,261,886 Other underwriting income (loss) — 1,728 3,599 5,327 737 6,064 Losses and loss adjustment expenses (568,795 ) (318,609 ) (35,156 ) (922,560 ) (123,581 ) (1,046,141 ) Acquisition expenses (82,638 ) (57,340 ) (21,803 ) (161,781 ) (32,073 ) (193,854 ) Other operating expenses (90,875 ) (36,214 ) (34,770 ) (161,859 ) (8,268 ) (170,127 ) Underwriting income (loss) $ (207,143 ) $ (86,862 ) $ 186,388 (107,617 ) (34,555 ) (142,172 ) Net investment income 94,127 22,332 116,459 Net realized gains (losses) 64,104 2,171 66,275 Net impairment losses recognized in earnings (1,878 ) — (1,878 ) Equity in net income (loss) of investment funds accounted for using the equity method 31,090 — 31,090 Other income (loss) (342 ) — (342 ) Corporate expenses (2) (14,108 ) — (14,108 ) Transaction costs and other (2) (2,990 ) — (2,990 ) Amortization of intangible assets (31,824 ) — (31,824 ) Interest expense (26,264 ) (3,246 ) (29,510 ) Net foreign exchange gains (losses) (27,785 ) (243 ) (28,028 ) Income (loss) before income taxes (23,487 ) (13,541 ) (37,028 ) Income tax expense (8,168 ) (21 ) (8,189 ) Net income (loss) (31,655 ) (13,562 ) (45,217 ) Dividends attributable to redeemable noncontrolling interests — (4,586 ) (4,586 ) Amounts attributable to nonredeemable noncontrolling interests — 16,147 16,147 Net income (loss) available to Arch (31,655 ) (2,001 ) (33,656 ) Preferred dividends (12,369 ) — (12,369 ) Loss on redemption of preferred shares (6,735 ) — (6,735 ) Net income (loss) available to Arch common shareholders $ (50,759 ) $ (2,001 ) $ (52,760 ) Underwriting Ratios Loss ratio 106.3 % 98.5 % 12.8 % 81.4 % 96.1 % 82.9 % Acquisition expense ratio 15.4 % 17.7 % 7.9 % 14.3 % 24.9 % 15.4 % Other operating expense ratio 17.0 % 11.2 % 12.7 % 14.3 % 6.4 % 13.5 % Combined ratio 138.7 % 127.4 % 33.4 % 110.0 % 127.4 % 111.8 % Goodwill and intangible assets $ 23,445 $ 417 $ 652,893 $ 676,755 $ 7,650 $ 684,405 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Nine Months Ended September 30, 2018 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 2,429,570 $ 1,503,206 $ 1,002,727 $ 4,935,339 $ 574,078 $ 5,266,086 Premiums ceded (752,413 ) (455,682 ) (154,230 ) (1,362,161 ) (102,263 ) (1,221,093 ) Net premiums written 1,677,157 1,047,524 848,497 3,573,178 471,815 4,044,993 Change in unearned premiums (30,913 ) (134,761 ) 23,147 (142,527 ) (39,926 ) (182,453 ) Net premiums earned 1,646,244 912,763 871,644 3,430,651 431,889 3,862,540 Other underwriting income (loss) — 2,490 10,464 12,954 2,092 15,046 Losses and loss adjustment expenses (1,120,630 ) (555,044 ) (74,672 ) (1,750,346 ) (312,087 ) (2,062,433 ) Acquisition expenses (264,094 ) (148,828 ) (87,665 ) (500,587 ) (95,229 ) (595,816 ) Other operating expenses (274,735 ) (101,185 ) (108,622 ) (484,542 ) (27,752 ) (512,294 ) Underwriting income (loss) $ (13,215 ) $ 110,196 $ 611,149 708,130 (1,087 ) 707,043 Net investment income 322,332 84,084 406,416 Net realized gains (losses) (218,414 ) (20,900 ) (239,314 ) Net impairment losses recognized in earnings (1,124 ) — (1,124 ) Equity in net income (loss) of investment funds accounted for using the equity method 52,523 — 52,523 Other income (loss) 2,461 — 2,461 Corporate expenses (2) (43,330 ) — (43,330 ) Transaction costs and other (2) (8,829 ) — (8,829 ) Amortization of intangible assets (79,523 ) — (79,523 ) Interest expense (76,631 ) (14,079 ) (90,710 ) Net foreign exchange gains (losses) 38,302 6,521 44,823 Income before income taxes 695,897 54,539 750,436 Income tax expense (78,912 ) (27 ) (78,939 ) Net income 616,985 54,512 671,497 Dividends attributable to redeemable noncontrolling interests — (13,769 ) (13,769 ) Amounts attributable to nonredeemable noncontrolling interests — (36,251 ) (36,251 ) Net income available to Arch 616,985 4,492 621,477 Preferred dividends (31,242 ) — (31,242 ) Loss on redemption of preferred shares (2,710 ) — (2,710 ) Net income available to Arch common shareholders $ 583,033 $ 4,492 $ 587,525 Underwriting Ratios Loss ratio 68.1 % 60.8 % 8.6 % 51.0 % 72.3 % 53.4 % Acquisition expense ratio 16.0 % 16.3 % 10.1 % 14.6 % 22.0 % 15.4 % Other operating expense ratio 16.7 % 11.1 % 12.5 % 14.1 % 6.4 % 13.3 % Combined ratio 100.8 % 88.2 % 31.2 % 79.7 % 100.7 % 82.1 % (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Nine Months Ended September 30, 2017 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 2,313,630 $ 1,351,051 $ 1,032,800 $ 4,697,007 $ 473,131 $ 4,915,895 Premiums ceded (704,057 ) (386,743 ) (194,139 ) (1,284,465 ) (35,315 ) (1,065,537 ) Net premiums written 1,609,573 964,308 838,661 3,412,542 437,816 3,850,358 Change in unearned premiums (51,188 ) (81,182 ) (61,776 ) (194,146 ) (36,435 ) (230,581 ) Net premiums earned 1,558,385 883,126 776,885 3,218,396 401,381 3,619,777 Other underwriting income (loss) — 1,143 11,999 13,142 2,377 15,519 Losses and loss adjustment expenses (1,252,375 ) (631,669 ) (84,915 ) (1,968,959 ) (319,612 ) (2,288,571 ) Acquisition expenses (236,378 ) (154,638 ) (76,235 ) (467,251 ) (99,328 ) (566,579 ) Other operating expenses (271,268 ) (110,458 ) (108,790 ) (490,516 ) (24,311 ) (514,827 ) Underwriting income (loss) $ (201,636 ) $ (12,496 ) $ 518,944 304,812 (39,493 ) 265,319 Net investment income 282,459 62,998 345,457 Net realized gains (losses) 110,662 11,501 122,163 Net impairment losses recognized in earnings (5,415 ) — (5,415 ) Equity in net income (loss) of investment funds accounted for using the equity method 111,884 — 111,884 Other income (loss) (3,118 ) — (3,118 ) Corporate expenses (2) (48,517 ) — (48,517 ) Transaction costs and other (2) (21,249 ) — (21,249 ) Amortization of intangible assets (93,942 ) — (93,942 ) Interest expense (77,932 ) (9,003 ) (86,935 ) Net foreign exchange gains (losses) (85,451 ) (1,524 ) (86,975 ) Income before income taxes 474,193 24,479 498,672 Income tax expense (70,734 ) (21 ) (70,755 ) Net income 403,459 24,458 427,917 Dividends attributable to redeemable noncontrolling interests — (13,756 ) (13,756 ) Amounts attributable to nonredeemable noncontrolling interests — (9,523 ) (9,523 ) Net income available to Arch 403,459 1,179 404,638 Preferred dividends (34,936 ) — (34,936 ) Loss on redemption of preferred shares (6,735 ) — (6,735 ) Net income available to Arch common shareholders $ 361,788 $ 1,179 $ 362,967 Underwriting Ratios Loss ratio 80.4 % 71.5 % 10.9 % 61.2 % 79.6 % 63.2 % Acquisition expense ratio 15.2 % 17.5 % 9.8 % 14.5 % 24.7 % 15.7 % Other operating expense ratio 17.4 % 12.5 % 14.0 % 15.2 % 6.1 % 14.2 % Combined ratio 113.0 % 101.5 % 34.7 % 90.9 % 110.4 % 93.1 % (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ |
Reserve for Losses and Loss Adj
Reserve for Losses and Loss Adjustment Expenses | 9 Months Ended |
Sep. 30, 2018 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |
Reserve for losses and loss adjustment expenses | Reserve for Losses and Loss Adjustment Expenses The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses: Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Reserve for losses and loss adjustment expenses at beginning of period $ 11,424,337 $ 10,520,511 $ 11,383,792 $ 10,200,960 Unpaid losses and loss adjustment expenses recoverable 2,651,749 2,116,210 2,464,910 2,083,575 Net reserve for losses and loss adjustment expenses at beginning of period 8,772,588 8,404,301 8,918,882 8,117,385 Net incurred losses and loss adjustment expenses relating to losses occurring in: Current year 779,043 1,091,373 2,257,670 2,486,410 Prior years (79,623 ) (45,232 ) (195,237 ) (197,839 ) Total net incurred losses and loss adjustment expenses 699,420 1,046,141 2,062,433 2,288,571 Retroactive reinsurance transaction (1) — — (420,404 ) — Net foreign exchange (gains) losses (33,783 ) 61,919 (110,061 ) 168,493 Net paid losses and loss adjustment expenses relating to losses occurring in: Current year (149,999 ) (167,450 ) (245,021 ) (282,952 ) Prior years (396,695 ) (457,183 ) (1,314,298 ) (1,403,769 ) Total net paid losses and loss adjustment expenses (546,694 ) (624,633 ) (1,559,319 ) (1,686,721 ) Net reserve for losses and loss adjustment expenses at end of period 8,891,531 8,887,728 8,891,531 8,887,728 Unpaid losses and loss adjustment expenses recoverable 2,662,790 2,463,539 2,662,790 2,463,539 Reserve for losses and loss adjustment expenses at end of period $ 11,554,321 $ 11,351,267 $ 11,554,321 $ 11,351,267 (1) During the 2018 second quarter, a subsidiary of the Company entered into a retroactive reinsurance transaction with a third party reinsurer to reinsure run-off liabilities associated with certain discontinued U.S. specialty casualty and program exposures. Development on Prior Year Loss Reserves 2018 Third Quarter During the 2018 third quarter , the Company recorded net favorable development on prior year loss reserves of $79.6 million , which consisted of $34.3 million from the reinsurance segment, $5.9 million from the insurance segment, $38.6 million from the mortgage segment and $0.7 million from the ‘other’ segment. The reinsurance segment’s net favorable development of $34.3 million , or 11.7 loss ratio points, for the 2018 third quarter consisted of $26.5 million from short-tailed lines and $7.8 million from long-tailed and medium-tailed lines. Favorable development in short-tailed lines included $15.9 million from property catastrophe and property other than property catastrophe reserves, across most underwriting years ( i.e. , all premiums and losses attributable to contracts having an inception or renewal date within the given twelve-month period), reflecting lower levels of reported and paid claims activity than previously anticipated which led to decreases in certain loss ratio selections during the period, and $10.3 million from other specialty reserves, primarily from the 2016 underwriting year. Favorable development in long-tailed and medium-tailed lines reflected reductions in casualty reserves of $7.9 million based on varying levels of reported and paid claims activity, primarily from the 2009 underwriting year. The insurance segment’s net favorable development of $5.9 million , or 1.1 loss ratio points, for the 2018 third quarter consisted of $14.3 million of net favorable development in short-tailed lines and $8.4 million of net adverse development in medium-tailed and long-tailed lines. Net favorable development in short-tailed lines primarily resulted from property (including special risk other than marine) reserves from the 2017 accident year ( i.e. , the year in which a loss occurred) while net adverse development in medium-tailed and long-tailed lines primarily resulted from $16.4 million of adverse development on contract binding business, primarily from the 2015 to 2017 accident years. Such amounts were partially offset by $8.0 million of net favorable development in other medium-tailed and short-tailed lines, including professional liability and surety business, across most accident years. The mortgage segment’s net favorable development was $38.6 million , or 12.8 loss ratio points, for the 2018 third quarter . The 2018 third quarter development was primarily driven by continued lower than expected claim rates on first lien business and subrogation recoveries on second lien business at Arch MI U.S. 2017 Third Quarter During the 2017 third quarter , the Company recorded net favorable development on prior year loss reserves of $45.2 million , which consisted of $36.5 million from the reinsurance segment, $3.0 million from the insurance segment, $21.5 million from the mortgage segment and adverse development of $15.8 million from the ‘other’ segment. The reinsurance segment’s net favorable development of $36.5 million , or 11.3 loss ratio points, for the 2017 third quarter consisted of $16.9 million from short-tailed lines and $19.6 million from long-tailed and medium-tailed lines. Favorable development in short-tailed lines included $11.8 million from property catastrophe and property other than property catastrophe reserves, across most underwriting years, reflecting lower levels of reported and paid claims activity than previously anticipated which led to decreases in certain loss ratio selections during the period. Favorable development in long-tailed and medium-tailed lines reflected reductions in casualty reserves of $13.4 million based on varying levels of reported and paid claims activity, primarily from the 2002 to 2009 underwriting years, and favorable development in marine reserves of $4.3 million across most underwriting years. The insurance segment’s net favorable development of $3.0 million , or 0.6 loss ratio points, for the 2017 third quarter consisted of $1.8 million of net favorable development in short-tailed lines and $1.2 million of net favorable development in medium-tailed and long-tailed lines. Net favorable development in short-tailed lines primarily resulted from property (including special risk other than marine) reserves from the 2011 to 2016 accident years. Net favorable development in medium-tailed lines reflected $11.9 million from professional liability reserves across most accident years and in surety reserves with $4.2 million of favorable development. Such amounts were partially offset by $12.9 million of adverse development on a small number of programs in the 2014 to 2016 accident years. The mortgage segment’s net favorable development was $21.5 million , or 7.8 loss ratio points, for the 2017 third quarter . The 2017 third quarter development was primarily driven by continued lower than expected claim rates on first lien business and subrogation recoveries on second lien business at Arch MI U.S. Nine Months Ended September 30, 2018 During the nine months ended September 30, 2018 , the Company recorded net favorable development on prior year loss reserves of $195.2 million , which consisted of $103.9 million from the reinsurance segment, $14.1 million from the insurance segment, $74.9 million from the mortgage segment and $2.3 million from the ‘other’ segment. The reinsurance segment’s net favorable development of $103.9 million , or 11.4 loss ratio points, for the 2018 period consisted of $77.6 million from short-tailed lines and $26.3 million from long-tailed and medium-tailed lines. Favorable development in short-tailed lines included $56.4 million from property catastrophe and property other than property catastrophe reserves, across most underwriting years, reflecting lower levels of reported and paid claims activity than previously anticipated which led to decreases in certain loss ratio selections during the period, and $10.7 million from other specialty reserves, across most underwriting years. Favorable development in long-tailed and medium-tailed lines reflected reductions in casualty reserves of $16.0 million based on varying levels of reported and paid claims activity, primarily from the 2002 to 2010 underwriting years, and favorable development in marine reserves of $10.8 million across most underwriting years. The insurance segment’s net favorable development of $14.1 million , or 0.9 loss ratio points, for the 2018 period consisted of $37.0 million of net favorable development in short-tailed lines and $16.4 million of net favorable development in long-tailed lines, partially offset by $39.3 million of net adverse development in medium-tailed lines. Net favorable development in short-tailed lines primarily resulted from property (including special risk other than marine) reserves from the 2010 and 2017 accident years. Net favorable development in long-tailed lines reflected net reductions in executive assurance reserves of $8.0 million , primarily from the 2008 accident year, and in healthcare reserves of $8.1 million , primarily from the 2003 accident year. Net adverse development in medium-tailed lines reflected $23.4 million of adverse development in program business, primarily driven by a few inactive programs that were non-renewed in prior periods and $42.1 million of adverse development on contract binding business, primarily from the 2014 to 2017 accident years. Such amounts were partially offset by $26.2 million of net favorable development in other medium-tailed lines, including professional liability and surety business, across most accident years. The mortgage segment’s net favorable development was $74.9 million , or 8.6 loss ratio points, for the 2018 period. The 2018 development was primarily driven by continued lower than expected claim rates on first lien business and subrogation recoveries on second lien business at Arch MI U.S. Nine Months Ended September 30, 2017 During the nine months ended September 30, 2017, the Company recorded net favorable development on prior year loss reserves of $197.8 million , which consisted of $133.3 million from the reinsurance segment, $7.2 million from the insurance segment, $74.9 million from the mortgage segment and adverse development of $17.5 million from the ‘other’ segment. The reinsurance segment’s net favorable development of $133.3 million , or 15.1 points, for the 2017 period consisted of $85.8 million from short-tailed lines and $47.5 million from long-tailed and medium-tailed lines. Favorable development in short-tailed lines included $62.7 million from property catastrophe and property other than property catastrophe reserves, across most underwriting years, reflecting lower levels of reported and paid claims activity than previously anticipated which led to decreases in certain loss ratio selections during the period, and $20.3 million from other specialty reserves, primarily from the 2016 underwriting year. Favorable development in long-tailed and medium-tailed lines reflected reductions in casualty reserves of $28.0 million based on varying levels of reported and paid claims activity, primarily from the 2002 to 2013 underwriting years, and favorable development in marine reserves of $16.6 million across most underwriting years. The insurance segment’s net favorable development of $7.2 million , or 0.5 points, for the 2017 period consisted of $9.0 million of net favorable development in short-tailed lines and $7.4 million of net favorable development in long-tailed lines, partially offset by $9.2 million of net adverse development in medium-tailed lines. Net favorable development in short-tailed lines primarily resulted from property (including special risk other than marine) reserves from the 2011 to 2016 accident years. Net favorable development in long-tailed lines reflected net reductions in executive assurance reserves from the 2008 to 2014 accident years and reductions in healthcare reserves across various accident years, partially offset by $17.2 million of adverse development on construction reserves across various accident years. Net adverse development in medium-tailed lines primarily resulted from an increase in programs of $39.3 million stemming in part from development on a small number of programs in the 2013 to 2015 accident years, partially offset by net favorable development of $30.1 million in other medium-tailed lines, primarily in professional liability and surety. The mortgage segment’s net favorable development was $74.9 million , or 9.6 points, for the 2017 period. The 2017 development was primarily driven by continued lower than expected claim rates on first lien business and subrogation recoveries on second lien business at Arch MI U.S. |
Investment Information
Investment Information | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Investment Information [Abstract] | |
Investment Information | Investment Information At September 30, 2018 , total investable assets of $22.32 billion included $19.59 billion held by the Company and $2.73 billion attributable to Watford Re. Available For Sale Investments The following table summarizes the fair value and cost or amortized cost of the Company’s securities classified as available for sale: Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost or Amortized Cost OTTI Unrealized Losses (2) September 30, 2018 Fixed maturities (1): Corporate bonds $ 5,639,800 $ 7,363 $ (95,474 ) $ 5,727,911 $ (69 ) Mortgage backed securities 468,254 1,412 (7,772 ) 474,614 (6 ) Municipal bonds 1,222,440 4,236 (26,460 ) 1,244,664 — Commercial mortgage backed securities 682,516 578 (15,062 ) 697,000 — U.S. government and government agencies 3,276,243 1,499 (29,013 ) 3,303,757 — Non-U.S. government securities 1,722,606 13,917 (40,094 ) 1,748,783 — Asset backed securities 1,606,473 2,749 (13,450 ) 1,617,174 — Total 14,618,332 31,754 (227,325 ) 14,813,903 (75 ) Equity securities (3) Other investments — — — — — Short-term investments 961,799 195 (389 ) 961,993 — Total $ 15,580,131 $ 31,949 $ (227,714 ) $ 15,775,896 $ (75 ) December 31, 2017 Fixed maturities (1): Corporate bonds $ 4,434,439 $ 30,943 $ (32,340 ) $ 4,435,836 $ (73 ) Mortgage backed securities 316,141 1,640 (2,561 ) 317,062 (15 ) Municipal bonds 2,158,840 20,285 (12,308 ) 2,150,863 — Commercial mortgage backed securities 545,817 2,131 (4,268 ) 547,954 — U.S. government and government agencies 3,484,257 2,188 (28,769 ) 3,510,838 — Non-U.S. government securities 1,612,754 48,764 (17,321 ) 1,581,311 — Asset backed securities 1,780,143 5,147 (8,614 ) 1,783,610 — Total 14,332,391 111,098 (106,181 ) 14,327,474 (88 ) Equity securities 504,333 88,739 (5,583 ) 421,177 — Other investments 264,989 66,946 (120 ) 198,163 — Short-term investments 1,469,042 650 (563 ) 1,468,955 — Total $ 16,570,755 $ 267,433 $ (112,447 ) $ 16,415,769 $ (88 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” (2) Represents the total other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income (“AOCI”). It does not include the change in fair value subsequent to the impairment measurement date. At September 30, 2018 , the net unrealized gain related to securities for which a non-credit OTTI was recognized in AOCI was $0.2 million , compared to a net unrealized gain of $0.3 million at December 31, 2017 . (3) Effective January 1, 2018, the Company adopted new accounting guidance for financial instruments (see Note 1 ). As a result, equity securities are no longer accounted for as available for sale and are excluded from this table. The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position: Less than 12 Months 12 Months or More Total Estimated Gross Unrealized Losses Estimated Gross Unrealized Losses Estimated Gross Unrealized Losses September 30, 2018 Fixed maturities (1): Corporate bonds $ 4,517,581 $ (75,830 ) $ 483,379 $ (19,644 ) $ 5,000,960 $ (95,474 ) Mortgage backed securities 402,443 (6,721 ) 26,414 (1,051 ) 428,857 (7,772 ) Municipal bonds 744,018 (16,808 ) 198,243 (9,652 ) 942,261 (26,460 ) Commercial mortgage backed securities 499,307 (8,745 ) 103,813 (6,317 ) 603,120 (15,062 ) U.S. government and government agencies 2,818,235 (22,512 ) 214,570 (6,501 ) 3,032,805 (29,013 ) Non-U.S. government securities 1,289,557 (29,224 ) 299,654 (10,870 ) 1,589,211 (40,094 ) Asset backed securities 1,176,057 (11,096 ) 139,349 (2,354 ) 1,315,406 (13,450 ) Total 11,447,198 (170,936 ) 1,465,422 (56,389 ) 12,912,620 (227,325 ) Equity securities (2) Other investments — — — — — — Short-term investments 189,378 (389 ) — — 189,378 (389 ) Total $ 11,636,576 $ (171,325 ) $ 1,465,422 $ (56,389 ) $ 13,101,998 $ (227,714 ) December 31, 2017 Fixed maturities (1): Corporate bonds $ 2,320,716 $ (25,411 ) $ 279,082 $ (6,929 ) $ 2,599,798 $ (32,340 ) Mortgage backed securities 221,113 (1,715 ) 28,380 (846 ) 249,493 (2,561 ) Municipal bonds 1,030,389 (8,438 ) 132,469 (3,870 ) 1,162,858 (12,308 ) Commercial mortgage backed securities 225,164 (1,899 ) 57,291 (2,369 ) 282,455 (4,268 ) U.S. government and government agencies 2,646,415 (26,501 ) 111,879 (2,268 ) 2,758,294 (28,769 ) Non-U.S. government securities 1,218,514 (15,546 ) 93,530 (1,775 ) 1,312,044 (17,321 ) Asset backed securities 1,111,246 (5,915 ) 209,207 (2,699 ) 1,320,453 (8,614 ) Total 8,773,557 (85,425 ) 911,838 (20,756 ) 9,685,395 (106,181 ) Equity securities 166,562 (5,583 ) — — 166,562 (5,583 ) Other investments 15,025 (120 ) — — 15,025 (120 ) Short-term investments 109,528 (563 ) — — 109,528 (563 ) Total $ 9,064,672 $ (91,691 ) $ 911,838 $ (20,756 ) $ 9,976,510 $ (112,447 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” (2) Effective January 1, 2018, the Company adopted new accounting guidance for financial instruments (see Note 1 ). As a result, equity securities are no longer accounted for as available for sale and are excluded from this table. At September 30, 2018 , on a lot level basis, approximately 5,610 security lots out of a total of approximately 7,690 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $2.4 million . At December 31, 2017 , on a lot level basis, approximately 3,830 security lots out of a total of approximately 7,450 security lots were in an unrealized loss position and the largest single unrealized loss from a single lot in the Company’s fixed maturity portfolio was $1.3 million . The contractual maturities of the Company’s fixed maturities are shown in the following table. Expected maturities, which are management’s best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. September 30, 2018 December 31, 2017 Maturity Estimated Fair Value Amortized Cost Estimated Amortized Cost Due in one year or less $ 330,506 $ 331,010 $ 550,711 $ 548,771 Due after one year through five years 8,334,661 8,431,730 7,436,153 7,434,801 Due after five years through 10 years 2,910,493 2,972,893 3,369,635 3,369,750 Due after 10 years 285,429 289,482 333,791 325,526 11,861,089 12,025,115 11,690,290 11,678,848 Mortgage backed securities 468,254 474,614 316,141 317,062 Commercial mortgage backed securities 682,516 697,000 545,817 547,954 Asset backed securities 1,606,473 1,617,174 1,780,143 1,783,610 Total (1) $ 14,618,332 $ 14,813,903 $ 14,332,391 $ 14,327,474 (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” Securities Lending Agreements The Company enters into securities lending agreements with financial institutions to enhance investment income whereby it loans certain of its securities to third parties, primarily major brokerage firms, for short periods of time through a lending agent. The Company maintains legal control over the securities it lends, retains the earnings and cash flows associated with the loaned securities and receives a fee from the borrower for the temporary use of the securities. An indemnification agreement with the lending agent protects the Company in the event a borrower becomes insolvent or fails to return any of the securities on loan from the Company. The Company receives collateral in the form of cash or securities. Cash collateral primarily consists of short term investments. At September 30, 2018 , the fair value of the cash collateral received on securities lending was $62.8 million and the fair value of security collateral received was $244.1 million . At December 31, 2017 , the fair value of the cash collateral received on securities lending was $199.9 million , and the fair value of security collateral received was $276.7 million . The Company’s securities lending transactions were accounted for as secured borrowings with significant investment categories as follows: Remaining Contractual Maturity of the Agreements Overnight and Continuous Less than 30 Days 30-90 Days 90 Days or More Total September 30, 2018 U.S. government and government agencies $ 116,389 $ — $ 155,273 $ — $ 271,662 Corporate bonds 22,267 — — — 22,267 Equity securities 12,957 — — — 12,957 Total $ 151,613 $ — $ 155,273 $ — $ 306,886 Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 8 $ — Amounts related to securities lending not included in offsetting disclosure in Note 8 $ 306,886 December 31, 2017 U.S. government and government agencies $ 343,425 $ 20,309 $ 76,086 $ — $ 439,820 Corporate bonds 28,003 — — — 28,003 Equity securities 8,782 — — — 8,782 Total $ 380,210 $ 20,309 $ 76,086 $ — $ 476,605 Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 8 $ — Amounts related to securities lending not included in offsetting disclosure in Note 8 $ 476,605 Equity Securities, at Fair Value At September 30, 2018 , the Company held $444.1 million of equity securities, at fair value, compared to $495.8 million at December 31, 2017 . Such holdings include publicly traded common stocks in the natural resources, energy, consumer staples and other sectors. Pursuant to new accounting guidance (see Note 1 ), changes in fair value on equity securities are recorded through net income effective January 1, 2018. Other Investments The following table summarizes the Company’s other investments, including available for sale and fair value option components: September 30, December 31, Available for sale securities: Asian and emerging markets $ — $ 135,140 Investment grade fixed income — 53,878 Credit related funds — 18,365 Other — 57,606 Total available for sale (1) — 264,989 Fair value option: Term loan investments (par value: $1,376,013 and $1,223,453) $ 1,351,098 $ 1,200,882 Mezzanine debt funds 241,968 252,160 Credit related funds 200,226 175,422 Investment grade fixed income 97,347 102,347 Asian and emerging markets 330,999 258,541 Other (2) 120,038 147,029 Total fair value option 2,341,676 2,136,381 Total $ 2,341,676 $ 2,401,370 (1) The Company reviewed the accounting treatment for three limited partnership investments which were accounted for as available for sale at December 31, 2017 during the 2018 first quarter and determined, based on reconsideration during the period of the Company’s percentage ownership, that the equity method of accounting was appropriate for such investments. (2) Includes fund investments with strategies in mortgage servicing rights, transportation, infrastructure assets and other. Certain of the Company’s other investments are in investment funds for which the Company has the option to redeem at agreed upon values as described in each investment fund’s subscription agreement. Depending on the terms of the various subscription agreements, investments in investment funds may be redeemed daily, monthly, quarterly or on other terms. Two common redemption restrictions which may impact the Company’s ability to redeem these investment funds are gates and lockups. A gate is a suspension of redemptions which may be implemented by the general partner or investment manager of the fund in order to defer, in whole or in part, the redemption request in the event the aggregate amount of redemption requests exceeds a predetermined percentage of the investment fund’s net assets which may otherwise hinder the general partner or investment manager’s ability to liquidate holdings in an orderly fashion in order to generate the cash necessary to fund extraordinarily large redemption payouts. A lockup period is the initial amount of time an investor is contractually required to hold the security before having the ability to redeem. If the investment funds are eligible to be redeemed, the time to redeem such fund can take weeks or months following the notification. Fair Value Option The following table summarizes the Company’s assets and liabilities which are accounted for using the fair value option: September 30, December 31, Fixed maturities $ 1,374,453 $ 1,642,855 Other investments 2,341,676 2,136,381 Short-term investments 248,834 297,426 Equity securities 132,772 139,575 Investments accounted for using the fair value option $ 4,097,735 $ 4,216,237 Limited Partnership Interests In the normal course of its activities, the Company invests in limited partnerships as part of its overall investment strategy. Such amounts are included in ‘investments accounted for using the equity method’ and ‘investments accounted for using the fair value option.’ The Company has determined that it is not required to consolidate these investments because it is not the primary beneficiary of the funds. The Company’s maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the Company’s consolidated balance sheet and any unfunded commitment. The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item: September 30, December 31, Investments accounted for using the equity method (1) 1,524,242 1,041,322 Investments accounted for using the fair value option (2) 167,860 130,471 Total $ 1,692,102 $ 1,171,793 (1) Aggregate unfunded commitments were $1.04 billion at September 30, 2018 , compared to $1.02 billion at December 31, 2017 . (2) Aggregate unfunded commitments were $111.1 million at September 30, 2018 , compared to $100.4 million at December 31, 2017 . Net Investment Income The components of net investment income were derived from the following sources: September 30, 2018 2017 Three Months Ended Fixed maturities $ 120,516 $ 96,144 Equity securities 3,165 2,887 Short-term investments 4,547 2,957 Other (1) 39,098 37,957 Gross investment income 167,326 139,945 Investment expenses (23,302 ) (23,486 ) Net investment income $ 144,024 $ 116,459 Nine Months Ended Fixed maturities $ 343,513 $ 284,807 Equity securities 10,510 9,184 Short-term investments 13,799 6,732 Other (1) 114,640 111,613 Gross investment income 482,462 412,336 Investment expenses (76,046 ) (66,879 ) Net investment income $ 406,416 $ 345,457 (1) Includes income distributions from investment funds, term loan investments and other items. Equity in Net Income (Loss) of Investment Funds Accounted for Using the Equity Method The Company recorded $16.0 million of equity in net income related to investment funds accounted for using the equity method in the 2018 third quarter , compared to $31.1 million for the 2017 third quarter , and $52.5 million for the nine months ended September 30, 2018 , compared to $111.9 million for the 2017 period. In applying the equity method, investments are initially recorded at cost and are subsequently adjusted based on the Company’s proportionate share of the net income or loss of the funds (which include changes in the market value of the underlying securities in the funds). Such investments are generally recorded on a one to three month lag based on the availability of reports from the investment funds. Net Realized Gains (Losses) Net realized gains (losses) were as follows, excluding net impairment losses recognized in earnings: September 30, 2018 2017 Three Months Ended Available for sale securities: Gross gains on investment sales $ 10,990 $ 66,565 Gross losses on investment sales (34,879 ) (39,015 ) Change in fair value of assets and liabilities accounted for using the fair value option: Fixed maturities (6,604 ) 4,035 Other investments (7,950 ) 24,264 Equity securities 2,752 10,230 Short-term investments (471 ) (3,320 ) Equity securities, at fair value (1): Net realized gains (losses) on sales during the period (2,012 ) — Net unrealized gains (losses) on equity securities still held at reporting date 10,798 — Derivative instruments (2) (17,556 ) 4,298 Other (3) (6,773 ) (782 ) Net realized gains (losses) $ (51,705 ) $ 66,275 Nine Months Ended Available for sale securities: Gross gains on investment sales $ 44,732 $ 212,470 Gross losses on investment sales (175,141 ) (152,996 ) Change in fair value of assets and liabilities accounted for using the fair value option: Fixed maturities (47,082 ) 34,232 Other investments (14,578 ) 42,149 Equity securities 10,650 16,604 Short-term investments (758 ) 12 Equity securities, at fair value (1): Net realized gains (losses) on sales during the period (13,298 ) — Net unrealized gains (losses) on equity securities still held at reporting date (4,063 ) — Derivative instruments (2) (23,665 ) (9,653 ) Other (3) (16,111 ) (20,655 ) Net realized gains (losses) $ (239,314 ) $ 122,163 (1) Pursuant to new accounting guidance (see Note 1 ), changes in fair value on equity securities are recorded through net income effective January 1, 2018. (2) See Note 8 for information on the Company’s derivative instruments. (3) Includes the re-measurement of contingent consideration liability amounts. Net Impairment Losses Recognized in Earnings The Company performs quarterly reviews of its available for sale investments in order to determine whether declines in fair value below the amortized cost basis were considered other-than-temporary in accordance with applicable guidance. The following table details the net impairment losses recognized in earnings by asset class: September 30, 2018 2017 Three Months Ended Fixed maturities: Mortgage backed securities $ (73 ) $ (50 ) Corporate bonds (270 ) (82 ) Non-U.S. government securities (149 ) (178 ) U.S. government and government agencies — (426 ) Municipal bonds — (202 ) Total (492 ) (938 ) Equity securities — (940 ) Net impairment losses recognized in earnings $ (492 ) $ (1,878 ) Nine Months Ended Fixed maturities: Mortgage backed securities $ (196 ) $ (1,461 ) Corporate bonds (631 ) (1,484 ) Non-U.S. government securities (149 ) (376 ) Asset backed securities (148 ) — U.S. government and government agencies — (426 ) Municipal bonds — (375 ) Total (1,124 ) (4,122 ) Equity securities — (1,126 ) Other investments — (167 ) Net impairment losses recognized in earnings $ (1,124 ) $ (5,415 ) Net impairment losses recognized in earnings in the 2018 periods reflected foreign currency impacts and other reductions on corporate bonds and other securities. The Company believes that the $0.1 million of OTTI included in accumulated other comprehensive income at September 30, 2018 on the securities which were considered by the Company to be impaired was due to market and sector-related factors ( i.e. , not credit losses). At September 30, 2018 , the Company did not intend to sell these securities, or any other securities which were in an unrealized loss position, and determined that it is more likely than not that the Company will not be required to sell such securities before recovery of their cost basis. The following table provides a roll forward of the amount related to credit losses recognized in earnings for which a portion of an OTTI was recognized in accumulated other comprehensive income: September 30, 2018 2017 Three Months Ended Balance at start of period $ 698 $ 4,437 Credit loss impairments recognized on securities not previously impaired — — Credit loss impairments recognized on securities previously impaired — 15 Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security — — Reductions for securities sold during the period (47 ) (689 ) Balance at end of period $ 651 $ 3,763 Nine Months Ended Balance at start of year $ 767 $ 13,138 Credit loss impairments recognized on securities not previously impaired — 31 Credit loss impairments recognized on securities previously impaired — 210 Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security — — Reductions for securities sold during the period (116 ) (9,616 ) Balance at end of period $ 651 $ 3,763 Restricted Assets The Company is required to maintain assets on deposit, which primarily consist of fixed maturities, with various regulatory authorities to support its operations. The Company’s subsidiaries maintain assets in trust accounts as collateral for transactions with affiliated companies and also have investments in segregated portfolios primarily to provide collateral or guarantees for letters of credit to third parties. See note 16, “Commitments and Contingencies,” of the notes to consolidated financial statements in the Company’s 2017 Form 10-K. The following table details the value of the Company’s restricted assets: September 30, December 31, Assets used for collateral or guarantees: Affiliated transactions $ 4,235,515 $ 4,323,726 Third party agreements 2,094,952 1,674,304 Deposits with U.S. regulatory authorities 688,574 616,987 Deposits with non-U.S. regulatory authorities 61,210 55,895 Total restricted assets $ 7,080,251 $ 6,670,912 Reconciliation of Cash and Restricted Cash The following table details reconciliation of cash and restricted cash within the Consolidated Balance Sheets: September 30, December 31, Cash $ 651,037 $ 606,199 Restricted cash (included in ‘other assets’) $ 58,782 $ 121,085 Cash and restricted cash $ 709,819 $ 727,284 |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value Accounting guidance regarding fair value measurements addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP and provides a common definition of fair value to be used throughout GAAP. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. In addition, it establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The level in the hierarchy within which a given fair value measurement falls is determined based on the lowest level input that is significant to the measurement (Level 1 being the highest priority and Level 3 being the lowest priority). The levels in the hierarchy are defined as follows: Level 1: Inputs to the valuation methodology are observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets Level 2: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement Following is a description of the valuation methodologies used for securities measured at fair value, as well as the general classification of such securities pursuant to the valuation hierarchy. The Company reviews its securities measured at fair value and discusses the proper classification of such investments with investment advisers and others. The Company determines the existence of an active market based on its judgment as to whether transactions for the financial instrument occur in such market with sufficient frequency and volume to provide reliable pricing information. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. The Company uses quoted values and other data provided by nationally recognized independent pricing sources as inputs into its process for determining fair values of its fixed maturity investments. To validate the techniques or models used by pricing sources, the Company's review process includes, but is not limited to: (i) quantitative analysis (e.g., comparing the quarterly return for each managed portfolio to its target benchmark, with significant differences identified and investigated); (ii) a review of the average number of prices obtained in the pricing process and the range of resulting fair values; (iii) initial and ongoing evaluation of methodologies used by outside parties to calculate fair value; (iv) a comparison of the fair value estimates to the Company’s knowledge of the current market; (v) a comparison of the pricing services' fair values to other pricing services' fair values for the same investments; and (vi) periodic back-testing, which includes randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates from the pricing service. A price source hierarchy was maintained in order to determine which price source would be used (i.e. , a price obtained from a pricing service with more seniority in the hierarchy will be used over a less senior one in all cases). The hierarchy prioritizes pricing services based on availability and reliability and assigns the highest priority to index providers. Based on the above review, the Company will challenge any prices for a security or portfolio which are considered not to be representative of fair value. The Company did not adjust any of the prices obtained from the independent pricing sources at September 30, 2018 . In certain circumstances, when fair values are unavailable from these independent pricing sources, quotes are obtained directly from broker-dealers who are active in the corresponding markets. Such quotes are subject to the validation procedures noted above. Of the $20.30 billion of financial assets and liabilities measured at fair value at September 30, 2018 , approximately $212.2 million , or 1.1% , were priced using non-binding broker-dealer quotes. Of the $20.92 billion of financial assets and liabilities measured at fair value at December 31, 2017 , approximately $181.5 million , or 0.9% , were priced using non-binding broker-dealer quotes. Fixed maturities The Company uses the market approach valuation technique to estimate the fair value of its fixed maturity securities, when possible. The market approach includes obtaining prices from independent pricing services, such as index providers and pricing vendors, as well as to a lesser extent quotes from broker-dealers. The independent pricing sources obtain market quotations and actual transaction prices for securities that have quoted prices in active markets. Each source has its own proprietary method for determining the fair value of securities that are not actively traded. In general, these methods involve the use of “matrix pricing” in which the independent pricing source uses observable market inputs including, but not limited to, investment yields, credit risks and spreads, benchmarking of like securities, broker-dealer quotes, reported trades and sector groupings to determine a reasonable fair value. The following describes the significant inputs generally used to determine the fair value of the Company’s fixed maturity securities by asset class: • U.S. government and government agencies — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The Company determined that all U.S. Treasuries would be classified as Level 1 securities due to observed levels of trading activity, the high number of strongly correlated pricing quotes received on U.S. Treasuries and other factors. The fair values of U.S. government agency securities are generally determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads for these securities are observable market inputs, the fair values of U.S. government agency securities are classified within Level 2. • Corporate bonds — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined using the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. As the significant inputs used in the pricing process for corporate bonds are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. • Mortgage-backed securities — valuations provided by independent pricing services, substantially all through pricing vendors and index providers with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the expected average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. • Municipal bonds — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally determined using spreads obtained from broker-dealers who trade in the relevant security market, trade prices and the new issue market. As the significant inputs used in the pricing process for municipal bonds are observable market inputs, the fair value of these securities are classified within Level 2. • Commercial mortgage-backed securities — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for commercial mortgage-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. • Non-U.S. government securities — valuations provided by independent pricing services, with all prices provided through index providers and pricing vendors. The fair values of these securities are generally based on international indices or valuation models which include daily observed yield curves, cross-currency basis index spreads and country credit spreads. As the significant inputs used in the pricing process for non-U.S. government securities are observable market inputs, the fair value of these securities are classified within Level 2. • Asset-backed securities — valuations provided by independent pricing services, substantially all through index providers and pricing vendors with a small amount through broker-dealers. The fair values of these securities are generally determined through the use of pricing models (including Option Adjusted Spread) which use spreads to determine the appropriate average life of the securities. These spreads are generally obtained from the new issue market, secondary trading and from broker-dealers who trade in the relevant security market. The pricing services also review prepayment speeds and other indicators, when applicable. As the significant inputs used in the pricing process for asset-backed securities are observable market inputs, the fair value of these securities are classified within Level 2. A small number of securities are included in Level 3 due to a low level of transparency on the inputs used in the pricing process. Equity securities The Company determined that exchange-traded equity securities would be included in Level 1 as their fair values are based on quoted market prices in active markets. Other equity securities are included in Level 2 of the valuation hierarchy. Other investments The Company determined that exchange-traded investments in mutual funds would be included in Level 1 as their fair values are based on quoted market prices in active markets. Other investments also include term loan investments for which fair values are estimated by using quoted prices of term loan investments with similar characteristics, pricing models or matrix pricing. Such investments are generally classified within Level 2. The fair values for certain of the Company’s other investments are determined using net asset values as advised by external fund managers. The net asset value is based on the fund manager’s valuation of the underlying holdings in accordance with the fund’s governing documents. In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. A small number of securities are included in Level 3 due to the lack of an available independent price source for such securities. Derivative instruments The Company’s futures contracts, foreign currency forward contracts, interest rate swaps and other derivatives trade in the over-the-counter derivative market. The Company uses the market approach valuation technique to estimate the fair value for these derivatives based on significant observable market inputs from third party pricing vendors, non-binding broker-dealer quotes and/or recent trading activity. As the significant inputs used in the pricing process for these derivative instruments are observable market inputs, the fair value of these securities are classified within Level 2. Short-term investments The Company determined that certain of its short-term investments held in highly liquid money market-type funds, Treasury bills and commercial paper would be included in Level 1 as their fair values are based on quoted market prices in active markets. The fair values of other short-term investments are generally determined using the spread above the risk-free yield curve and are classified within Level 2. Contingent consideration liabilities Contingent consideration liabilities (included in ‘other liabilities’ in the consolidated balance sheets) include amounts related to the acquisition of CMG Mortgage Insurance Company and its affiliated mortgage insurance companies and other acquisitions. Such amounts are remeasured at fair value at each balance sheet date with changes in fair value recognized in ‘net realized gains (losses).’ To determine the fair value of contingent consideration liabilities, the Company estimates future payments using an income approach based on modeled inputs which include a weighted average cost of capital. The Company determined that contingent consideration liabilities would be included within Level 3. The following table presents the Company’s financial assets and liabilities measured at fair value by level at September 30, 2018 : Estimated Fair Value Measurements Using: Estimated Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 5,639,800 $ — $ 5,631,516 $ 8,284 Mortgage backed securities 468,254 — 467,923 331 Municipal bonds 1,222,440 — 1,222,440 — Commercial mortgage backed securities 682,516 — 682,502 14 U.S. government and government agencies 3,276,243 3,125,520 150,723 — Non-U.S. government securities 1,722,606 — 1,722,606 — Asset backed securities 1,606,473 — 1,606,473 — Total 14,618,332 3,125,520 11,484,183 8,629 Short-term investments 961,799 819,294 142,505 — Equity securities, at fair value 456,836 408,436 48,400 — Derivative instruments (4) 37,341 — 37,341 — Fair value option: Corporate bonds 912,927 — 903,321 9,606 Non-U.S. government bonds 105,019 — 105,019 — Mortgage backed securities 15,845 — 15,845 — Municipal bonds 7,037 — 7,037 — Commercial mortgage backed securities — — — — Asset backed securities 213,971 — 213,971 — U.S. government and government agencies 119,654 119,547 107 — Short-term investments 248,834 230,836 17,998 — Equity securities 132,772 67,441 65,331 — Other investments 1,303,349 49,579 1,190,839 62,931 Other investments measured at net asset value (2) 1,038,327 Total 4,097,735 467,403 2,519,468 72,537 Total assets measured at fair value $ 20,172,043 $ 4,820,653 $ 14,231,897 $ 81,166 Liabilities measured at fair value: Contingent consideration liabilities $ (65,641 ) $ — $ — $ (65,641 ) Securities sold but not yet purchased (3) (9,065 ) — (9,065 ) — Derivative instruments (4) (49,189 ) — (49,189 ) — Total liabilities measured at fair value $ (123,895 ) $ — $ (58,254 ) $ (65,641 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 6 , “Investment Information—Securities Lending Agreements.” (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See Note 8 , “Derivative Instruments.” The following table presents the Company’s financial assets and liabilities measured at fair value by level at December 31, 2017 : Estimated Fair Value Measurements Using: Estimated Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 4,434,439 $ — $ 4,424,979 $ 9,460 Mortgage backed securities 316,141 — 315,754 387 Municipal bonds 2,158,840 — 2,158,840 — Commercial mortgage backed securities 545,817 — 545,277 540 U.S. government and government agencies 3,484,257 3,408,902 75,355 — Non-U.S. government securities 1,612,754 — 1,612,754 — Asset backed securities 1,780,143 — 1,775,143 5,000 Total 14,332,391 3,408,902 10,908,102 15,387 Equity securities 504,333 498,182 6,151 — Short-term investments 1,469,042 1,420,732 48,310 — Other investments 76,427 74,611 1,816 — Other investments measured at net asset value (2) 188,562 Total other investments 264,989 74,611 1,816 — Derivative instruments (4) 15,747 — 15,747 — Fair value option: Corporate bonds 1,068,725 — 1,056,508 12,217 Non-U.S. government bonds 195,788 — 195,788 — Mortgage backed securities 20,491 — 20,491 — Municipal bonds 15,210 — 15,210 — Commercial mortgage backed securities 11,997 — 11,997 — Asset backed securities 99,354 — 99,354 — U.S. government and government agencies 231,290 231,019 271 — Short-term investments 297,426 40,166 257,260 — Equity securities 139,575 67,440 72,135 — Other investments 1,128,094 82,291 986,636 59,167 Other investments measured at net asset value (2) 1,008,287 Total 4,216,237 420,916 2,715,650 71,384 Total assets measured at fair value $ 20,802,739 $ 5,823,343 $ 13,695,776 $ 86,771 Liabilities measured at fair value: Contingent consideration liabilities $ (60,996 ) $ — $ — $ (60,996 ) Securities sold but not yet purchased (3) (34,375 ) — (34,375 ) — Derivative instruments (4) (20,464 ) — (20,464 ) — Total liabilities measured at fair value $ (115,835 ) $ — $ (54,839 ) $ (60,996 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 6 , “Investment Information—Securities Lending Agreements.” (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See Note 8 , “Derivative Instruments.” The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs: Assets Liabilities s Available For Sale Fair Value Option Structured Securities (1) Corporate Corporate Other Investments Total Contingent Consideration Liabilities Three Months Ended September 30, 2018 Balance at beginning of period $ 376 $ 8,773 $ 11,335 $ 58,214 $ 78,698 $ (63,930 ) Total gains or (losses) (realized/unrealized) Included in earnings (2) — (1 ) (503 ) (1,459 ) (1,963 ) (1,711 ) Included in other comprehensive income 2 (32 ) — — (30 ) — Purchases, issuances, sales and settlements Purchases — — — 6,250 6,250 — Issuances — — — — — — Sales — — — (74 ) (74 ) — Settlements (33 ) (456 ) (1,226 ) — (1,715 ) — Transfers in and/or out of Level 3 — — — — — — Balance at end of period $ 345 $ 8,284 $ 9,606 $ 62,931 $ 81,166 $ (65,641 ) Three Months Ended September 30, 2017 Balance at beginning of period $ — $ 11,570 $ — $ 25,000 $ 36,570 $ (57,246 ) Total gains or (losses) (realized/unrealized) Included in earnings (2) — — — — — (2,002 ) Included in other comprehensive income — 289 — — 289 — Purchases, issuances, sales and settlements Purchases — — — 1,348 1,348 — Issuances — — — — — — Sales — — — — — — Settlements — — — — — — Transfers in and/or out of Level 3 5,949 132 11,471 4,798 22,350 — Balance at end of period $ 5,949 $ 11,991 $ 11,471 $ 31,146 $ 60,557 $ (59,248 ) Nine Months Ended September 30, 2018 Balance at beginning of year $ 5,927 $ 9,460 $ 12,217 $ 59,167 $ 86,771 $ (60,996 ) Total gains or (losses) (realized/unrealized) Included in earnings (2) 4 (1 ) (1,115 ) (1,838 ) (2,950 ) (4,645 ) Included in other comprehensive income (6 ) (200 ) — — (206 ) — Purchases, issuances, sales and settlements Purchases — 393 — 6,250 6,643 — Issuances — — — — — — Sales (5,003 ) — — (148 ) (5,151 ) — Settlements (577 ) (1,368 ) (1,496 ) (500 ) (3,941 ) — Transfers in and/or out of Level 3 — — — — — — Balance at end of period $ 345 $ 8,284 $ 9,606 $ 62,931 $ 81,166 $ (65,641 ) Nine Months Ended September 30, 2017 Balance at beginning of year $ 11,289 $ 18,344 $ — $ 25,000 $ 54,633 $ (122,350 ) Total gains or (losses) (realized/unrealized) Included in earnings (2) 3,779 893 — — 4,672 (9,089 ) Included in other comprehensive income — 289 — — 289 — Purchases, issuances, sales and settlements Purchases — 4,935 — 1,348 6,283 — Issuances — — — — — — Sales (13,640 ) (12,602 ) — — (26,242 ) — Settlements (1,428 ) — — — (1,428 ) 72,191 Transfers in and/or out of Level 3 5,949 132 11,471 4,798 22,350 — Balance at end of period $ 5,949 $ 11,991 $ 11,471 $ 31,146 $ 60,557 $ (59,248 ) (1) Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities. (2) Gains or losses were included in net realized gains (losses). Financial Instruments Disclosed, But Not Carried, At Fair Value The Company uses various financial instruments in the normal course of its business. The carrying values of cash, accrued investment income, receivable for securities sold, certain other assets, payable for securities purchased and certain other liabilities approximated their fair values at September 30, 2018 , due to their respective short maturities. As these financial instruments are not actively traded, their respective fair values are classified within Level 2. At September 30, 2018 , the Company’s senior notes were carried at their cost, net of debt issuance costs, of $1.73 billion and had a fair value of $1.88 billion . At December 31, 2017 , Company’s senior notes were carried at their cost, net of debt issuance costs, of $1.73 billion and had a fair value of $2.04 billion . The fair values of the senior notes were obtained from a third party pricing service and are based on observable market inputs. As such, the fair values of the senior notes are classified within Level 2. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company’s investment strategy allows for the use of derivative instruments. The Company’s derivative instruments are recorded on its consolidated balance sheets at fair value. The Company utilizes exchange traded U.S. Treasury note, Eurodollar and other futures contracts and commodity futures to manage portfolio duration or replicate investment positions in its portfolios and the Company routinely utilizes foreign currency forward contracts, currency options, index futures contracts and other derivatives as part of its total return objective. In addition, certain of the Company’s investments are managed in portfolios which incorporate the use of foreign currency forward contracts which are intended to provide an economic hedge against foreign currency movements. In addition, the Company purchases to-be-announced mortgage backed securities (“TBAs”) as part of its investment strategy. TBAs represent commitments to purchase a future issuance of agency mortgage backed securities. For the period between purchase of a TBA and issuance of the underlying security, the Company’s position is accounted for as a derivative. The Company purchases TBAs in both long and short positions to enhance investment performance and as part of its overall investment strategy. The following table summarizes information on the fair values and notional values of the Company’s derivative instruments: Estimated Fair Value Asset Derivatives Liability Derivatives Notional Value (1) September 30, 2018 Futures contracts (2) $ 2,794 $ (14,085 ) $ 1,547,523 Foreign currency forward contracts (2) 8,203 (7,490 ) 1,315,080 TBAs (3) 25,207 — 24,964 Other (2) 26,344 (27,614 ) 2,220,054 Total $ 62,548 $ (49,189 ) December 31, 2017 Futures contracts (2) $ 3,371 $ (1,542 ) $ 1,452,497 Foreign currency forward contracts (2) 4,478 (4,381 ) 686,941 TBAs (3) 27,184 — 27,066 Other (2) 7,898 (14,541 ) 1,457,345 Total $ 42,931 $ (20,464 ) (1) Represents the absolute notional value of all outstanding contracts, consisting of long and short positions. (2) The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’ (3) The fair value of TBAs are included in ‘fixed maturities available for sale, at fair value.’ The Company did not hold any derivatives which were designated as hedging instruments at September 30, 2018 or December 31, 2017 . The Company’s derivative instruments can be traded under master netting agreements, which establish terms that apply to all derivative transactions with a counterparty. In the event of a bankruptcy or other stipulated event of default, such agreements provide that the non-defaulting party may elect to terminate all outstanding derivative transactions, in which case all individual derivative positions (loss or gain) with a counterparty are closed out and netted and replaced with a single amount, usually referred to as the termination amount, which is expressed in a single currency. The resulting single net amount, where positive, is payable to the party “in-the-money” regardless of whether or not it is the defaulting party, unless the parties have agreed that only the non-defaulting party is entitled to receive a termination payment where the net amount is positive and is in its favor. Contractual close-out netting reduces derivatives credit exposure from gross to net exposure. The remaining derivatives included in the table above were not subject to a master netting agreement. At September 30, 2018 , asset derivatives and liability derivatives of $60.4 million and $31.9 million , respectively, were subject to a master netting agreement, compared to $40.6 million and $19.6 million , respectively, at December 31, 2017 . The remaining derivatives included in the preceding table were not subject to a master netting agreement. Realized and unrealized contract gains and losses on the Company’s derivative instruments are reflected in ‘net realized gains (losses)’ in the consolidated statements of income, as summarized in the following table: Derivatives not designated as September 30, hedging instruments: 2018 2017 Three Months Ended Net realized gains (losses): Futures contracts $ (15,399 ) $ 4,899 Foreign currency forward contracts (5,458 ) (228 ) TBAs (3 ) 122 Other 3,304 (495 ) Total $ (17,556 ) $ 4,298 Nine Months Ended Net realized gains (losses): Futures contracts $ (10,609 ) $ 7,309 Foreign currency forward contracts (13,074 ) (12,266 ) TBAs (100 ) 143 Other 118 (4,839 ) Total $ (23,665 ) $ (9,653 ) |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Investment Commitments The Company’s investment commitments, which are primarily related to agreements entered into by the Company to invest in funds and separately managed accounts when called upon, were approximately $1.57 billion at September 30, 2018 , compared to $1.70 billion at December 31, 2017 . Interest Paid Interest paid on the Company’s senior notes and other borrowings were $67.6 million for the nine months ended September 30, 2018 , compared to $64.6 million for the 2017 period. |
Variable Interest Entities and
Variable Interest Entities and Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Variable Interest Entity and Noncontrolling Interests | Variable Interest Entities and Noncontrolling Interests A variable interest entity (“VIE”) refers to an entity that has characteristics such as (i) insufficient equity at risk to allow the entity to finance its activities without additional financial support or (ii) instances where the equity investors, as a group, do not have characteristics of a controlling financial interest. The primary beneficiary of a VIE is defined as the variable interest holder that is determined to have the controlling financial interest as a result of having both (i) the power to direct the activities of a VIE that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. If a company is determined to be the primary beneficiary, it is required to consolidate the VIE in its financial statements. Watford Holdings Ltd. In March 2014, the Company invested $100.0 million and acquired approximately 11% of Watford Holdings Ltd.’s common equity and a warrant to purchase additional common equity. Watford Holdings Ltd. is the parent of Watford Re Ltd., a multi-line Bermuda reinsurance company (together with Watford Holdings Ltd., “Watford Re”). Watford Re is considered a VIE and the Company concluded that it is the primary beneficiary of Watford Re. As such, the results of Watford Re are included in the Company’s consolidated financial statements. The Company does not guarantee or provide credit support for Watford Re, and the Company’s financial exposure to Watford Re is limited to its investment in Watford Re’s common and preferred shares and counterparty credit risk (mitigated by collateral) arising from reinsurance transactions. The following table provides the carrying amount and balance sheet caption in which the assets and liabilities of Watford Re are reported: September 30, December 31, 2018 2017 Assets Investments accounted for using the fair value option $ 2,424,009 $ 2,426,066 Fixed maturities available for sale, at fair value 305,388 — Equity securities, at fair value 46,581 — Cash 64,684 54,503 Accrued investment income 17,650 18,261 Premiums receivable 217,582 177,492 Reinsurance recoverable on unpaid and paid losses and LAE 69,849 42,777 Ceded unearned premiums 63,772 24,762 Deferred acquisition costs 84,980 85,961 Receivable for securities sold 36,153 36,374 Goodwill and intangible assets 7,650 7,650 Other assets 81,152 140,808 Total assets of consolidated VIE $ 3,419,450 $ 3,014,654 Liabilities Reserves for losses and loss adjustment expenses $ 962,927 $ 798,262 Unearned premiums 407,957 330,644 Reinsurance balances payable 24,696 18,424 Revolving credit agreement borrowings 429,756 441,132 Payable for securities purchased 135,690 42,501 Other liabilities 252,171 215,186 Total liabilities of consolidated VIE $ 2,213,197 $ 1,846,149 Redeemable noncontrolling interests $ 220,899 $ 220,622 For the nine months ended September 30, 2018 , Watford Re generated $174.3 million of cash provided by operating activities, $208.3 million of cash used for investing activities and $24.2 million of cash used for financing activities, compared to $221.9 million of cash provided by operating activities, $386.8 million of cash used for investing activities and $152.5 million of cash provided by financing activities for the nine months ended September 30, 2017 . Non-redeemable noncontrolling interests The Company accounts for the portion of Watford Re’s common equity attributable to third party investors in the shareholders’ equity section of its consolidated balance sheets. The noncontrolling ownership in Watford Re’s common shares was approximately 89% at September 30, 2018 . The portion of Watford Re’s income or loss attributable to third party investors is recorded in the consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests.’ The following table sets forth activity in the non-redeemable noncontrolling interests: September 30, 2018 2017 Three Months Ended Balance, beginning of period $ 861,153 $ 877,456 Amounts attributable to noncontrolling interests 16,759 (16,147 ) Other comprehensive income attributable to noncontrolling interests (1,158 ) (411 ) Balance, end of period $ 876,754 $ 860,898 Nine Months Ended Balance, beginning of year $ 843,411 $ 851,854 Amounts attributable to noncontrolling interests 36,251 9,523 Other comprehensive income attributable to noncontrolling interests (2,908 ) (479 ) Balance, end of period $ 876,754 $ 860,898 Redeemable noncontrolling interests The Company accounts for redeemable noncontrolling interests in the mezzanine section of its consolidated balance sheets in accordance with applicable accounting guidance. Such redeemable noncontrolling interests relate to the 9,065,200 cumulative redeemable preference shares (“Watford Preference Shares”) issued in March 2014 with a par value of $0.01 per share and a liquidation preference of $25.00 per share. Preferred dividends, including the accretion of the discount and issuance costs, are included in ‘net (income) loss attributable to noncontrolling interests’ in the Company’s consolidated statements of income. The following table sets forth activity in the redeemable non-controlling interests: September 30, 2018 2017 Three Months Ended Balance, beginning of period $ 206,105 $ 205,736 Accretion of preference share issuance costs 94 93 Balance, end of period $ 206,199 $ 205,829 Nine Months Ended Balance, beginning of year $ 205,922 $ 205,553 Accretion of preference share issuance costs 277 276 Balance, end of period $ 206,199 $ 205,829 The portion of Watford Re’s income or loss attributable to third party investors, recorded in the Company’s consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests,’ are summarized in the table below: September 30, 2018 2017 Three Months Ended Amounts attributable to non-redeemable noncontrolling interests $ (16,759 ) $ 16,147 Dividends attributable to redeemable noncontrolling interests (4,599 ) (4,586 ) Net (income) loss attributable to noncontrolling interests $ (21,358 ) $ 11,561 Nine Months Ended Amounts attributable to non-redeemable noncontrolling interests $ (36,251 ) $ (9,523 ) Dividends attributable to redeemable noncontrolling interests (13,769 ) (13,756 ) Net (income) loss attributable to noncontrolling interests $ (50,020 ) $ (23,279 ) Bellemeade Re The Company has entered into various aggregate excess of loss reinsurance agreements with various special purpose reinsurance companies domiciled in Bermuda (the “Bellemeade Agreements”). At the time the Bellemeade Agreements were entered into, the applicability of the accounting guidance that addresses VIEs was evaluated. As a result of the evaluation of the Bellemeade Agreements, the Company concluded that these entities are VIEs. However, given that the ceding insurers do not have the unilateral power to direct those activities that are significant to their economic performance, the Company does not consolidate such entities in its consolidated financial statements. The following table presents total assets of the Bellemeade entities, as well as the Company’s maximum exposure to loss associated with these VIEs as of September 30, 2018 and December 31, 2017: Maximum Exposure to Loss Bellemeade Entities (Issue Date) Total VIE Assets On-Balance Sheet Off-Balance Sheet Total Sep 30, 2018 Bellemeade 2015-1 Ltd. (Jul-15) $ 59,729 $ 166 $ 314 $ 480 Bellemeade 2016-1 Ltd. (May-16) 31,765 4 28 32 Bellemeade 2017-1 Ltd. (Oct-17) 319,635 198 1,104 1,302 Bellemeade 2018-1 Ltd. (Apr-18) 374,460 32 1,194 1,226 Bellemeade 2018-2 Ltd. (Aug-18) 653,278 388 2,395 2,783 Total $ 1,438,867 $ 788 $ 5,035 $ 5,823 Dec 31, 2017 Bellemeade 2015-1 Ltd. (Jul-15) $ 92,390 $ 471 $ 832 $ 1,303 Bellemeade 2016-1 Ltd. (May-16) 135,201 20 527 547 Bellemeade 2017-1 Ltd. (Oct-17) 347,139 391 1,867 2,258 Total $ 574,730 $ 882 $ 3,226 $ 4,108 See Note 15 , “Subsequent Events.” |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2018 | |
Comprehensive Income Note Disclosure [Abstract] | |
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss): Amounts Reclassified from AOCI Consolidated Statement of Income Three Months Ended Nine Months Ended Details About Line Item That Includes September 30, September 30, AOCI Components Reclassification 2018 2017 2018 2017 Unrealized appreciation on available-for-sale investments Net realized gains (losses) $ (23,888 ) $ 27,550 $ (130,409 ) $ 59,474 Other-than-temporary impairment losses (492 ) (1,878 ) (1,124 ) (5,415 ) Total before tax (24,380 ) 25,672 (131,533 ) 54,059 Income tax (expense) benefit 1,177 (1,760 ) 9,226 (7,879 ) Net of tax $ (23,203 ) $ 23,912 $ (122,307 ) $ 46,180 Before Tax Amount Tax Expense (Benefit) Net of Tax Amount Three Months Ended September 30, 2018 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ (57,812 ) $ (4,504 ) $ (53,308 ) Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) — — — Less reclassification of net realized gains (losses) included in net income (24,380 ) (1,177 ) (23,203 ) Foreign currency translation adjustments 2,167 104 2,063 Other comprehensive income (loss) $ (31,265 ) $ (3,223 ) $ (28,042 ) Three Months Ended September 30, 2017 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 69,330 $ 2,868 $ 66,462 Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) — — — Less reclassification of net realized gains (losses) included in net income 25,672 1,760 23,912 Foreign currency translation adjustments 8,590 310 8,280 Other comprehensive income (loss) $ 52,248 $ 1,418 $ 50,830 Nine Months Ended September 30, 2018 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ (335,789 ) $ (30,533 ) $ (305,256 ) Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) — — — Less reclassification of net realized gains (losses) included in net income (131,533 ) (9,226 ) (122,307 ) Foreign currency translation adjustments (9,102 ) 148 (9,250 ) Other comprehensive income (loss) $ (213,358 ) $ (21,159 ) $ (192,199 ) Nine Months Ended September 30, 2017 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 288,813 $ 28,590 $ 260,223 Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) — — — Less reclassification of net realized gains (losses) included in net income 54,059 7,879 46,180 Foreign currency translation adjustments 30,264 563 29,701 Other comprehensive income (loss) $ 265,018 $ 21,274 $ 243,744 |
Guarantor Financial Information
Guarantor Financial Information | 9 Months Ended |
Sep. 30, 2018 | |
Condensed Financial Information Disclosure [Abstract] | |
Guarantor Financial Information | Guarantor Financial Information The following tables present condensed financial information for Arch Capital, Arch-U.S., a 100% owned subsidiary of Arch Capital, and Arch Capital’s other subsidiaries. September 30, 2018 Condensed Consolidating Balance Sheet Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Assets Total investments $ 183 $ 198,843 $ 21,482,102 $ (14,700 ) $ 21,666,428 Cash 8,058 52,784 590,195 — 651,037 Investments in subsidiaries 9,655,977 4,126,722 — (13,782,699 ) — Due from subsidiaries and affiliates 16 2 1,870,606 (1,870,624 ) — Premiums receivable — — 1,852,571 (545,105 ) 1,307,466 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses — — 8,264,202 (5,514,417 ) 2,749,785 Contractholder receivables — — 2,067,268 — 2,067,268 Ceded unearned premiums — — 1,809,979 (798,129 ) 1,011,850 Deferred acquisition costs — — 632,637 (59,650 ) 572,987 Goodwill and intangible assets — — 566,662 — 566,662 Other assets 11,966 30,477 1,759,537 (142,929 ) 1,659,051 Total assets $ 9,676,200 $ 4,408,828 $ 40,895,759 $ (22,728,253 ) $ 32,252,534 Liabilities Reserve for losses and loss adjustment expenses $ — $ — $ 16,847,736 $ (5,293,415 ) $ 11,554,321 Unearned premiums — — 4,666,508 (798,129 ) 3,868,379 Reinsurance balances payable — — 950,041 (545,105 ) 404,936 Contractholder payables — — 2,067,268 — 2,067,268 Collateral held for insured obligations — — 249,723 249,723 Senior notes 297,125 494,697 941,542 — 1,733,364 Revolving credit agreement borrowings — — 554,756 — 554,756 Due to subsidiaries and affiliates 3,386 542,365 1,324,873 (1,870,624 ) — Other liabilities 20,541 34,661 1,750,063 (423,579 ) 1,381,686 Total liabilities 321,052 1,071,723 29,352,510 (8,930,852 ) 21,814,433 Redeemable noncontrolling interests — — 220,899 (14,700 ) 206,199 Shareholders’ Equity Total shareholders’ equity available to Arch 9,355,148 3,337,105 10,445,596 (13,782,701 ) 9,355,148 Non-redeemable noncontrolling interests — — 876,754 — 876,754 Total shareholders’ equity 9,355,148 3,337,105 11,322,350 (13,782,701 ) 10,231,902 Total liabilities, noncontrolling interests and shareholders’ equity $ 9,676,200 $ 4,408,828 $ 40,895,759 $ (22,728,253 ) $ 32,252,534 December 31, 2017 Condensed Consolidating Balance Sheet Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Assets Total investments $ 96,540 $ 46,281 $ 21,711,891 $ (14,700 ) $ 21,840,012 Cash 9,997 30,380 565,822 — 606,199 Investments in subsidiaries 9,396,621 4,097,765 — (13,494,386 ) — Due from subsidiaries and affiliates 394 — 1,828,864 (1,829,258 ) — Premiums receivable — — 2,967,701 (1,832,452 ) 1,135,249 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses — — 8,442,192 (5,902,049 ) 2,540,143 Contractholder receivables — — 1,978,414 — 1,978,414 Ceded unearned premiums — — 2,165,789 (1,239,178 ) 926,611 Deferred acquisition costs — — 693,053 (157,229 ) 535,824 Goodwill and intangible assets — — 652,611 — 652,611 Other assets 13,176 49,585 1,860,505 (86,671 ) 1,836,595 Total assets $ 9,516,728 $ 4,224,011 $ 42,866,842 $ (24,555,923 ) $ 32,051,658 Liabilities Reserve for losses and loss adjustment expenses $ — $ — $ 17,236,401 $ (5,852,609 ) $ 11,383,792 Unearned premiums — — 4,861,491 (1,239,177 ) 3,622,314 Reinsurance balances payable — — 2,155,947 (1,832,451 ) 323,496 Contractholder payables — — 1,978,414 — 1,978,414 Collateral held for insured obligations — — 240,183 — 240,183 Senior notes 297,053 494,621 941,210 — 1,732,884 Revolving credit agreement borrowings — — 816,132 — 816,132 Due to subsidiaries and affiliates 235 536,919 1,292,104 (1,829,258 ) — Other liabilities 22,838 29,317 1,949,696 (293,343 ) 1,708,508 Total liabilities 320,126 1,060,857 31,471,578 (11,046,838 ) 21,805,723 Redeemable noncontrolling interests — — 220,622 (14,700 ) 205,922 Shareholders’ Equity Total shareholders’ equity available to Arch 9,196,602 3,163,154 10,331,231 (13,494,385 ) 9,196,602 Non-redeemable noncontrolling interests — — 843,411 — 843,411 Total shareholders’ equity 9,196,602 3,163,154 11,174,642 (13,494,385 ) 10,040,013 Total liabilities, noncontrolling interests and shareholders’ equity $ 9,516,728 $ 4,224,011 $ 42,866,842 $ (24,555,923 ) $ 32,051,658 Three Months Ended September 30, 2018 Condensed Consolidating Statement of Income and Comprehensive Income Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Revenues Net premiums earned $ — $ — $ 1,290,878 $ — $ 1,290,878 Net investment income 2 1,202 165,289 (22,469 ) 144,024 Net realized gains (losses) — (64 ) (51,641 ) — (51,705 ) Net impairment losses recognized in earnings — — (492 ) — (492 ) Other underwriting income — — 5,823 — 5,823 Equity in net income (loss) of investment funds accounted for using the equity method — — 15,982 — 15,982 Other income (loss) (195 ) — (531 ) — (726 ) Total revenues (193 ) 1,138 1,425,308 (22,469 ) 1,403,784 Expenses Losses and loss adjustment expenses — — 699,420 — 699,420 Acquisition expenses — — 201,602 — 201,602 Other operating expenses — — 161,098 — 161,098 Corporate expenses 15,170 446 (1,281 ) — 14,335 Amortization of intangible assets — — 26,315 — 26,315 Interest expense 5,536 12,075 34,276 (22,157 ) 29,730 Net foreign exchange (gains) losses — — (10,426 ) (412 ) (10,838 ) Total expenses 20,706 12,521 1,111,004 (22,569 ) 1,121,662 Income (loss) before income taxes (20,899 ) (11,383 ) 314,304 100 282,122 Income tax (expense) benefit — 2,276 (35,632 ) — (33,356 ) Income (loss) before equity in net income of subsidiaries (20,899 ) (9,107 ) 278,672 100 248,766 Equity in net income of subsidiaries 248,307 92,906 — (341,213 ) — Net income 227,408 83,799 278,672 (341,113 ) 248,766 Net (income) loss attributable to noncontrolling interests — — (21,669 ) 311 (21,358 ) Net income available to Arch 227,408 83,799 257,003 (340,802 ) 227,408 Preferred dividends (10,402 ) — — — (10,402 ) Net income available to Arch common shareholders $ 217,006 $ 83,799 $ 257,003 $ (340,802 ) $ 217,006 Comprehensive income available to Arch $ 200,524 $ 77,389 $ 230,565 $ (307,954 ) $ 200,524 Three Months Ended September 30, 2017 Condensed Consolidating Statement of Income and Comprehensive Income Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Revenues Net premiums earned $ — $ — $ 1,261,886 $ — $ 1,261,886 Net investment income 117 151 138,784 (22,593 ) 116,459 Net realized gains (losses) — — 66,275 — 66,275 Net impairment losses recognized in earnings — — (1,878 ) — (1,878 ) Other underwriting income — — 6,064 — 6,064 Equity in net income (loss) of investment funds accounted for using the equity method — — 31,090 — 31,090 Other income (loss) (102 ) — (240 ) — (342 ) Total revenues 15 151 1,501,981 (22,593 ) 1,479,554 Expenses Losses and loss adjustment expenses — — 1,046,141 — 1,046,141 Acquisition expenses — — 193,854 — 193,854 Other operating expenses — — 170,127 — 170,127 Corporate expenses 14,576 410 2,112 — 17,098 Amortization of intangible assets — — 31,824 — 31,824 Interest expense 5,934 12,037 33,811 (22,272 ) 29,510 Net foreign exchange (gains) losses — — 20,510 7,518 28,028 Total expenses 20,510 12,447 1,498,379 (14,754 ) 1,516,582 Income (loss) before income taxes (20,495 ) (12,296 ) 3,602 (7,839 ) (37,028 ) Income tax (expense) benefit — 4,432 (12,621 ) — (8,189 ) Income (loss) before equity in net income of subsidiaries (20,495 ) (7,864 ) (9,019 ) (7,839 ) (45,217 ) Equity in net income of subsidiaries (13,161 ) 50,057 — (36,896 ) — Net income (loss) (33,656 ) 42,193 (9,019 ) (44,735 ) (45,217 ) Net (income) loss attributable to noncontrolling interests — — 11,238 323 11,561 Net income (loss) available to Arch (33,656 ) 42,193 2,219 (44,412 ) (33,656 ) Preferred dividends (12,369 ) — — — (12,369 ) Loss on redemption of preferred shares (6,735 ) — — — (6,735 ) Net income (loss) available to Arch common shareholders $ (52,760 ) $ 42,193 $ 2,219 $ (44,412 ) $ (52,760 ) Comprehensive income available to Arch $ 17,585 $ 47,676 $ 45,936 $ (93,612 ) $ 17,585 Nine Months Ended September 30, 2018 Condensed Consolidating Statement of Income and Comprehensive Income Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Revenues Net premiums earned $ — $ — $ 3,862,540 $ — $ 3,862,540 Net investment income 37 2,020 471,588 (67,229 ) 406,416 Net realized gains (losses) 29 (71 ) (239,272 ) — (239,314 ) Net impairment losses recognized in earnings — — (1,124 ) — (1,124 ) Other underwriting income — — 15,046 — 15,046 Equity in net income (loss) of investment funds accounted for using the equity method — — 52,523 — 52,523 Other income (loss) 2,066 — 395 — 2,461 Total revenues 2,132 1,949 4,161,696 (67,229 ) 4,098,548 Expenses Losses and loss adjustment expenses — — 2,062,433 — 2,062,433 Acquisition expenses — — 595,816 — 595,816 Other operating expenses — — 512,294 — 512,294 Corporate expenses 47,981 1,205 2,973 — 52,159 Amortization of intangible assets — — 79,523 — 79,523 Interest expense 16,609 36,014 104,359 (66,272 ) 90,710 Net foreign exchange (gains) losses 29 — (37,347 ) (7,505 ) (44,823 ) Total expenses 64,619 37,219 3,320,051 (73,777 ) 3,348,112 Income (loss) before income taxes (62,487 ) (35,270 ) 841,645 6,548 750,436 Income tax (expense) benefit — 7,704 (86,643 ) — (78,939 ) Income (loss) before equity in net income of subsidiaries (62,487 ) (27,566 ) 755,002 6,548 671,497 Equity in net income of subsidiaries 683,964 266,053 — (950,017 ) — Net income 621,477 238,487 755,002 (943,469 ) 671,497 Net (income) loss attributable to noncontrolling interests — — (50,976 ) 956 (50,020 ) Net income available to Arch 621,477 238,487 704,026 (942,513 ) 621,477 Preferred dividends (31,242 ) — — — (31,242 ) Loss on redemption of preferred shares (2,710 ) — — — (2,710 ) Net income available to Arch common shareholders $ 587,525 $ 238,487 $ 704,026 $ (942,513 ) $ 587,525 Comprehensive income available to Arch $ 432,186 $ 153,992 $ 522,448 $ (676,440 ) $ 432,186 Nine Months Ended September 30, 2017 Condensed Consolidating Statement of Income and Comprehensive Income Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Revenues Net premiums earned $ — $ — $ 3,619,777 $ — $ 3,619,777 Net investment income 123 1,151 410,392 (66,209 ) 345,457 Net realized gains (losses) — — 122,163 — 122,163 Net impairment losses recognized in earnings — — (5,415 ) — (5,415 ) Other underwriting income — — 15,519 — 15,519 Equity in net income (loss) of investment funds accounted for using the equity method — — 111,884 — 111,884 Other income (loss) (368 ) — (2,750 ) — (3,118 ) Total revenues (245 ) 1,151 4,271,570 (66,209 ) 4,206,267 Expenses Losses and loss adjustment expenses — — 2,288,571 — 2,288,571 Acquisition expenses — — 566,579 — 566,579 Other operating expenses — — 514,827 — 514,827 Corporate expenses 53,639 3,727 12,400 — 69,766 Amortization of intangible assets — — 93,942 — 93,942 Interest expense 18,024 35,956 98,197 (65,242 ) 86,935 Net foreign exchange (gains) losses — — 65,701 21,274 86,975 Total expenses 71,663 39,683 3,640,217 (43,968 ) 3,707,595 Income (loss) before income taxes (71,908 ) (38,532 ) 631,353 (22,241 ) 498,672 Income tax (expense) benefit — 13,374 (84,129 ) — (70,755 ) Income (loss) before equity in net income of subsidiaries (71,908 ) (25,158 ) 547,224 (22,241 ) 427,917 Equity in net income of subsidiaries 476,546 213,586 — (690,132 ) — Net income 404,638 188,428 547,224 (712,373 ) 427,917 Net (income) loss attributable to noncontrolling interests — — (24,247 ) 968 (23,279 ) Net income available to Arch 404,638 188,428 522,977 (711,405 ) 404,638 Preferred dividends (34,936 ) — — — (34,936 ) Loss on redemption of preferred shares (6,735 ) — — — (6,735 ) Net income available to Arch common shareholders $ 362,967 $ 188,428 $ 522,977 $ (711,405 ) $ 362,967 Comprehensive income available to Arch $ 648,861 $ 240,759 $ 745,856 $ (986,615 ) $ 648,861 Nine Months Ended September 30, 2018 Condensed Consolidating Statement of Cash Flows Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Operating Activities Net Cash Provided By (Used For) Operating Activities $ 222,097 $ 176,851 $ 1,622,248 $ (900,209 ) $ 1,120,987 Investing Activities Purchases of fixed maturity investments — (214,449 ) (25,229,184 ) 605,716 (24,837,917 ) Purchases of equity securities — — (819,342 ) — (819,342 ) Purchases of other investments — — (1,543,332 ) — (1,543,332 ) Proceeds from the sales of fixed maturity investments — 111,533 23,804,386 (605,716 ) 23,310,203 Proceeds from the sales of equity securities — — 866,919 — 866,919 Proceeds from the sales, redemptions and maturities of other investments — — 1,178,035 — 1,178,035 Proceeds from redemptions and maturities of fixed maturity investments — — 724,021 — 724,021 Net settlements of derivative instruments — — 765 — 765 Net (purchases) sales of short-term investments 96,397 (49,031 ) 506,949 — 554,315 Change in cash collateral related to securities lending — — 137,073 — 137,073 Contributions to subsidiaries — (2,500 ) (29,646 ) 32,146 — Purchases of fixed assets (71 ) — (18,979 ) — (19,050 ) Other (4 ) — 58,231 — 58,227 Net Cash Provided By (Used For) Investing Activities 96,322 (154,447 ) (364,104 ) 32,146 (390,083 ) Financing Activities Redemption of preferred shares (92,555 ) — — — (92,555 ) Purchases of common shares under share repurchase program (184,529 ) — — — (184,529 ) Proceeds from common shares issued, net (12,029 ) — 32,146 (32,146 ) (12,029 ) Proceeds from borrowings — — 167,259 — 167,259 Repayments of borrowings — — (427,000 ) — (427,000 ) Change in cash collateral related to securities lending — — (137,073 ) — (137,073 ) Dividends paid to redeemable noncontrolling interests — — (14,447 ) 956 (13,491 ) Dividends paid to parent (1) — — (899,253 ) 899,253 — Other — — (6,084 ) — (6,084 ) Preferred dividends paid (31,242 ) — — — (31,242 ) Net Cash Provided By (Used For) Financing Activities (320,355 ) — (1,284,452 ) 868,063 (736,744 ) Effects of exchange rates changes on foreign currency cash and restricted cash — — (11,625 ) — (11,625 ) Increase (decrease) in cash and restricted cash (1,936 ) 22,404 (37,933 ) — (17,465 ) Cash and restricted cash, beginning of year 10,048 30,380 686,856 — 727,284 Cash and restricted cash, end of period $ 8,112 $ 52,784 $ 648,923 $ — $ 709,819 (1) Dividends received by parent are included in net cash provided by (used for) operating activities. Nine Months Ended September 30, 2017 Condensed Consolidating Statement of Cash Flows Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Operating Activities Net Cash Provided By (Used For) Operating Activities $ 130,715 $ 70,761 $ 1,444,276 $ (585,043 ) $ 1,060,709 Investing Activities Purchases of fixed maturity investments — — (28,079,129 ) — (28,079,129 ) Purchases of equity securities — — (667,135 ) — (667,135 ) Purchases of other investments — — (1,406,528 ) — (1,406,528 ) Proceeds from the sales of fixed maturity investments — — 27,629,474 — 27,629,474 Proceeds from the sales of equity securities — — 751,873 — 751,873 Proceeds from the sales, redemptions and maturities of other investments — — 938,581 — 938,581 Proceeds from redemptions and maturities of fixed maturity investments — — 747,621 — 747,621 Net settlements of derivative instruments — — (20,952 ) — (20,952 ) Net (purchases) sales of short-term investments 2,209 (27,998 ) (938,864 ) — (964,653 ) Change in cash collateral related to securities lending — — 148,692 — 148,692 Contributions to subsidiaries 20,641 (72,900 ) (353,588 ) 405,847 — Issuance of intercompany loans — — (47,000 ) 47,000 — Repayment of intercompany loans — 47,000 — (47,000 ) — Acquisitions, net of cash — — (27,709 ) — (27,709 ) Purchases of fixed assets (18 ) — (16,844 ) — (16,862 ) Other — — 114,730 (20,641 ) 94,089 Net Cash Provided By (Used For) Investing Activities 22,832 (53,898 ) (1,226,778 ) 385,206 (872,638 ) Financing Activities Proceeds from issuance of preferred shares, net 222,054 — — — 222,054 Redemption of preferred shares (230,000 ) — — — (230,000 ) Proceeds from common shares issued, net (7,484 ) — 405,847 (405,847 ) (7,484 ) Proceeds from intercompany borrowings — — 47,000 (47,000 ) — Proceeds from borrowings — — 238,915 — 238,915 Repayments of intercompany borrowings — — (47,000 ) 47,000 — Repayments of borrowings (100,000 ) — (72,000 ) — (172,000 ) Change in cash collateral related to securities lending — — (148,692 ) — (148,692 ) Dividends paid to redeemable noncontrolling interests — — (14,447 ) 956 (13,491 ) Dividends paid to parent (1) — — (584,087 ) 584,087 — Other — — (69,921 ) 20,641 (49,280 ) Preferred dividends paid (34,936 ) — — — (34,936 ) Net Cash Provided By (Used For) Financing Activities (150,366 ) — (244,385 ) 199,837 (194,914 ) Effects of exchange rates changes on foreign currency cash and restricted cash — — 17,888 — 17,888 Increase (decrease) in cash and restricted cash 3,181 16,863 (8,999 ) — 11,045 Cash and restricted cash, beginning of year 1,738 71,955 895,876 — 969,569 Cash and restricted cash, end of period $ 4,919 $ 88,818 $ 886,877 $ — $ 980,614 (1) Dividends received by parent are included in net cash provided by (used for) operating activities. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s income tax provision on income before income taxes resulted in an expense of 10.5% for the nine months ended September 30, 2018 , compared to an expense of 14.2% for the 2017 period. The Company’s effective tax rate, which is based upon the expected annual effective tax rate, may fluctuate from period to period based on the relative mix of income or loss reported by jurisdiction and the varying tax rates in each jurisdiction. For interim reporting purposes, the Company has calculated its effective tax rate for the full year of 2018 by treating any changes in assessment regarding the realizability of its deferred tax assets and excess tax benefits that arise from the accounting for stock based compensation as discrete items. As such, these amounts are not included when projecting the Company’s full year effective tax rate but rather is accounted for at the U.S. Federal statutory rate of 21% after applying the projected full year effective tax rate to actual results before the discrete item. The impact of the discrete items resulted in an expense of 0.3% for the nine months ended September 30, 2018 . On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act of 2017 (“Tax Cuts Act”). Pursuant to the guidance within SAB 118, the Company’s remeasurement of its deferred taxes at December 31, 2017 included certain provisional effects associated with enactment of the Tax Cuts Act for which measurement could be reasonably estimated. Provisional amounts may be adjusted in 2018 during the measurement period in accordance with SAB 118 when additional information is obtained. Additional information that may affect the provisional amounts would include, completion of the Company’s U.S. subsidiaries’ 2017 tax return filings, and potential future guidance from the IRS with respect to the transitional adjustment pertaining to loss reserve discounting as well as the utilization of alternative minimum tax credits. The Company’s income tax provision for the nine months ended September 30, 2018 does not include any adjustments to the provisional effects recorded at December 31, 2017. The Company had a net deferred tax asset of $17.2 million at September 30, 2018 , compared to $39.6 million at December 31, 2017 . In addition, the Company recovered $34.0 million and paid $47.9 million of income taxes for the nine months ended September 30, 2018 and 2017 , respectively. |
Legal Proceedings
Legal Proceedings | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Legal Proceedings [Abstract] | |
Legal Proceedings | Legal Proceedings The Company, in common with the insurance industry in general, is subject to litigation and arbitration in the normal course of its business. As of September 30, 2018 , the Company was not a party to any litigation or arbitration which is expected by management to have a material adverse effect on the Company’s results of operations and financial condition and liquidity. |
Subsequent Events (Notes)
Subsequent Events (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Hurricane Michael The Company estimates that its 2018 fourth quarter results will be negatively impacted by Hurricane Michael, which occurred in October 2018, in the range of $40 million to $60 million , net of reinsurance and reinstatement premiums. This pre-tax preliminary loss estimate is based on industry insured losses ranging from $7 billion to $10 billion . The Company’s preliminary estimate for Hurricane Michael is based on currently available information derived from modeling techniques, industry assessments of exposure, preliminary claims information obtained from the Company’s clients and brokers to date and a review of in-force contracts. The Company’s actual losses from this event may vary materially from the estimates due to the inherent uncertainties in making such determinations resulting from several factors, including the preliminary nature of available information, the potential inaccuracies and inadequacies in the data provided by clients and brokers, the modeling techniques and the application of such techniques, the contingent nature of business interruption exposures, the effects of any resultant demand surge on claims activity and attendant coverage issues. In addition, actual losses may increase if the Company’s reinsurers fail to meet their obligations to the Company or the reinsurance protections purchased by the Company are exhausted or are otherwise unavailable. Bellemeade On October 22, 2018, Arch MI U.S. entered into an aggregate excess of loss reinsurance agreement with Bellemeade Re 2018-3 Ltd. (“Bellemeade 2018-3 Ltd.”), a special purpose reinsurance company domiciled in Bermuda. The agreement provides for up to $506.1 million in excess of $179.3 million of aggregate excess of loss reinsurance coverage at inception for new delinquencies on a portfolio of in-force policies primarily issued between January 1, 2018 and June 30, 2018. The coverage amount decreases over a ten -year period as the underlying covered mortgages amortize. Bellemeade 2018-3 Ltd. is funding its reinsurance obligations through the issuance of four classes of amortizing notes with ten-year legal final maturities. In addition, Arch MI U.S. elected to terminate the agreement with Bellemeade 2016-1 Ltd. through an optional clean-up call event effective October 25, 2018. Business Acquisitions On November 1, 2018, the Company announced that its U.S. insurance operations entered into a definitive agreement to acquire McNeil & Co. (“McNeil”), a nationwide leader in specialized risk management and insurance programs headquartered in Cortland, New York. McNeil produced $153.7 million of premium for the Company in 2017. Post-acquisition, McNeil will support the Company’s insurance segment program product line. Approximately 140 employees will move to the Company as a result of the transaction. The transaction is expected to close in the 2018 fourth quarter and is subject to closing conditions, including regulatory approvals. On November 1, 2018, the Company also announced that its U.K. insurance operations entered into a renewal rights transaction of a U.K. commercial lines book of business with The Ardonagh Group, consisting of commercial property, casualty, motor, professional liability, personal accident and travel business. The subject book of business generated approximately £150 m of gross premiums written in 2017. Approximately 250 employees will move to the Company as a result of the transaction. The transaction is expected to close in the 2019 first quarter. |
Basis of Presentation and Rec_2
Basis of Presentation and Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of accounting | The interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions. In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of results on an interim basis. The results of any interim period are not necessarily indicative of the results for a full year or any future periods. |
Recent accounting pronouncements | Recently Issued Accounting Standards Adopted The Company adopted ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities,” which enhances the reporting model for financial instruments and provides improved financial information to readers of the financial statements. Among other provisions focused on improving the recognition and measurement of financial instruments, the ASU significantly changes the income statement impact of equity instruments and the recognition of changes in fair value of financial liabilities attributable to an entity's own credit risk when the fair value option is elected. The ASU requires equity instruments that do not result in consolidation and are not accounted for under the equity method to be measured at fair value with any changes in fair value recognized in net income rather than other comprehensive income. Upon adoption of this ASU, the Company recorded a cumulative effect adjustment of $149.8 million in retained earnings and an offsetting decrease in accumulated other comprehensive income. The adoption of this ASU did not have a material impact on the Company's financial position, cash flows, or total comprehensive income, but may increase volatility in the Company's results of operations in future periods. The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606),” which creates a new comprehensive revenue recognition standard that serves as a single source of revenue guidance for all companies in all industries. The guidance applies to all companies that either enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other standards, such as insurance contracts or financial instruments. The ASU also requires enhanced disclosures about revenue. The Company adopted the ASU using the modified retrospective method, whereby the cumulative effect of adoption was recognized as an adjustment to retained earnings at the date of initial application. The impact of the adoption of this ASU was not material, mostly because the accounting for insurance contracts is outside of the scope of ASU 2014-09. The Company adopted ASU 2016-18, “Statement of Cash Flows (Topic 230) - Restricted Cash,” which requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents in the reconciliation of beginning and ending cash on the statements of cash flows. As a result, transfers between cash and cash equivalents and restricted cash and restricted cash equivalents will no longer be presented on the statement of cash flows. The revised presentation required in this ASU is reflected in the Company’s consolidated statements of cash flows for both periods presented. The adoption of this ASU did not have any effect on the Company’s results of operations, financial position or comprehensive income. Recently Issued Accounting Standards Not Yet Adopted In July 2018, the FASB issued ASU 2018-11, “Leases: Targeted Improvements (Topic 842),” which will ease implementation of the lease standard (ASU 2016-02). The guidance provides an alternative transition method by which leases are recognized at the date of adoption. Entities that elect this transition option will still be required to adopt the new leases standard using the modified retrospective transition method required by the standard, but they will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The Company will adopt this alternative transition method when adopting the new lease standard as of January 1, 2019. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40),” to align the requirements for capitalizing certain implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The guidance provides flexibility in adoption, allowing for either retrospective adjustment or prospective adjustment for all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements. For information regarding additional accounting standards that the Company has not yet adopted, see note 3(q), “Significant Accounting Policies—Recent Accounting Pronouncements,” of the notes to consolidated financial statements in the Company’s 2017 Form 10-K. |
Earnings (Loss) Per Common Sh_2
Earnings (Loss) Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted earnings per common share | The following table sets forth the computation of basic and diluted earnings per common share: Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net income (loss) $ 248,766 $ (45,217 ) $ 671,497 $ 427,917 Amounts attributable to noncontrolling interests (21,358 ) 11,561 (50,020 ) (23,279 ) Net income (loss) available to Arch 227,408 (33,656 ) 621,477 404,638 Preferred dividends (10,402 ) (12,369 ) (31,242 ) (34,936 ) Loss on redemption of preferred shares — (6,735 ) (2,710 ) (6,735 ) Net income (loss) available to Arch common shareholders $ 217,006 $ (52,760 ) $ 587,525 $ 362,967 Denominator: Weighted average common shares outstanding 402,939,092 387,633,753 400,649,105 373,579,833 Series D preferred shares (1) — 17,022,600 4,427,123 29,836,554 Weighted average common shares and common share equivalents outstanding — basic 402,939,092 404,656,353 405,076,228 403,416,387 Effect of dilutive common share equivalents: Nonvested restricted shares 1,619,286 — 1,568,044 4,379,637 Stock options (2) 7,162,836 — 7,348,920 9,870,948 Weighted average common shares and common share equivalents outstanding — diluted 411,721,214 404,656,353 413,993,192 417,666,972 Earnings (loss) per common share: Basic $ 0.54 $ (0.13 ) $ 1.45 $ 0.90 Diluted $ 0.53 $ (0.13 ) $ 1.42 $ 0.87 (1) Such shares are convertible non-voting common equivalent preferred shares issued in connection with the UGC acquisition. See Note 2 . (2) Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2018 third quarter and 2017 third quarter , the number of stock options excluded were 4,396,352 and 0 , respectively. For the nine months ended September 30, 2018 and 2017 , the number of stock options excluded were 5,481,584 and 2,516,604 , respectively. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Analysis of underwriting income or loss by segment and reconciliation to net income available to common shareholders | The following tables summarize the Company’s underwriting income or loss by segment, together with a reconciliation of underwriting income or loss to net income available to Arch common shareholders: Three Months Ended September 30, 2018 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 836,820 $ 435,396 $ 350,559 $ 1,622,532 $ 185,033 $ 1,731,328 Premiums ceded (259,968 ) (123,705 ) (57,226 ) (440,656 ) (33,356 ) (397,775 ) Net premiums written 576,852 311,691 293,333 1,181,876 151,677 1,333,553 Change in unearned premiums (15,794 ) (18,418 ) 7,591 (26,621 ) (16,054 ) (42,675 ) Net premiums earned 561,058 293,273 300,924 1,155,255 135,623 1,290,878 Other underwriting income (loss) — 1,387 3,733 5,120 703 5,823 Losses and loss adjustment expenses (409,435 ) (183,413 ) (9,615 ) (602,463 ) (96,957 ) (699,420 ) Acquisition expenses (88,255 ) (50,367 ) (33,361 ) (171,983 ) (29,619 ) (201,602 ) Other operating expenses (90,081 ) (29,936 ) (31,122 ) (151,139 ) (9,959 ) (161,098 ) Underwriting income (loss) $ (26,713 ) $ 30,944 $ 230,559 234,790 (209 ) 234,581 Net investment income 114,328 29,696 144,024 Net realized gains (losses) (47,010 ) (4,695 ) (51,705 ) Net impairment losses recognized in earnings (492 ) — (492 ) Equity in net income (loss) of investment funds accounted for using the equity method 15,982 — 15,982 Other income (loss) (726 ) — (726 ) Corporate expenses (2) (13,244 ) — (13,244 ) Transaction costs and other (2) (1,091 ) — (1,091 ) Amortization of intangible assets (26,315 ) — (26,315 ) Interest expense (24,666 ) (5,064 ) (29,730 ) Net foreign exchange gains (losses) 7,130 3,708 10,838 Income before income taxes 258,686 23,436 282,122 Income tax expense (33,356 ) — (33,356 ) Net income 225,330 23,436 248,766 Dividends attributable to redeemable noncontrolling interests — (4,599 ) (4,599 ) Amounts attributable to nonredeemable noncontrolling interests — (16,759 ) (16,759 ) Net income available to Arch 225,330 2,078 227,408 Preferred dividends (10,402 ) — (10,402 ) Net income available to Arch common shareholders $ 214,928 $ 2,078 $ 217,006 Underwriting Ratios Loss ratio 73.0 % 62.5 % 3.2 % 52.1 % 71.5 % 54.2 % Acquisition expense ratio 15.7 % 17.2 % 11.1 % 14.9 % 21.8 % 15.6 % Other operating expense ratio 16.1 % 10.2 % 10.3 % 13.1 % 7.3 % 12.5 % Combined ratio 104.8 % 89.9 % 24.6 % 80.1 % 100.6 % 82.3 % Goodwill and intangible assets $ 20,141 $ — $ 538,871 $ 559,012 $ 7,650 $ 566,662 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Three Months Ended September 30, 2017 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 787,447 $ 422,083 $ 347,951 $ 1,557,179 $ 166,198 $ 1,648,246 Premiums ceded (222,516 ) (105,389 ) (57,900 ) (385,503 ) (12,471 ) (322,843 ) Net premiums written 564,931 316,694 290,051 1,171,676 153,727 1,325,403 Change in unearned premiums (29,766 ) 6,879 (15,533 ) (38,420 ) (25,097 ) (63,517 ) Net premiums earned 535,165 323,573 274,518 1,133,256 128,630 1,261,886 Other underwriting income (loss) — 1,728 3,599 5,327 737 6,064 Losses and loss adjustment expenses (568,795 ) (318,609 ) (35,156 ) (922,560 ) (123,581 ) (1,046,141 ) Acquisition expenses (82,638 ) (57,340 ) (21,803 ) (161,781 ) (32,073 ) (193,854 ) Other operating expenses (90,875 ) (36,214 ) (34,770 ) (161,859 ) (8,268 ) (170,127 ) Underwriting income (loss) $ (207,143 ) $ (86,862 ) $ 186,388 (107,617 ) (34,555 ) (142,172 ) Net investment income 94,127 22,332 116,459 Net realized gains (losses) 64,104 2,171 66,275 Net impairment losses recognized in earnings (1,878 ) — (1,878 ) Equity in net income (loss) of investment funds accounted for using the equity method 31,090 — 31,090 Other income (loss) (342 ) — (342 ) Corporate expenses (2) (14,108 ) — (14,108 ) Transaction costs and other (2) (2,990 ) — (2,990 ) Amortization of intangible assets (31,824 ) — (31,824 ) Interest expense (26,264 ) (3,246 ) (29,510 ) Net foreign exchange gains (losses) (27,785 ) (243 ) (28,028 ) Income (loss) before income taxes (23,487 ) (13,541 ) (37,028 ) Income tax expense (8,168 ) (21 ) (8,189 ) Net income (loss) (31,655 ) (13,562 ) (45,217 ) Dividends attributable to redeemable noncontrolling interests — (4,586 ) (4,586 ) Amounts attributable to nonredeemable noncontrolling interests — 16,147 16,147 Net income (loss) available to Arch (31,655 ) (2,001 ) (33,656 ) Preferred dividends (12,369 ) — (12,369 ) Loss on redemption of preferred shares (6,735 ) — (6,735 ) Net income (loss) available to Arch common shareholders $ (50,759 ) $ (2,001 ) $ (52,760 ) Underwriting Ratios Loss ratio 106.3 % 98.5 % 12.8 % 81.4 % 96.1 % 82.9 % Acquisition expense ratio 15.4 % 17.7 % 7.9 % 14.3 % 24.9 % 15.4 % Other operating expense ratio 17.0 % 11.2 % 12.7 % 14.3 % 6.4 % 13.5 % Combined ratio 138.7 % 127.4 % 33.4 % 110.0 % 127.4 % 111.8 % Goodwill and intangible assets $ 23,445 $ 417 $ 652,893 $ 676,755 $ 7,650 $ 684,405 (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Nine Months Ended September 30, 2018 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 2,429,570 $ 1,503,206 $ 1,002,727 $ 4,935,339 $ 574,078 $ 5,266,086 Premiums ceded (752,413 ) (455,682 ) (154,230 ) (1,362,161 ) (102,263 ) (1,221,093 ) Net premiums written 1,677,157 1,047,524 848,497 3,573,178 471,815 4,044,993 Change in unearned premiums (30,913 ) (134,761 ) 23,147 (142,527 ) (39,926 ) (182,453 ) Net premiums earned 1,646,244 912,763 871,644 3,430,651 431,889 3,862,540 Other underwriting income (loss) — 2,490 10,464 12,954 2,092 15,046 Losses and loss adjustment expenses (1,120,630 ) (555,044 ) (74,672 ) (1,750,346 ) (312,087 ) (2,062,433 ) Acquisition expenses (264,094 ) (148,828 ) (87,665 ) (500,587 ) (95,229 ) (595,816 ) Other operating expenses (274,735 ) (101,185 ) (108,622 ) (484,542 ) (27,752 ) (512,294 ) Underwriting income (loss) $ (13,215 ) $ 110,196 $ 611,149 708,130 (1,087 ) 707,043 Net investment income 322,332 84,084 406,416 Net realized gains (losses) (218,414 ) (20,900 ) (239,314 ) Net impairment losses recognized in earnings (1,124 ) — (1,124 ) Equity in net income (loss) of investment funds accounted for using the equity method 52,523 — 52,523 Other income (loss) 2,461 — 2,461 Corporate expenses (2) (43,330 ) — (43,330 ) Transaction costs and other (2) (8,829 ) — (8,829 ) Amortization of intangible assets (79,523 ) — (79,523 ) Interest expense (76,631 ) (14,079 ) (90,710 ) Net foreign exchange gains (losses) 38,302 6,521 44,823 Income before income taxes 695,897 54,539 750,436 Income tax expense (78,912 ) (27 ) (78,939 ) Net income 616,985 54,512 671,497 Dividends attributable to redeemable noncontrolling interests — (13,769 ) (13,769 ) Amounts attributable to nonredeemable noncontrolling interests — (36,251 ) (36,251 ) Net income available to Arch 616,985 4,492 621,477 Preferred dividends (31,242 ) — (31,242 ) Loss on redemption of preferred shares (2,710 ) — (2,710 ) Net income available to Arch common shareholders $ 583,033 $ 4,492 $ 587,525 Underwriting Ratios Loss ratio 68.1 % 60.8 % 8.6 % 51.0 % 72.3 % 53.4 % Acquisition expense ratio 16.0 % 16.3 % 10.1 % 14.6 % 22.0 % 15.4 % Other operating expense ratio 16.7 % 11.1 % 12.5 % 14.1 % 6.4 % 13.3 % Combined ratio 100.8 % 88.2 % 31.2 % 79.7 % 100.7 % 82.1 % (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ Nine Months Ended September 30, 2017 Insurance Reinsurance Mortgage Sub-Total Other Total Gross premiums written (1) $ 2,313,630 $ 1,351,051 $ 1,032,800 $ 4,697,007 $ 473,131 $ 4,915,895 Premiums ceded (704,057 ) (386,743 ) (194,139 ) (1,284,465 ) (35,315 ) (1,065,537 ) Net premiums written 1,609,573 964,308 838,661 3,412,542 437,816 3,850,358 Change in unearned premiums (51,188 ) (81,182 ) (61,776 ) (194,146 ) (36,435 ) (230,581 ) Net premiums earned 1,558,385 883,126 776,885 3,218,396 401,381 3,619,777 Other underwriting income (loss) — 1,143 11,999 13,142 2,377 15,519 Losses and loss adjustment expenses (1,252,375 ) (631,669 ) (84,915 ) (1,968,959 ) (319,612 ) (2,288,571 ) Acquisition expenses (236,378 ) (154,638 ) (76,235 ) (467,251 ) (99,328 ) (566,579 ) Other operating expenses (271,268 ) (110,458 ) (108,790 ) (490,516 ) (24,311 ) (514,827 ) Underwriting income (loss) $ (201,636 ) $ (12,496 ) $ 518,944 304,812 (39,493 ) 265,319 Net investment income 282,459 62,998 345,457 Net realized gains (losses) 110,662 11,501 122,163 Net impairment losses recognized in earnings (5,415 ) — (5,415 ) Equity in net income (loss) of investment funds accounted for using the equity method 111,884 — 111,884 Other income (loss) (3,118 ) — (3,118 ) Corporate expenses (2) (48,517 ) — (48,517 ) Transaction costs and other (2) (21,249 ) — (21,249 ) Amortization of intangible assets (93,942 ) — (93,942 ) Interest expense (77,932 ) (9,003 ) (86,935 ) Net foreign exchange gains (losses) (85,451 ) (1,524 ) (86,975 ) Income before income taxes 474,193 24,479 498,672 Income tax expense (70,734 ) (21 ) (70,755 ) Net income 403,459 24,458 427,917 Dividends attributable to redeemable noncontrolling interests — (13,756 ) (13,756 ) Amounts attributable to nonredeemable noncontrolling interests — (9,523 ) (9,523 ) Net income available to Arch 403,459 1,179 404,638 Preferred dividends (34,936 ) — (34,936 ) Loss on redemption of preferred shares (6,735 ) — (6,735 ) Net income available to Arch common shareholders $ 361,788 $ 1,179 $ 362,967 Underwriting Ratios Loss ratio 80.4 % 71.5 % 10.9 % 61.2 % 79.6 % 63.2 % Acquisition expense ratio 15.2 % 17.5 % 9.8 % 14.5 % 24.7 % 15.7 % Other operating expense ratio 17.4 % 12.5 % 14.0 % 15.2 % 6.1 % 14.2 % Combined ratio 113.0 % 101.5 % 34.7 % 90.9 % 110.4 % 93.1 % (1) Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. (2) Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ |
Reserve for Losses and Loss A_2
Reserve for Losses and Loss Adjustment Expenses (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |
Analysis of losses and loss adjustment expenses and reconciliation of beginning and ending reserve balances | The following table represents an analysis of losses and loss adjustment expenses and a reconciliation of the beginning and ending reserve for losses and loss adjustment expenses: Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Reserve for losses and loss adjustment expenses at beginning of period $ 11,424,337 $ 10,520,511 $ 11,383,792 $ 10,200,960 Unpaid losses and loss adjustment expenses recoverable 2,651,749 2,116,210 2,464,910 2,083,575 Net reserve for losses and loss adjustment expenses at beginning of period 8,772,588 8,404,301 8,918,882 8,117,385 Net incurred losses and loss adjustment expenses relating to losses occurring in: Current year 779,043 1,091,373 2,257,670 2,486,410 Prior years (79,623 ) (45,232 ) (195,237 ) (197,839 ) Total net incurred losses and loss adjustment expenses 699,420 1,046,141 2,062,433 2,288,571 Retroactive reinsurance transaction (1) — — (420,404 ) — Net foreign exchange (gains) losses (33,783 ) 61,919 (110,061 ) 168,493 Net paid losses and loss adjustment expenses relating to losses occurring in: Current year (149,999 ) (167,450 ) (245,021 ) (282,952 ) Prior years (396,695 ) (457,183 ) (1,314,298 ) (1,403,769 ) Total net paid losses and loss adjustment expenses (546,694 ) (624,633 ) (1,559,319 ) (1,686,721 ) Net reserve for losses and loss adjustment expenses at end of period 8,891,531 8,887,728 8,891,531 8,887,728 Unpaid losses and loss adjustment expenses recoverable 2,662,790 2,463,539 2,662,790 2,463,539 Reserve for losses and loss adjustment expenses at end of period $ 11,554,321 $ 11,351,267 $ 11,554,321 $ 11,351,267 (1) During the 2018 second quarter, a subsidiary of the Company entered into a retroactive reinsurance transaction with a third party reinsurer to reinsure run-off liabilities associated with certain discontinued U.S. specialty casualty and program exposures. |
Investment Information (Tables)
Investment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Investment Information [Abstract] | |
Summary of fair value and cost or amortized cost of available for sale securities | The following table summarizes the fair value and cost or amortized cost of the Company’s securities classified as available for sale: Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost or Amortized Cost OTTI Unrealized Losses (2) September 30, 2018 Fixed maturities (1): Corporate bonds $ 5,639,800 $ 7,363 $ (95,474 ) $ 5,727,911 $ (69 ) Mortgage backed securities 468,254 1,412 (7,772 ) 474,614 (6 ) Municipal bonds 1,222,440 4,236 (26,460 ) 1,244,664 — Commercial mortgage backed securities 682,516 578 (15,062 ) 697,000 — U.S. government and government agencies 3,276,243 1,499 (29,013 ) 3,303,757 — Non-U.S. government securities 1,722,606 13,917 (40,094 ) 1,748,783 — Asset backed securities 1,606,473 2,749 (13,450 ) 1,617,174 — Total 14,618,332 31,754 (227,325 ) 14,813,903 (75 ) Equity securities (3) Other investments — — — — — Short-term investments 961,799 195 (389 ) 961,993 — Total $ 15,580,131 $ 31,949 $ (227,714 ) $ 15,775,896 $ (75 ) December 31, 2017 Fixed maturities (1): Corporate bonds $ 4,434,439 $ 30,943 $ (32,340 ) $ 4,435,836 $ (73 ) Mortgage backed securities 316,141 1,640 (2,561 ) 317,062 (15 ) Municipal bonds 2,158,840 20,285 (12,308 ) 2,150,863 — Commercial mortgage backed securities 545,817 2,131 (4,268 ) 547,954 — U.S. government and government agencies 3,484,257 2,188 (28,769 ) 3,510,838 — Non-U.S. government securities 1,612,754 48,764 (17,321 ) 1,581,311 — Asset backed securities 1,780,143 5,147 (8,614 ) 1,783,610 — Total 14,332,391 111,098 (106,181 ) 14,327,474 (88 ) Equity securities 504,333 88,739 (5,583 ) 421,177 — Other investments 264,989 66,946 (120 ) 198,163 — Short-term investments 1,469,042 650 (563 ) 1,468,955 — Total $ 16,570,755 $ 267,433 $ (112,447 ) $ 16,415,769 $ (88 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” (2) Represents the total other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income (“AOCI”). It does not include the change in fair value subsequent to the impairment measurement date. At September 30, 2018 , the net unrealized gain related to securities for which a non-credit OTTI was recognized in AOCI was $0.2 million , compared to a net unrealized gain of $0.3 million at December 31, 2017 . (3) Effective January 1, 2018, the Company adopted new accounting guidance for financial instruments (see Note 1 ). As a result, equity securities are no longer accounted for as available for sale and are excluded from this table. |
Summary of available for sale securities in a continual unrealized loss position | The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position: Less than 12 Months 12 Months or More Total Estimated Gross Unrealized Losses Estimated Gross Unrealized Losses Estimated Gross Unrealized Losses September 30, 2018 Fixed maturities (1): Corporate bonds $ 4,517,581 $ (75,830 ) $ 483,379 $ (19,644 ) $ 5,000,960 $ (95,474 ) Mortgage backed securities 402,443 (6,721 ) 26,414 (1,051 ) 428,857 (7,772 ) Municipal bonds 744,018 (16,808 ) 198,243 (9,652 ) 942,261 (26,460 ) Commercial mortgage backed securities 499,307 (8,745 ) 103,813 (6,317 ) 603,120 (15,062 ) U.S. government and government agencies 2,818,235 (22,512 ) 214,570 (6,501 ) 3,032,805 (29,013 ) Non-U.S. government securities 1,289,557 (29,224 ) 299,654 (10,870 ) 1,589,211 (40,094 ) Asset backed securities 1,176,057 (11,096 ) 139,349 (2,354 ) 1,315,406 (13,450 ) Total 11,447,198 (170,936 ) 1,465,422 (56,389 ) 12,912,620 (227,325 ) Equity securities (2) Other investments — — — — — — Short-term investments 189,378 (389 ) — — 189,378 (389 ) Total $ 11,636,576 $ (171,325 ) $ 1,465,422 $ (56,389 ) $ 13,101,998 $ (227,714 ) December 31, 2017 Fixed maturities (1): Corporate bonds $ 2,320,716 $ (25,411 ) $ 279,082 $ (6,929 ) $ 2,599,798 $ (32,340 ) Mortgage backed securities 221,113 (1,715 ) 28,380 (846 ) 249,493 (2,561 ) Municipal bonds 1,030,389 (8,438 ) 132,469 (3,870 ) 1,162,858 (12,308 ) Commercial mortgage backed securities 225,164 (1,899 ) 57,291 (2,369 ) 282,455 (4,268 ) U.S. government and government agencies 2,646,415 (26,501 ) 111,879 (2,268 ) 2,758,294 (28,769 ) Non-U.S. government securities 1,218,514 (15,546 ) 93,530 (1,775 ) 1,312,044 (17,321 ) Asset backed securities 1,111,246 (5,915 ) 209,207 (2,699 ) 1,320,453 (8,614 ) Total 8,773,557 (85,425 ) 911,838 (20,756 ) 9,685,395 (106,181 ) Equity securities 166,562 (5,583 ) — — 166,562 (5,583 ) Other investments 15,025 (120 ) — — 15,025 (120 ) Short-term investments 109,528 (563 ) — — 109,528 (563 ) Total $ 9,064,672 $ (91,691 ) $ 911,838 $ (20,756 ) $ 9,976,510 $ (112,447 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” (2) Effective January 1, 2018, the Company adopted new accounting guidance for financial instruments (see Note 1 ). As a result, equity securities are no longer accounted for as available for sale and are excluded from this table. |
Contractual maturities of the Company's fixed maturities and fixed maturities pledged under securities lending arrangements | The contractual maturities of the Company’s fixed maturities are shown in the following table. Expected maturities, which are management’s best estimates, will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. September 30, 2018 December 31, 2017 Maturity Estimated Fair Value Amortized Cost Estimated Amortized Cost Due in one year or less $ 330,506 $ 331,010 $ 550,711 $ 548,771 Due after one year through five years 8,334,661 8,431,730 7,436,153 7,434,801 Due after five years through 10 years 2,910,493 2,972,893 3,369,635 3,369,750 Due after 10 years 285,429 289,482 333,791 325,526 11,861,089 12,025,115 11,690,290 11,678,848 Mortgage backed securities 468,254 474,614 316,141 317,062 Commercial mortgage backed securities 682,516 697,000 545,817 547,954 Asset backed securities 1,606,473 1,617,174 1,780,143 1,783,610 Total (1) $ 14,618,332 $ 14,813,903 $ 14,332,391 $ 14,327,474 (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
Securities lending transactions accounted for as secured borrowings, by significant investment category | The Company’s securities lending transactions were accounted for as secured borrowings with significant investment categories as follows: Remaining Contractual Maturity of the Agreements Overnight and Continuous Less than 30 Days 30-90 Days 90 Days or More Total September 30, 2018 U.S. government and government agencies $ 116,389 $ — $ 155,273 $ — $ 271,662 Corporate bonds 22,267 — — — 22,267 Equity securities 12,957 — — — 12,957 Total $ 151,613 $ — $ 155,273 $ — $ 306,886 Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 8 $ — Amounts related to securities lending not included in offsetting disclosure in Note 8 $ 306,886 December 31, 2017 U.S. government and government agencies $ 343,425 $ 20,309 $ 76,086 $ — $ 439,820 Corporate bonds 28,003 — — — 28,003 Equity securities 8,782 — — — 8,782 Total $ 380,210 $ 20,309 $ 76,086 $ — $ 476,605 Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 8 $ — Amounts related to securities lending not included in offsetting disclosure in Note 8 $ 476,605 |
Summary of other investments, including available for sale and fair value option components | The following table summarizes the Company’s other investments, including available for sale and fair value option components: September 30, December 31, Available for sale securities: Asian and emerging markets $ — $ 135,140 Investment grade fixed income — 53,878 Credit related funds — 18,365 Other — 57,606 Total available for sale (1) — 264,989 Fair value option: Term loan investments (par value: $1,376,013 and $1,223,453) $ 1,351,098 $ 1,200,882 Mezzanine debt funds 241,968 252,160 Credit related funds 200,226 175,422 Investment grade fixed income 97,347 102,347 Asian and emerging markets 330,999 258,541 Other (2) 120,038 147,029 Total fair value option 2,341,676 2,136,381 Total $ 2,341,676 $ 2,401,370 (1) The Company reviewed the accounting treatment for three limited partnership investments which were accounted for as available for sale at December 31, 2017 during the 2018 first quarter and determined, based on reconsideration during the period of the Company’s percentage ownership, that the equity method of accounting was appropriate for such investments. (2) Includes fund investments with strategies in mortgage servicing rights, transportation, infrastructure assets and other. |
Summary of assets and liabilities accounted for using the fair value option | The following table summarizes the Company’s assets and liabilities which are accounted for using the fair value option: September 30, December 31, Fixed maturities $ 1,374,453 $ 1,642,855 Other investments 2,341,676 2,136,381 Short-term investments 248,834 297,426 Equity securities 132,772 139,575 Investments accounted for using the fair value option $ 4,097,735 $ 4,216,237 |
Summary of investments in limited partnership interests where the Company has a variable interest | The following table summarizes investments in limited partnership interests where the Company has a variable interest by balance sheet line item: September 30, December 31, Investments accounted for using the equity method (1) 1,524,242 1,041,322 Investments accounted for using the fair value option (2) 167,860 130,471 Total $ 1,692,102 $ 1,171,793 (1) Aggregate unfunded commitments were $1.04 billion at September 30, 2018 , compared to $1.02 billion at December 31, 2017 . (2) Aggregate unfunded commitments were $111.1 million at September 30, 2018 , compared to $100.4 million at December 31, 2017 . |
Components of net investment income | The components of net investment income were derived from the following sources: September 30, 2018 2017 Three Months Ended Fixed maturities $ 120,516 $ 96,144 Equity securities 3,165 2,887 Short-term investments 4,547 2,957 Other (1) 39,098 37,957 Gross investment income 167,326 139,945 Investment expenses (23,302 ) (23,486 ) Net investment income $ 144,024 $ 116,459 Nine Months Ended Fixed maturities $ 343,513 $ 284,807 Equity securities 10,510 9,184 Short-term investments 13,799 6,732 Other (1) 114,640 111,613 Gross investment income 482,462 412,336 Investment expenses (76,046 ) (66,879 ) Net investment income $ 406,416 $ 345,457 (1) Includes income distributions from investment funds, term loan investments and other items. |
Summary of net realized gains (losses), excluding other-than-temporary impairment provisions | Net realized gains (losses) were as follows, excluding net impairment losses recognized in earnings: September 30, 2018 2017 Three Months Ended Available for sale securities: Gross gains on investment sales $ 10,990 $ 66,565 Gross losses on investment sales (34,879 ) (39,015 ) Change in fair value of assets and liabilities accounted for using the fair value option: Fixed maturities (6,604 ) 4,035 Other investments (7,950 ) 24,264 Equity securities 2,752 10,230 Short-term investments (471 ) (3,320 ) Equity securities, at fair value (1): Net realized gains (losses) on sales during the period (2,012 ) — Net unrealized gains (losses) on equity securities still held at reporting date 10,798 — Derivative instruments (2) (17,556 ) 4,298 Other (3) (6,773 ) (782 ) Net realized gains (losses) $ (51,705 ) $ 66,275 Nine Months Ended Available for sale securities: Gross gains on investment sales $ 44,732 $ 212,470 Gross losses on investment sales (175,141 ) (152,996 ) Change in fair value of assets and liabilities accounted for using the fair value option: Fixed maturities (47,082 ) 34,232 Other investments (14,578 ) 42,149 Equity securities 10,650 16,604 Short-term investments (758 ) 12 Equity securities, at fair value (1): Net realized gains (losses) on sales during the period (13,298 ) — Net unrealized gains (losses) on equity securities still held at reporting date (4,063 ) — Derivative instruments (2) (23,665 ) (9,653 ) Other (3) (16,111 ) (20,655 ) Net realized gains (losses) $ (239,314 ) $ 122,163 (1) Pursuant to new accounting guidance (see Note 1 ), changes in fair value on equity securities are recorded through net income effective January 1, 2018. (2) See Note 8 for information on the Company’s derivative instruments. (3) Includes the re-measurement of contingent consideration liability amounts. |
Summary of OTTI recognized in earnings by asset class | The following table details the net impairment losses recognized in earnings by asset class: September 30, 2018 2017 Three Months Ended Fixed maturities: Mortgage backed securities $ (73 ) $ (50 ) Corporate bonds (270 ) (82 ) Non-U.S. government securities (149 ) (178 ) U.S. government and government agencies — (426 ) Municipal bonds — (202 ) Total (492 ) (938 ) Equity securities — (940 ) Net impairment losses recognized in earnings $ (492 ) $ (1,878 ) Nine Months Ended Fixed maturities: Mortgage backed securities $ (196 ) $ (1,461 ) Corporate bonds (631 ) (1,484 ) Non-U.S. government securities (149 ) (376 ) Asset backed securities (148 ) — U.S. government and government agencies — (426 ) Municipal bonds — (375 ) Total (1,124 ) (4,122 ) Equity securities — (1,126 ) Other investments — (167 ) Net impairment losses recognized in earnings $ (1,124 ) $ (5,415 ) |
Rollforward of the amount related to credit losses recognized in earnings for which a portion was recognized in AOCI | The following table provides a roll forward of the amount related to credit losses recognized in earnings for which a portion of an OTTI was recognized in accumulated other comprehensive income: September 30, 2018 2017 Three Months Ended Balance at start of period $ 698 $ 4,437 Credit loss impairments recognized on securities not previously impaired — — Credit loss impairments recognized on securities previously impaired — 15 Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security — — Reductions for securities sold during the period (47 ) (689 ) Balance at end of period $ 651 $ 3,763 Nine Months Ended Balance at start of year $ 767 $ 13,138 Credit loss impairments recognized on securities not previously impaired — 31 Credit loss impairments recognized on securities previously impaired — 210 Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security — — Reductions for securities sold during the period (116 ) (9,616 ) Balance at end of period $ 651 $ 3,763 |
Summary of restricted assets | The following table details the value of the Company’s restricted assets: September 30, December 31, Assets used for collateral or guarantees: Affiliated transactions $ 4,235,515 $ 4,323,726 Third party agreements 2,094,952 1,674,304 Deposits with U.S. regulatory authorities 688,574 616,987 Deposits with non-U.S. regulatory authorities 61,210 55,895 Total restricted assets $ 7,080,251 $ 6,670,912 |
Reconciliation of cash and restricted cash | The following table details reconciliation of cash and restricted cash within the Consolidated Balance Sheets: September 30, December 31, Cash $ 651,037 $ 606,199 Restricted cash (included in ‘other assets’) $ 58,782 $ 121,085 Cash and restricted cash $ 709,819 $ 727,284 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value hierarchy | The following table presents the Company’s financial assets and liabilities measured at fair value by level at September 30, 2018 : Estimated Fair Value Measurements Using: Estimated Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 5,639,800 $ — $ 5,631,516 $ 8,284 Mortgage backed securities 468,254 — 467,923 331 Municipal bonds 1,222,440 — 1,222,440 — Commercial mortgage backed securities 682,516 — 682,502 14 U.S. government and government agencies 3,276,243 3,125,520 150,723 — Non-U.S. government securities 1,722,606 — 1,722,606 — Asset backed securities 1,606,473 — 1,606,473 — Total 14,618,332 3,125,520 11,484,183 8,629 Short-term investments 961,799 819,294 142,505 — Equity securities, at fair value 456,836 408,436 48,400 — Derivative instruments (4) 37,341 — 37,341 — Fair value option: Corporate bonds 912,927 — 903,321 9,606 Non-U.S. government bonds 105,019 — 105,019 — Mortgage backed securities 15,845 — 15,845 — Municipal bonds 7,037 — 7,037 — Commercial mortgage backed securities — — — — Asset backed securities 213,971 — 213,971 — U.S. government and government agencies 119,654 119,547 107 — Short-term investments 248,834 230,836 17,998 — Equity securities 132,772 67,441 65,331 — Other investments 1,303,349 49,579 1,190,839 62,931 Other investments measured at net asset value (2) 1,038,327 Total 4,097,735 467,403 2,519,468 72,537 Total assets measured at fair value $ 20,172,043 $ 4,820,653 $ 14,231,897 $ 81,166 Liabilities measured at fair value: Contingent consideration liabilities $ (65,641 ) $ — $ — $ (65,641 ) Securities sold but not yet purchased (3) (9,065 ) — (9,065 ) — Derivative instruments (4) (49,189 ) — (49,189 ) — Total liabilities measured at fair value $ (123,895 ) $ — $ (58,254 ) $ (65,641 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 6 , “Investment Information—Securities Lending Agreements.” (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See Note 8 , “Derivative Instruments.” The following table presents the Company’s financial assets and liabilities measured at fair value by level at December 31, 2017 : Estimated Fair Value Measurements Using: Estimated Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets measured at fair value (1): Available for sale securities: Fixed maturities: Corporate bonds $ 4,434,439 $ — $ 4,424,979 $ 9,460 Mortgage backed securities 316,141 — 315,754 387 Municipal bonds 2,158,840 — 2,158,840 — Commercial mortgage backed securities 545,817 — 545,277 540 U.S. government and government agencies 3,484,257 3,408,902 75,355 — Non-U.S. government securities 1,612,754 — 1,612,754 — Asset backed securities 1,780,143 — 1,775,143 5,000 Total 14,332,391 3,408,902 10,908,102 15,387 Equity securities 504,333 498,182 6,151 — Short-term investments 1,469,042 1,420,732 48,310 — Other investments 76,427 74,611 1,816 — Other investments measured at net asset value (2) 188,562 Total other investments 264,989 74,611 1,816 — Derivative instruments (4) 15,747 — 15,747 — Fair value option: Corporate bonds 1,068,725 — 1,056,508 12,217 Non-U.S. government bonds 195,788 — 195,788 — Mortgage backed securities 20,491 — 20,491 — Municipal bonds 15,210 — 15,210 — Commercial mortgage backed securities 11,997 — 11,997 — Asset backed securities 99,354 — 99,354 — U.S. government and government agencies 231,290 231,019 271 — Short-term investments 297,426 40,166 257,260 — Equity securities 139,575 67,440 72,135 — Other investments 1,128,094 82,291 986,636 59,167 Other investments measured at net asset value (2) 1,008,287 Total 4,216,237 420,916 2,715,650 71,384 Total assets measured at fair value $ 20,802,739 $ 5,823,343 $ 13,695,776 $ 86,771 Liabilities measured at fair value: Contingent consideration liabilities $ (60,996 ) $ — $ — $ (60,996 ) Securities sold but not yet purchased (3) (34,375 ) — (34,375 ) — Derivative instruments (4) (20,464 ) — (20,464 ) — Total liabilities measured at fair value $ (115,835 ) $ — $ (54,839 ) $ (60,996 ) (1) In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 6 , “Investment Information—Securities Lending Agreements.” (2) In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. (3) Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. (4) See Note 8 , “Derivative Instruments.” |
Rollforward of Level 3 investments | The following table presents a reconciliation of the beginning and ending balances for all financial assets and liabilities measured at fair value on a recurring basis using Level 3 inputs: Assets Liabilities s Available For Sale Fair Value Option Structured Securities (1) Corporate Corporate Other Investments Total Contingent Consideration Liabilities Three Months Ended September 30, 2018 Balance at beginning of period $ 376 $ 8,773 $ 11,335 $ 58,214 $ 78,698 $ (63,930 ) Total gains or (losses) (realized/unrealized) Included in earnings (2) — (1 ) (503 ) (1,459 ) (1,963 ) (1,711 ) Included in other comprehensive income 2 (32 ) — — (30 ) — Purchases, issuances, sales and settlements Purchases — — — 6,250 6,250 — Issuances — — — — — — Sales — — — (74 ) (74 ) — Settlements (33 ) (456 ) (1,226 ) — (1,715 ) — Transfers in and/or out of Level 3 — — — — — — Balance at end of period $ 345 $ 8,284 $ 9,606 $ 62,931 $ 81,166 $ (65,641 ) Three Months Ended September 30, 2017 Balance at beginning of period $ — $ 11,570 $ — $ 25,000 $ 36,570 $ (57,246 ) Total gains or (losses) (realized/unrealized) Included in earnings (2) — — — — — (2,002 ) Included in other comprehensive income — 289 — — 289 — Purchases, issuances, sales and settlements Purchases — — — 1,348 1,348 — Issuances — — — — — — Sales — — — — — — Settlements — — — — — — Transfers in and/or out of Level 3 5,949 132 11,471 4,798 22,350 — Balance at end of period $ 5,949 $ 11,991 $ 11,471 $ 31,146 $ 60,557 $ (59,248 ) Nine Months Ended September 30, 2018 Balance at beginning of year $ 5,927 $ 9,460 $ 12,217 $ 59,167 $ 86,771 $ (60,996 ) Total gains or (losses) (realized/unrealized) Included in earnings (2) 4 (1 ) (1,115 ) (1,838 ) (2,950 ) (4,645 ) Included in other comprehensive income (6 ) (200 ) — — (206 ) — Purchases, issuances, sales and settlements Purchases — 393 — 6,250 6,643 — Issuances — — — — — — Sales (5,003 ) — — (148 ) (5,151 ) — Settlements (577 ) (1,368 ) (1,496 ) (500 ) (3,941 ) — Transfers in and/or out of Level 3 — — — — — — Balance at end of period $ 345 $ 8,284 $ 9,606 $ 62,931 $ 81,166 $ (65,641 ) Nine Months Ended September 30, 2017 Balance at beginning of year $ 11,289 $ 18,344 $ — $ 25,000 $ 54,633 $ (122,350 ) Total gains or (losses) (realized/unrealized) Included in earnings (2) 3,779 893 — — 4,672 (9,089 ) Included in other comprehensive income — 289 — — 289 — Purchases, issuances, sales and settlements Purchases — 4,935 — 1,348 6,283 — Issuances — — — — — — Sales (13,640 ) (12,602 ) — — (26,242 ) — Settlements (1,428 ) — — — (1,428 ) 72,191 Transfers in and/or out of Level 3 5,949 132 11,471 4,798 22,350 — Balance at end of period $ 5,949 $ 11,991 $ 11,471 $ 31,146 $ 60,557 $ (59,248 ) (1) Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities. (2) Gains or losses were included in net realized gains (losses). |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value and notional amount of derivatives | The following table summarizes information on the fair values and notional values of the Company’s derivative instruments: Estimated Fair Value Asset Derivatives Liability Derivatives Notional Value (1) September 30, 2018 Futures contracts (2) $ 2,794 $ (14,085 ) $ 1,547,523 Foreign currency forward contracts (2) 8,203 (7,490 ) 1,315,080 TBAs (3) 25,207 — 24,964 Other (2) 26,344 (27,614 ) 2,220,054 Total $ 62,548 $ (49,189 ) December 31, 2017 Futures contracts (2) $ 3,371 $ (1,542 ) $ 1,452,497 Foreign currency forward contracts (2) 4,478 (4,381 ) 686,941 TBAs (3) 27,184 — 27,066 Other (2) 7,898 (14,541 ) 1,457,345 Total $ 42,931 $ (20,464 ) (1) Represents the absolute notional value of all outstanding contracts, consisting of long and short positions. (2) The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’ (3) The fair value of TBAs are included in ‘fixed maturities available for sale, at fair value.’ |
Summary of net realized gains (losses) recorded in the consolidated statements of income | Realized and unrealized contract gains and losses on the Company’s derivative instruments are reflected in ‘net realized gains (losses)’ in the consolidated statements of income, as summarized in the following table: Derivatives not designated as September 30, hedging instruments: 2018 2017 Three Months Ended Net realized gains (losses): Futures contracts $ (15,399 ) $ 4,899 Foreign currency forward contracts (5,458 ) (228 ) TBAs (3 ) 122 Other 3,304 (495 ) Total $ (17,556 ) $ 4,298 Nine Months Ended Net realized gains (losses): Futures contracts $ (10,609 ) $ 7,309 Foreign currency forward contracts (13,074 ) (12,266 ) TBAs (100 ) 143 Other 118 (4,839 ) Total $ (23,665 ) $ (9,653 ) |
Variable Interest Entities an_2
Variable Interest Entities and Noncontrolling Interests (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Carrying value of assets and liabilities of variable interest entity | The following table provides the carrying amount and balance sheet caption in which the assets and liabilities of Watford Re are reported: September 30, December 31, 2018 2017 Assets Investments accounted for using the fair value option $ 2,424,009 $ 2,426,066 Fixed maturities available for sale, at fair value 305,388 — Equity securities, at fair value 46,581 — Cash 64,684 54,503 Accrued investment income 17,650 18,261 Premiums receivable 217,582 177,492 Reinsurance recoverable on unpaid and paid losses and LAE 69,849 42,777 Ceded unearned premiums 63,772 24,762 Deferred acquisition costs 84,980 85,961 Receivable for securities sold 36,153 36,374 Goodwill and intangible assets 7,650 7,650 Other assets 81,152 140,808 Total assets of consolidated VIE $ 3,419,450 $ 3,014,654 Liabilities Reserves for losses and loss adjustment expenses $ 962,927 $ 798,262 Unearned premiums 407,957 330,644 Reinsurance balances payable 24,696 18,424 Revolving credit agreement borrowings 429,756 441,132 Payable for securities purchased 135,690 42,501 Other liabilities 252,171 215,186 Total liabilities of consolidated VIE $ 2,213,197 $ 1,846,149 Redeemable noncontrolling interests $ 220,899 $ 220,622 |
Activity in non-redeemable noncontrolling interests | The following table sets forth activity in the non-redeemable noncontrolling interests: September 30, 2018 2017 Three Months Ended Balance, beginning of period $ 861,153 $ 877,456 Amounts attributable to noncontrolling interests 16,759 (16,147 ) Other comprehensive income attributable to noncontrolling interests (1,158 ) (411 ) Balance, end of period $ 876,754 $ 860,898 Nine Months Ended Balance, beginning of year $ 843,411 $ 851,854 Amounts attributable to noncontrolling interests 36,251 9,523 Other comprehensive income attributable to noncontrolling interests (2,908 ) (479 ) Balance, end of period $ 876,754 $ 860,898 |
Activity in redeemable noncontrolling interests | The following table sets forth activity in the redeemable non-controlling interests: September 30, 2018 2017 Three Months Ended Balance, beginning of period $ 206,105 $ 205,736 Accretion of preference share issuance costs 94 93 Balance, end of period $ 206,199 $ 205,829 Nine Months Ended Balance, beginning of year $ 205,922 $ 205,553 Accretion of preference share issuance costs 277 276 Balance, end of period $ 206,199 $ 205,829 |
Portion of income or loss attributable to third party investors | The portion of Watford Re’s income or loss attributable to third party investors, recorded in the Company’s consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests,’ are summarized in the table below: September 30, 2018 2017 Three Months Ended Amounts attributable to non-redeemable noncontrolling interests $ (16,759 ) $ 16,147 Dividends attributable to redeemable noncontrolling interests (4,599 ) (4,586 ) Net (income) loss attributable to noncontrolling interests $ (21,358 ) $ 11,561 Nine Months Ended Amounts attributable to non-redeemable noncontrolling interests $ (36,251 ) $ (9,523 ) Dividends attributable to redeemable noncontrolling interests (13,769 ) (13,756 ) Net (income) loss attributable to noncontrolling interests $ (50,020 ) $ (23,279 ) |
Total assets and maximum exposure to loss associated with VIEs | The following table presents total assets of the Bellemeade entities, as well as the Company’s maximum exposure to loss associated with these VIEs as of September 30, 2018 and December 31, 2017: Maximum Exposure to Loss Bellemeade Entities (Issue Date) Total VIE Assets On-Balance Sheet Off-Balance Sheet Total Sep 30, 2018 Bellemeade 2015-1 Ltd. (Jul-15) $ 59,729 $ 166 $ 314 $ 480 Bellemeade 2016-1 Ltd. (May-16) 31,765 4 28 32 Bellemeade 2017-1 Ltd. (Oct-17) 319,635 198 1,104 1,302 Bellemeade 2018-1 Ltd. (Apr-18) 374,460 32 1,194 1,226 Bellemeade 2018-2 Ltd. (Aug-18) 653,278 388 2,395 2,783 Total $ 1,438,867 $ 788 $ 5,035 $ 5,823 Dec 31, 2017 Bellemeade 2015-1 Ltd. (Jul-15) $ 92,390 $ 471 $ 832 $ 1,303 Bellemeade 2016-1 Ltd. (May-16) 135,201 20 527 547 Bellemeade 2017-1 Ltd. (Oct-17) 347,139 391 1,867 2,258 Total $ 574,730 $ 882 $ 3,226 $ 4,108 |
Other Comprehensive Income (L_2
Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Comprehensive Income Note Disclosure [Abstract] | |
Details about amounts reclassified from AOCI | The following tables present details about amounts reclassified from accumulated other comprehensive income and the tax effects allocated to each component of other comprehensive income (loss): Amounts Reclassified from AOCI Consolidated Statement of Income Three Months Ended Nine Months Ended Details About Line Item That Includes September 30, September 30, AOCI Components Reclassification 2018 2017 2018 2017 Unrealized appreciation on available-for-sale investments Net realized gains (losses) $ (23,888 ) $ 27,550 $ (130,409 ) $ 59,474 Other-than-temporary impairment losses (492 ) (1,878 ) (1,124 ) (5,415 ) Total before tax (24,380 ) 25,672 (131,533 ) 54,059 Income tax (expense) benefit 1,177 (1,760 ) 9,226 (7,879 ) Net of tax $ (23,203 ) $ 23,912 $ (122,307 ) $ 46,180 |
Schedule of comprehensive income (loss) | Before Tax Amount Tax Expense (Benefit) Net of Tax Amount Three Months Ended September 30, 2018 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ (57,812 ) $ (4,504 ) $ (53,308 ) Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) — — — Less reclassification of net realized gains (losses) included in net income (24,380 ) (1,177 ) (23,203 ) Foreign currency translation adjustments 2,167 104 2,063 Other comprehensive income (loss) $ (31,265 ) $ (3,223 ) $ (28,042 ) Three Months Ended September 30, 2017 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 69,330 $ 2,868 $ 66,462 Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) — — — Less reclassification of net realized gains (losses) included in net income 25,672 1,760 23,912 Foreign currency translation adjustments 8,590 310 8,280 Other comprehensive income (loss) $ 52,248 $ 1,418 $ 50,830 Nine Months Ended September 30, 2018 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ (335,789 ) $ (30,533 ) $ (305,256 ) Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) — — — Less reclassification of net realized gains (losses) included in net income (131,533 ) (9,226 ) (122,307 ) Foreign currency translation adjustments (9,102 ) 148 (9,250 ) Other comprehensive income (loss) $ (213,358 ) $ (21,159 ) $ (192,199 ) Nine Months Ended September 30, 2017 Unrealized appreciation (decline) in value of investments: Unrealized holding gains (losses) arising during period $ 288,813 $ 28,590 $ 260,223 Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss) — — — Less reclassification of net realized gains (losses) included in net income 54,059 7,879 46,180 Foreign currency translation adjustments 30,264 563 29,701 Other comprehensive income (loss) $ 265,018 $ 21,274 $ 243,744 |
Guarantor Financial Informati_2
Guarantor Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed consolidating balance sheet | September 30, 2018 Condensed Consolidating Balance Sheet Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Assets Total investments $ 183 $ 198,843 $ 21,482,102 $ (14,700 ) $ 21,666,428 Cash 8,058 52,784 590,195 — 651,037 Investments in subsidiaries 9,655,977 4,126,722 — (13,782,699 ) — Due from subsidiaries and affiliates 16 2 1,870,606 (1,870,624 ) — Premiums receivable — — 1,852,571 (545,105 ) 1,307,466 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses — — 8,264,202 (5,514,417 ) 2,749,785 Contractholder receivables — — 2,067,268 — 2,067,268 Ceded unearned premiums — — 1,809,979 (798,129 ) 1,011,850 Deferred acquisition costs — — 632,637 (59,650 ) 572,987 Goodwill and intangible assets — — 566,662 — 566,662 Other assets 11,966 30,477 1,759,537 (142,929 ) 1,659,051 Total assets $ 9,676,200 $ 4,408,828 $ 40,895,759 $ (22,728,253 ) $ 32,252,534 Liabilities Reserve for losses and loss adjustment expenses $ — $ — $ 16,847,736 $ (5,293,415 ) $ 11,554,321 Unearned premiums — — 4,666,508 (798,129 ) 3,868,379 Reinsurance balances payable — — 950,041 (545,105 ) 404,936 Contractholder payables — — 2,067,268 — 2,067,268 Collateral held for insured obligations — — 249,723 249,723 Senior notes 297,125 494,697 941,542 — 1,733,364 Revolving credit agreement borrowings — — 554,756 — 554,756 Due to subsidiaries and affiliates 3,386 542,365 1,324,873 (1,870,624 ) — Other liabilities 20,541 34,661 1,750,063 (423,579 ) 1,381,686 Total liabilities 321,052 1,071,723 29,352,510 (8,930,852 ) 21,814,433 Redeemable noncontrolling interests — — 220,899 (14,700 ) 206,199 Shareholders’ Equity Total shareholders’ equity available to Arch 9,355,148 3,337,105 10,445,596 (13,782,701 ) 9,355,148 Non-redeemable noncontrolling interests — — 876,754 — 876,754 Total shareholders’ equity 9,355,148 3,337,105 11,322,350 (13,782,701 ) 10,231,902 Total liabilities, noncontrolling interests and shareholders’ equity $ 9,676,200 $ 4,408,828 $ 40,895,759 $ (22,728,253 ) $ 32,252,534 December 31, 2017 Condensed Consolidating Balance Sheet Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Assets Total investments $ 96,540 $ 46,281 $ 21,711,891 $ (14,700 ) $ 21,840,012 Cash 9,997 30,380 565,822 — 606,199 Investments in subsidiaries 9,396,621 4,097,765 — (13,494,386 ) — Due from subsidiaries and affiliates 394 — 1,828,864 (1,829,258 ) — Premiums receivable — — 2,967,701 (1,832,452 ) 1,135,249 Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses — — 8,442,192 (5,902,049 ) 2,540,143 Contractholder receivables — — 1,978,414 — 1,978,414 Ceded unearned premiums — — 2,165,789 (1,239,178 ) 926,611 Deferred acquisition costs — — 693,053 (157,229 ) 535,824 Goodwill and intangible assets — — 652,611 — 652,611 Other assets 13,176 49,585 1,860,505 (86,671 ) 1,836,595 Total assets $ 9,516,728 $ 4,224,011 $ 42,866,842 $ (24,555,923 ) $ 32,051,658 Liabilities Reserve for losses and loss adjustment expenses $ — $ — $ 17,236,401 $ (5,852,609 ) $ 11,383,792 Unearned premiums — — 4,861,491 (1,239,177 ) 3,622,314 Reinsurance balances payable — — 2,155,947 (1,832,451 ) 323,496 Contractholder payables — — 1,978,414 — 1,978,414 Collateral held for insured obligations — — 240,183 — 240,183 Senior notes 297,053 494,621 941,210 — 1,732,884 Revolving credit agreement borrowings — — 816,132 — 816,132 Due to subsidiaries and affiliates 235 536,919 1,292,104 (1,829,258 ) — Other liabilities 22,838 29,317 1,949,696 (293,343 ) 1,708,508 Total liabilities 320,126 1,060,857 31,471,578 (11,046,838 ) 21,805,723 Redeemable noncontrolling interests — — 220,622 (14,700 ) 205,922 Shareholders’ Equity Total shareholders’ equity available to Arch 9,196,602 3,163,154 10,331,231 (13,494,385 ) 9,196,602 Non-redeemable noncontrolling interests — — 843,411 — 843,411 Total shareholders’ equity 9,196,602 3,163,154 11,174,642 (13,494,385 ) 10,040,013 Total liabilities, noncontrolling interests and shareholders’ equity $ 9,516,728 $ 4,224,011 $ 42,866,842 $ (24,555,923 ) $ 32,051,658 |
Condensed consolidating statement of income and comprehensive income | Three Months Ended September 30, 2018 Condensed Consolidating Statement of Income and Comprehensive Income Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Revenues Net premiums earned $ — $ — $ 1,290,878 $ — $ 1,290,878 Net investment income 2 1,202 165,289 (22,469 ) 144,024 Net realized gains (losses) — (64 ) (51,641 ) — (51,705 ) Net impairment losses recognized in earnings — — (492 ) — (492 ) Other underwriting income — — 5,823 — 5,823 Equity in net income (loss) of investment funds accounted for using the equity method — — 15,982 — 15,982 Other income (loss) (195 ) — (531 ) — (726 ) Total revenues (193 ) 1,138 1,425,308 (22,469 ) 1,403,784 Expenses Losses and loss adjustment expenses — — 699,420 — 699,420 Acquisition expenses — — 201,602 — 201,602 Other operating expenses — — 161,098 — 161,098 Corporate expenses 15,170 446 (1,281 ) — 14,335 Amortization of intangible assets — — 26,315 — 26,315 Interest expense 5,536 12,075 34,276 (22,157 ) 29,730 Net foreign exchange (gains) losses — — (10,426 ) (412 ) (10,838 ) Total expenses 20,706 12,521 1,111,004 (22,569 ) 1,121,662 Income (loss) before income taxes (20,899 ) (11,383 ) 314,304 100 282,122 Income tax (expense) benefit — 2,276 (35,632 ) — (33,356 ) Income (loss) before equity in net income of subsidiaries (20,899 ) (9,107 ) 278,672 100 248,766 Equity in net income of subsidiaries 248,307 92,906 — (341,213 ) — Net income 227,408 83,799 278,672 (341,113 ) 248,766 Net (income) loss attributable to noncontrolling interests — — (21,669 ) 311 (21,358 ) Net income available to Arch 227,408 83,799 257,003 (340,802 ) 227,408 Preferred dividends (10,402 ) — — — (10,402 ) Net income available to Arch common shareholders $ 217,006 $ 83,799 $ 257,003 $ (340,802 ) $ 217,006 Comprehensive income available to Arch $ 200,524 $ 77,389 $ 230,565 $ (307,954 ) $ 200,524 Three Months Ended September 30, 2017 Condensed Consolidating Statement of Income and Comprehensive Income Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Revenues Net premiums earned $ — $ — $ 1,261,886 $ — $ 1,261,886 Net investment income 117 151 138,784 (22,593 ) 116,459 Net realized gains (losses) — — 66,275 — 66,275 Net impairment losses recognized in earnings — — (1,878 ) — (1,878 ) Other underwriting income — — 6,064 — 6,064 Equity in net income (loss) of investment funds accounted for using the equity method — — 31,090 — 31,090 Other income (loss) (102 ) — (240 ) — (342 ) Total revenues 15 151 1,501,981 (22,593 ) 1,479,554 Expenses Losses and loss adjustment expenses — — 1,046,141 — 1,046,141 Acquisition expenses — — 193,854 — 193,854 Other operating expenses — — 170,127 — 170,127 Corporate expenses 14,576 410 2,112 — 17,098 Amortization of intangible assets — — 31,824 — 31,824 Interest expense 5,934 12,037 33,811 (22,272 ) 29,510 Net foreign exchange (gains) losses — — 20,510 7,518 28,028 Total expenses 20,510 12,447 1,498,379 (14,754 ) 1,516,582 Income (loss) before income taxes (20,495 ) (12,296 ) 3,602 (7,839 ) (37,028 ) Income tax (expense) benefit — 4,432 (12,621 ) — (8,189 ) Income (loss) before equity in net income of subsidiaries (20,495 ) (7,864 ) (9,019 ) (7,839 ) (45,217 ) Equity in net income of subsidiaries (13,161 ) 50,057 — (36,896 ) — Net income (loss) (33,656 ) 42,193 (9,019 ) (44,735 ) (45,217 ) Net (income) loss attributable to noncontrolling interests — — 11,238 323 11,561 Net income (loss) available to Arch (33,656 ) 42,193 2,219 (44,412 ) (33,656 ) Preferred dividends (12,369 ) — — — (12,369 ) Loss on redemption of preferred shares (6,735 ) — — — (6,735 ) Net income (loss) available to Arch common shareholders $ (52,760 ) $ 42,193 $ 2,219 $ (44,412 ) $ (52,760 ) Comprehensive income available to Arch $ 17,585 $ 47,676 $ 45,936 $ (93,612 ) $ 17,585 Nine Months Ended September 30, 2018 Condensed Consolidating Statement of Income and Comprehensive Income Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Revenues Net premiums earned $ — $ — $ 3,862,540 $ — $ 3,862,540 Net investment income 37 2,020 471,588 (67,229 ) 406,416 Net realized gains (losses) 29 (71 ) (239,272 ) — (239,314 ) Net impairment losses recognized in earnings — — (1,124 ) — (1,124 ) Other underwriting income — — 15,046 — 15,046 Equity in net income (loss) of investment funds accounted for using the equity method — — 52,523 — 52,523 Other income (loss) 2,066 — 395 — 2,461 Total revenues 2,132 1,949 4,161,696 (67,229 ) 4,098,548 Expenses Losses and loss adjustment expenses — — 2,062,433 — 2,062,433 Acquisition expenses — — 595,816 — 595,816 Other operating expenses — — 512,294 — 512,294 Corporate expenses 47,981 1,205 2,973 — 52,159 Amortization of intangible assets — — 79,523 — 79,523 Interest expense 16,609 36,014 104,359 (66,272 ) 90,710 Net foreign exchange (gains) losses 29 — (37,347 ) (7,505 ) (44,823 ) Total expenses 64,619 37,219 3,320,051 (73,777 ) 3,348,112 Income (loss) before income taxes (62,487 ) (35,270 ) 841,645 6,548 750,436 Income tax (expense) benefit — 7,704 (86,643 ) — (78,939 ) Income (loss) before equity in net income of subsidiaries (62,487 ) (27,566 ) 755,002 6,548 671,497 Equity in net income of subsidiaries 683,964 266,053 — (950,017 ) — Net income 621,477 238,487 755,002 (943,469 ) 671,497 Net (income) loss attributable to noncontrolling interests — — (50,976 ) 956 (50,020 ) Net income available to Arch 621,477 238,487 704,026 (942,513 ) 621,477 Preferred dividends (31,242 ) — — — (31,242 ) Loss on redemption of preferred shares (2,710 ) — — — (2,710 ) Net income available to Arch common shareholders $ 587,525 $ 238,487 $ 704,026 $ (942,513 ) $ 587,525 Comprehensive income available to Arch $ 432,186 $ 153,992 $ 522,448 $ (676,440 ) $ 432,186 Nine Months Ended September 30, 2017 Condensed Consolidating Statement of Income and Comprehensive Income Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Revenues Net premiums earned $ — $ — $ 3,619,777 $ — $ 3,619,777 Net investment income 123 1,151 410,392 (66,209 ) 345,457 Net realized gains (losses) — — 122,163 — 122,163 Net impairment losses recognized in earnings — — (5,415 ) — (5,415 ) Other underwriting income — — 15,519 — 15,519 Equity in net income (loss) of investment funds accounted for using the equity method — — 111,884 — 111,884 Other income (loss) (368 ) — (2,750 ) — (3,118 ) Total revenues (245 ) 1,151 4,271,570 (66,209 ) 4,206,267 Expenses Losses and loss adjustment expenses — — 2,288,571 — 2,288,571 Acquisition expenses — — 566,579 — 566,579 Other operating expenses — — 514,827 — 514,827 Corporate expenses 53,639 3,727 12,400 — 69,766 Amortization of intangible assets — — 93,942 — 93,942 Interest expense 18,024 35,956 98,197 (65,242 ) 86,935 Net foreign exchange (gains) losses — — 65,701 21,274 86,975 Total expenses 71,663 39,683 3,640,217 (43,968 ) 3,707,595 Income (loss) before income taxes (71,908 ) (38,532 ) 631,353 (22,241 ) 498,672 Income tax (expense) benefit — 13,374 (84,129 ) — (70,755 ) Income (loss) before equity in net income of subsidiaries (71,908 ) (25,158 ) 547,224 (22,241 ) 427,917 Equity in net income of subsidiaries 476,546 213,586 — (690,132 ) — Net income 404,638 188,428 547,224 (712,373 ) 427,917 Net (income) loss attributable to noncontrolling interests — — (24,247 ) 968 (23,279 ) Net income available to Arch 404,638 188,428 522,977 (711,405 ) 404,638 Preferred dividends (34,936 ) — — — (34,936 ) Loss on redemption of preferred shares (6,735 ) — — — (6,735 ) Net income available to Arch common shareholders $ 362,967 $ 188,428 $ 522,977 $ (711,405 ) $ 362,967 Comprehensive income available to Arch $ 648,861 $ 240,759 $ 745,856 $ (986,615 ) $ 648,861 |
Condensed consolidating statement of cash flows | Nine Months Ended September 30, 2018 Condensed Consolidating Statement of Cash Flows Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Operating Activities Net Cash Provided By (Used For) Operating Activities $ 222,097 $ 176,851 $ 1,622,248 $ (900,209 ) $ 1,120,987 Investing Activities Purchases of fixed maturity investments — (214,449 ) (25,229,184 ) 605,716 (24,837,917 ) Purchases of equity securities — — (819,342 ) — (819,342 ) Purchases of other investments — — (1,543,332 ) — (1,543,332 ) Proceeds from the sales of fixed maturity investments — 111,533 23,804,386 (605,716 ) 23,310,203 Proceeds from the sales of equity securities — — 866,919 — 866,919 Proceeds from the sales, redemptions and maturities of other investments — — 1,178,035 — 1,178,035 Proceeds from redemptions and maturities of fixed maturity investments — — 724,021 — 724,021 Net settlements of derivative instruments — — 765 — 765 Net (purchases) sales of short-term investments 96,397 (49,031 ) 506,949 — 554,315 Change in cash collateral related to securities lending — — 137,073 — 137,073 Contributions to subsidiaries — (2,500 ) (29,646 ) 32,146 — Purchases of fixed assets (71 ) — (18,979 ) — (19,050 ) Other (4 ) — 58,231 — 58,227 Net Cash Provided By (Used For) Investing Activities 96,322 (154,447 ) (364,104 ) 32,146 (390,083 ) Financing Activities Redemption of preferred shares (92,555 ) — — — (92,555 ) Purchases of common shares under share repurchase program (184,529 ) — — — (184,529 ) Proceeds from common shares issued, net (12,029 ) — 32,146 (32,146 ) (12,029 ) Proceeds from borrowings — — 167,259 — 167,259 Repayments of borrowings — — (427,000 ) — (427,000 ) Change in cash collateral related to securities lending — — (137,073 ) — (137,073 ) Dividends paid to redeemable noncontrolling interests — — (14,447 ) 956 (13,491 ) Dividends paid to parent (1) — — (899,253 ) 899,253 — Other — — (6,084 ) — (6,084 ) Preferred dividends paid (31,242 ) — — — (31,242 ) Net Cash Provided By (Used For) Financing Activities (320,355 ) — (1,284,452 ) 868,063 (736,744 ) Effects of exchange rates changes on foreign currency cash and restricted cash — — (11,625 ) — (11,625 ) Increase (decrease) in cash and restricted cash (1,936 ) 22,404 (37,933 ) — (17,465 ) Cash and restricted cash, beginning of year 10,048 30,380 686,856 — 727,284 Cash and restricted cash, end of period $ 8,112 $ 52,784 $ 648,923 $ — $ 709,819 (1) Dividends received by parent are included in net cash provided by (used for) operating activities. Nine Months Ended September 30, 2017 Condensed Consolidating Statement of Cash Flows Arch Capital (Parent Guarantor) Arch-U.S. (Subsidiary Issuer) Other Arch Capital Subsidiaries Consolidating Adjustments and Eliminations Arch Capital Consolidated Operating Activities Net Cash Provided By (Used For) Operating Activities $ 130,715 $ 70,761 $ 1,444,276 $ (585,043 ) $ 1,060,709 Investing Activities Purchases of fixed maturity investments — — (28,079,129 ) — (28,079,129 ) Purchases of equity securities — — (667,135 ) — (667,135 ) Purchases of other investments — — (1,406,528 ) — (1,406,528 ) Proceeds from the sales of fixed maturity investments — — 27,629,474 — 27,629,474 Proceeds from the sales of equity securities — — 751,873 — 751,873 Proceeds from the sales, redemptions and maturities of other investments — — 938,581 — 938,581 Proceeds from redemptions and maturities of fixed maturity investments — — 747,621 — 747,621 Net settlements of derivative instruments — — (20,952 ) — (20,952 ) Net (purchases) sales of short-term investments 2,209 (27,998 ) (938,864 ) — (964,653 ) Change in cash collateral related to securities lending — — 148,692 — 148,692 Contributions to subsidiaries 20,641 (72,900 ) (353,588 ) 405,847 — Issuance of intercompany loans — — (47,000 ) 47,000 — Repayment of intercompany loans — 47,000 — (47,000 ) — Acquisitions, net of cash — — (27,709 ) — (27,709 ) Purchases of fixed assets (18 ) — (16,844 ) — (16,862 ) Other — — 114,730 (20,641 ) 94,089 Net Cash Provided By (Used For) Investing Activities 22,832 (53,898 ) (1,226,778 ) 385,206 (872,638 ) Financing Activities Proceeds from issuance of preferred shares, net 222,054 — — — 222,054 Redemption of preferred shares (230,000 ) — — — (230,000 ) Proceeds from common shares issued, net (7,484 ) — 405,847 (405,847 ) (7,484 ) Proceeds from intercompany borrowings — — 47,000 (47,000 ) — Proceeds from borrowings — — 238,915 — 238,915 Repayments of intercompany borrowings — — (47,000 ) 47,000 — Repayments of borrowings (100,000 ) — (72,000 ) — (172,000 ) Change in cash collateral related to securities lending — — (148,692 ) — (148,692 ) Dividends paid to redeemable noncontrolling interests — — (14,447 ) 956 (13,491 ) Dividends paid to parent (1) — — (584,087 ) 584,087 — Other — — (69,921 ) 20,641 (49,280 ) Preferred dividends paid (34,936 ) — — — (34,936 ) Net Cash Provided By (Used For) Financing Activities (150,366 ) — (244,385 ) 199,837 (194,914 ) Effects of exchange rates changes on foreign currency cash and restricted cash — — 17,888 — 17,888 Increase (decrease) in cash and restricted cash 3,181 16,863 (8,999 ) — 11,045 Cash and restricted cash, beginning of year 1,738 71,955 895,876 — 969,569 Cash and restricted cash, end of period $ 4,919 $ 88,818 $ 886,877 $ — $ 980,614 (1) Dividends received by parent are included in net cash provided by (used for) operating activities. |
Basis of Presentation and Rec_3
Basis of Presentation and Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Retained earnings | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of an accounting change | $ 0 | $ 149,794 | $ 0 | $ (314) |
Retained earnings | ASU 2016-01 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of an accounting change | 149,794 | |||
Accumulated other comprehensive income (loss), net of deferred income tax | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of an accounting change | $ 0 | (149,794) | $ 0 | $ 0 |
Accumulated other comprehensive income (loss), net of deferred income tax | ASU 2016-01 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of an accounting change | $ (149,794) |
Share Transactions - Three-for-
Share Transactions - Three-for-one common share split (Details) shares in Millions | Jun. 18, 2018$ / sharesshares | Sep. 30, 2018$ / shares | Mar. 31, 2018$ / sharesshares | Dec. 31, 2017$ / shares |
Stockholders' Equity Note [Abstract] | ||||
Share split conversion ratio | 3 | |||
Number of common shares authorized | shares | 1,800 | 600 | ||
Common shares, par value per share | $ / shares | $ 0.0011 | $ 0.0011 | $ 0.0033 | $ 0.0011 |
Share Transactions - Share repu
Share Transactions - Share repurchases (Details) shares in Millions, $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($)shares | |
Class of Stock [Line Items] | |
Treasury stock, shares acquired (shares) | shares | 6.9 |
Shares repurchased for treasury | $ 184.5 |
Common shares | |
Class of Stock [Line Items] | |
Cumulative number of shares acquired since inception of share repurchase program | shares | 382.6 |
Aggregate purchase price of shares acquired since inception of share repurchase program | $ 3,870 |
Remaining authorized repurchase amount | $ 262 |
Share Transactions - Conversion
Share Transactions - Conversion of Non-voting common equivalent preferred shares (Details) shares in Millions | 1 Months Ended |
Mar. 31, 2018shares | |
Class of Stock [Line Items] | |
Number of common shares issued on conversion | 17 |
Number of convertible shares transferred | 0.6 |
Share Transactions - Series C P
Share Transactions - Series C Preferred Shares (Details) - Series C Preferred Shares | Jan. 02, 2018$ / shares |
Class of Stock [Line Items] | |
Preferred shares, dividend rate | 6.75% |
Preferred shares, redemption price | $ 25 |
Earnings (Loss) Per Common Sh_3
Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Numerator: | |||||
Net income (loss) | $ 248,766 | $ (45,217) | $ 671,497 | $ 427,917 | |
Net (income) loss attributable to noncontrolling interests | (21,358) | 11,561 | (50,020) | (23,279) | |
Net income available to Arch | 227,408 | (33,656) | 621,477 | 404,638 | |
Preferred dividends | (10,402) | (12,369) | (31,242) | (34,936) | |
Loss on redemption of preferred shares | 0 | (6,735) | (2,710) | (6,735) | |
Net income available to Arch common shareholders | $ 217,006 | $ (52,760) | $ 587,525 | $ 362,967 | |
Denominator: | |||||
Weighted average common shares outstanding | 402,939,092 | 387,633,753 | 400,649,105 | 373,579,833 | |
Series D preferred shares | 0 | 17,022,600 | 4,427,123 | 29,836,554 | |
Weighted average common shares outstanding — basic | 402,939,092 | 404,656,353 | 405,076,228 | 403,416,387 | |
Effect of dilutive common share equivalents: | |||||
Nonvested restricted shares | 1,619,286 | 0 | 1,568,044 | 4,379,637 | |
Stock options | [1] | 7,162,836 | 0 | 7,348,920 | 9,870,948 |
Weighted average common shares and common share equivalents outstanding — diluted | 411,721,214 | 404,656,353 | 413,993,192 | 417,666,972 | |
Earnings per common share: | |||||
Basic (per share) | $ 0.54 | $ (0.13) | $ 1.45 | $ 0.90 | |
Diluted (per share) | $ 0.53 | $ (0.13) | $ 1.42 | $ 0.87 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per common share (shares) | 4,700,000 | ||||
Stock Options | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per common share (shares) | 4,396,352 | 0 | 5,481,584 | 2,516,604 | |
[1] | Certain stock options were not included in the computation of diluted earnings per share where the exercise price of the stock options exceeded the average market price and would have been anti-dilutive or where, when applying the treasury stock method to in-the-money options, the sum of the proceeds, including unrecognized compensation, exceeded the average market price and would have been anti-dilutive. For the 2018 third quarter and 2017 third quarter, the number of stock options excluded were 4,396,352 and 0, respectively. For the nine months ended September 30, 2018 and 2017, the number of stock options excluded were 5,481,584 and 2,516,604, respectively. |
Segment Information - Summary o
Segment Information - Summary of underwriting income or loss by segment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |||||
Segment Reporting Information [Line Items] | |||||||||
Gross premiums written | $ 1,731,328 | $ 1,648,246 | $ 5,266,086 | $ 4,915,895 | |||||
Premiums ceded | (397,775) | (322,843) | (1,221,093) | (1,065,537) | |||||
Net premiums written | 1,333,553 | 1,325,403 | 4,044,993 | 3,850,358 | |||||
Change in unearned premiums | (42,675) | (63,517) | (182,453) | (230,581) | |||||
Net premiums earned | 1,290,878 | 1,261,886 | 3,862,540 | 3,619,777 | |||||
Other underwriting income | 5,823 | 6,064 | 15,046 | 15,519 | |||||
Losses and loss adjustment expenses | (699,420) | (1,046,141) | (2,062,433) | (2,288,571) | |||||
Acquisition expenses, net | (201,602) | (193,854) | (595,816) | (566,579) | |||||
Other operating expenses | (161,098) | (170,127) | (512,294) | (514,827) | |||||
Underwriting income (loss) | 234,581 | (142,172) | 707,043 | 265,319 | |||||
Net investment income | 144,024 | 116,459 | 406,416 | 345,457 | |||||
Net realized gains (losses) | (51,705) | 66,275 | (239,314) | 122,163 | |||||
Net impairment losses recognized in earnings | (492) | (1,878) | (1,124) | (5,415) | |||||
Equity in net income (loss) of investment funds accounted for using the equity method | 15,982 | 31,090 | 52,523 | 111,884 | |||||
Other income (loss) | (726) | (342) | 2,461 | (3,118) | |||||
Corporate expenses | (13,244) | [1] | (14,108) | (43,330) | [1] | (48,517) | [1] | ||
UGC transaction costs and other | (1,091) | [1] | (2,990) | (8,829) | [1] | (21,249) | [1] | ||
Amortization of intangible assets | (26,315) | (31,824) | (79,523) | (93,942) | |||||
Interest expense | (29,730) | (29,510) | (90,710) | (86,935) | |||||
Net foreign exchange gains (losses) | 10,838 | (28,028) | 44,823 | (86,975) | |||||
Income (loss) before income taxes | 282,122 | (37,028) | 750,436 | 498,672 | |||||
Income tax expense | (33,356) | (8,189) | (78,939) | (70,755) | |||||
Net income (loss) | 248,766 | (45,217) | 671,497 | 427,917 | |||||
Dividends attributable to redeemable noncontrolling interests | (4,599) | (4,586) | (13,769) | (13,756) | |||||
Amounts attributable to non-redeemable noncontrolling interests | (16,759) | 16,147 | (36,251) | (9,523) | |||||
Net income (loss) available to Arch | 227,408 | (33,656) | 621,477 | 404,638 | |||||
Preferred dividends | (10,402) | (12,369) | (31,242) | (34,936) | |||||
Loss on redemption of preferred shares | 0 | (6,735) | (2,710) | (6,735) | |||||
Net income available to Arch common shareholders | $ 217,006 | $ (52,760) | $ 587,525 | $ 362,967 | |||||
Underwriting Ratios | |||||||||
Loss ratio | 54.20% | 82.90% | 53.40% | 63.20% | |||||
Acquisition expense ratio | 15.60% | 15.40% | 15.40% | 15.70% | |||||
Other operating expense ratio | 12.50% | 13.50% | 13.30% | 14.20% | |||||
Combined ratio | 82.30% | 111.80% | 82.10% | 93.10% | |||||
Goodwill and intangible assets | $ 566,662 | $ 684,405 | $ 566,662 | $ 684,405 | $ 652,611 | ||||
Other | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Number of segments | segment | 2 | ||||||||
Gross premiums written | [2] | 185,033 | 166,198 | $ 574,078 | 473,131 | ||||
Premiums ceded | (33,356) | (12,471) | (102,263) | (35,315) | |||||
Net premiums written | 151,677 | 153,727 | 471,815 | 437,816 | |||||
Change in unearned premiums | (16,054) | (25,097) | (39,926) | (36,435) | |||||
Net premiums earned | 135,623 | 128,630 | 431,889 | 401,381 | |||||
Other underwriting income | 703 | 737 | 2,092 | 2,377 | |||||
Losses and loss adjustment expenses | (96,957) | (123,581) | (312,087) | (319,612) | |||||
Acquisition expenses, net | (29,619) | (32,073) | (95,229) | (99,328) | |||||
Other operating expenses | (9,959) | (8,268) | (27,752) | (24,311) | |||||
Underwriting income (loss) | (209) | (34,555) | (1,087) | (39,493) | |||||
Net investment income | 29,696 | 22,332 | 84,084 | 62,998 | |||||
Net realized gains (losses) | (4,695) | 2,171 | (20,900) | 11,501 | |||||
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 | |||||
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 | |||||
Other income (loss) | 0 | 0 | 0 | 0 | |||||
Corporate expenses | 0 | [1] | 0 | 0 | [1] | 0 | [1] | ||
UGC transaction costs and other | 0 | [1] | 0 | 0 | [1] | 0 | [1] | ||
Amortization of intangible assets | 0 | 0 | 0 | 0 | |||||
Interest expense | (5,064) | (3,246) | (14,079) | (9,003) | |||||
Net foreign exchange gains (losses) | 3,708 | (243) | 6,521 | (1,524) | |||||
Income (loss) before income taxes | 23,436 | (13,541) | 54,539 | 24,479 | |||||
Income tax expense | 0 | (21) | (27) | (21) | |||||
Net income (loss) | 23,436 | (13,562) | 54,512 | 24,458 | |||||
Dividends attributable to redeemable noncontrolling interests | (4,599) | (4,586) | (13,769) | (13,756) | |||||
Amounts attributable to non-redeemable noncontrolling interests | (16,759) | 16,147 | (36,251) | (9,523) | |||||
Net income (loss) available to Arch | 2,078 | (2,001) | 4,492 | 1,179 | |||||
Preferred dividends | 0 | 0 | 0 | 0 | |||||
Loss on redemption of preferred shares | 0 | 0 | 0 | ||||||
Net income available to Arch common shareholders | $ 2,078 | $ (2,001) | $ 4,492 | $ 1,179 | |||||
Underwriting Ratios | |||||||||
Loss ratio | 71.50% | 96.10% | 72.30% | 79.60% | |||||
Acquisition expense ratio | 21.80% | 24.90% | 22.00% | 24.70% | |||||
Other operating expense ratio | 7.30% | 6.40% | 6.40% | 6.10% | |||||
Combined ratio | 100.60% | 127.40% | 100.70% | 110.40% | |||||
Goodwill and intangible assets | $ 7,650 | $ 7,650 | $ 7,650 | $ 7,650 | |||||
Sub-Total | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Number of segments | segment | 3 | ||||||||
Gross premiums written | [2] | 1,622,532 | 1,557,179 | $ 4,935,339 | 4,697,007 | ||||
Premiums ceded | (440,656) | (385,503) | (1,362,161) | (1,284,465) | |||||
Net premiums written | 1,181,876 | 1,171,676 | 3,573,178 | 3,412,542 | |||||
Change in unearned premiums | (26,621) | (38,420) | (142,527) | (194,146) | |||||
Net premiums earned | 1,155,255 | 1,133,256 | 3,430,651 | 3,218,396 | |||||
Other underwriting income | 5,120 | 5,327 | 12,954 | 13,142 | |||||
Losses and loss adjustment expenses | (602,463) | (922,560) | (1,750,346) | (1,968,959) | |||||
Acquisition expenses, net | (171,983) | (161,781) | (500,587) | (467,251) | |||||
Other operating expenses | (151,139) | (161,859) | (484,542) | (490,516) | |||||
Underwriting income (loss) | 234,790 | (107,617) | 708,130 | 304,812 | |||||
Net investment income | 114,328 | 94,127 | 322,332 | 282,459 | |||||
Net realized gains (losses) | (47,010) | 64,104 | (218,414) | 110,662 | |||||
Net impairment losses recognized in earnings | (492) | (1,878) | (1,124) | (5,415) | |||||
Equity in net income (loss) of investment funds accounted for using the equity method | 15,982 | 31,090 | 52,523 | 111,884 | |||||
Other income (loss) | (726) | (342) | 2,461 | (3,118) | |||||
Corporate expenses | (13,244) | [1] | (14,108) | (43,330) | [1] | (48,517) | [1] | ||
UGC transaction costs and other | (1,091) | [1] | (2,990) | (8,829) | [1] | (21,249) | [1] | ||
Amortization of intangible assets | (26,315) | (31,824) | (79,523) | (93,942) | |||||
Interest expense | (24,666) | (26,264) | (76,631) | (77,932) | |||||
Net foreign exchange gains (losses) | 7,130 | (27,785) | 38,302 | (85,451) | |||||
Income (loss) before income taxes | 258,686 | (23,487) | 695,897 | 474,193 | |||||
Income tax expense | (33,356) | (8,168) | (78,912) | (70,734) | |||||
Net income (loss) | 225,330 | (31,655) | 616,985 | 403,459 | |||||
Dividends attributable to redeemable noncontrolling interests | 0 | 0 | 0 | 0 | |||||
Amounts attributable to non-redeemable noncontrolling interests | 0 | 0 | 0 | 0 | |||||
Net income (loss) available to Arch | 225,330 | (31,655) | 616,985 | 403,459 | |||||
Preferred dividends | (10,402) | (12,369) | (31,242) | (34,936) | |||||
Loss on redemption of preferred shares | (6,735) | (2,710) | (6,735) | ||||||
Net income available to Arch common shareholders | $ 214,928 | $ (50,759) | $ 583,033 | $ 361,788 | |||||
Underwriting Ratios | |||||||||
Loss ratio | 52.10% | 81.40% | 51.00% | 61.20% | |||||
Acquisition expense ratio | 14.90% | 14.30% | 14.60% | 14.50% | |||||
Other operating expense ratio | 13.10% | 14.30% | 14.10% | 15.20% | |||||
Combined ratio | 80.10% | 110.00% | 79.70% | 90.90% | |||||
Goodwill and intangible assets | $ 559,012 | $ 676,755 | $ 559,012 | $ 676,755 | |||||
Sub-Total | Insurance | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Gross premiums written | [2] | 836,820 | 787,447 | 2,429,570 | 2,313,630 | ||||
Premiums ceded | (259,968) | (222,516) | (752,413) | (704,057) | |||||
Net premiums written | 576,852 | 564,931 | 1,677,157 | 1,609,573 | |||||
Change in unearned premiums | (15,794) | (29,766) | (30,913) | (51,188) | |||||
Net premiums earned | 561,058 | 535,165 | 1,646,244 | 1,558,385 | |||||
Other underwriting income | 0 | 0 | 0 | 0 | |||||
Losses and loss adjustment expenses | (409,435) | (568,795) | (1,120,630) | (1,252,375) | |||||
Acquisition expenses, net | (88,255) | (82,638) | (264,094) | (236,378) | |||||
Other operating expenses | (90,081) | (90,875) | (274,735) | (271,268) | |||||
Underwriting income (loss) | $ (26,713) | $ (207,143) | $ (13,215) | $ (201,636) | |||||
Underwriting Ratios | |||||||||
Loss ratio | 73.00% | 106.30% | 68.10% | 80.40% | |||||
Acquisition expense ratio | 15.70% | 15.40% | 16.00% | 15.20% | |||||
Other operating expense ratio | 16.10% | 17.00% | 16.70% | 17.40% | |||||
Combined ratio | 104.80% | 138.70% | 100.80% | 113.00% | |||||
Goodwill and intangible assets | $ 20,141 | $ 23,445 | $ 20,141 | $ 23,445 | |||||
Sub-Total | Reinsurance | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Gross premiums written | [2] | 435,396 | 422,083 | 1,503,206 | 1,351,051 | ||||
Premiums ceded | (123,705) | (105,389) | (455,682) | (386,743) | |||||
Net premiums written | 311,691 | 316,694 | 1,047,524 | 964,308 | |||||
Change in unearned premiums | (18,418) | 6,879 | (134,761) | (81,182) | |||||
Net premiums earned | 293,273 | 323,573 | 912,763 | 883,126 | |||||
Other underwriting income | 1,387 | 1,728 | 2,490 | 1,143 | |||||
Losses and loss adjustment expenses | (183,413) | (318,609) | (555,044) | (631,669) | |||||
Acquisition expenses, net | (50,367) | (57,340) | (148,828) | (154,638) | |||||
Other operating expenses | (29,936) | (36,214) | (101,185) | (110,458) | |||||
Underwriting income (loss) | $ 30,944 | $ (86,862) | $ 110,196 | $ (12,496) | |||||
Underwriting Ratios | |||||||||
Loss ratio | 62.50% | 98.50% | 60.80% | 71.50% | |||||
Acquisition expense ratio | 17.20% | 17.70% | 16.30% | 17.50% | |||||
Other operating expense ratio | 10.20% | 11.20% | 11.10% | 12.50% | |||||
Combined ratio | 89.90% | 127.40% | 88.20% | 101.50% | |||||
Goodwill and intangible assets | $ 0 | $ 417 | $ 0 | $ 417 | |||||
Sub-Total | Mortgage | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Gross premiums written | [2] | 350,559 | 347,951 | 1,002,727 | 1,032,800 | ||||
Premiums ceded | (57,226) | (57,900) | (154,230) | (194,139) | |||||
Net premiums written | 293,333 | 290,051 | 848,497 | 838,661 | |||||
Change in unearned premiums | 7,591 | (15,533) | 23,147 | (61,776) | |||||
Net premiums earned | 300,924 | 274,518 | 871,644 | 776,885 | |||||
Other underwriting income | 3,733 | 3,599 | 10,464 | 11,999 | |||||
Losses and loss adjustment expenses | (9,615) | (35,156) | (74,672) | (84,915) | |||||
Acquisition expenses, net | (33,361) | (21,803) | (87,665) | (76,235) | |||||
Other operating expenses | (31,122) | (34,770) | (108,622) | (108,790) | |||||
Underwriting income (loss) | $ 230,559 | $ 186,388 | $ 611,149 | $ 518,944 | |||||
Underwriting Ratios | |||||||||
Loss ratio | 3.20% | 12.80% | 8.60% | 10.90% | |||||
Acquisition expense ratio | 11.10% | 7.90% | 10.10% | 9.80% | |||||
Other operating expense ratio | 10.30% | 12.70% | 12.50% | 14.00% | |||||
Combined ratio | 24.60% | 33.40% | 31.20% | 34.70% | |||||
Goodwill and intangible assets | $ 538,871 | $ 652,893 | $ 538,871 | $ 652,893 | |||||
[1] | Certain expenses have been excluded from ‘corporate expenses’ and reflected in ‘transaction costs and other.’ | ||||||||
[2] | Certain amounts included in the gross premiums written of each segment are related to intersegment transactions. Accordingly, the sum of gross premiums written for each segment does not agree to the total gross premiums written as shown in the table above due to the elimination of intersegment transactions in the total. |
Reserve for Losses and Loss A_3
Reserve for Losses and Loss Adjustment Expenses - Reconciliation of beginning and ending balances of losses and loss adjustment reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] | |||||
Reserve for losses and loss adjustment expenses at beginning of period | $ 11,424,337 | $ 10,520,511 | $ 11,383,792 | $ 10,200,960 | |
Unpaid losses and loss adjustment expenses recoverable | 2,651,749 | 2,116,210 | 2,464,910 | 2,083,575 | |
Net reserve for losses and loss adjustment expenses at beginning of period | 8,772,588 | 8,404,301 | 8,918,882 | 8,117,385 | |
Net incurred losses and loss adjustment expenses relating to losses occurring in: | |||||
Current year | 779,043 | 1,091,373 | 2,257,670 | 2,486,410 | |
Prior years | (79,623) | (45,232) | (195,237) | (197,839) | |
Total net incurred losses and loss adjustment expenses | 699,420 | 1,046,141 | 2,062,433 | 2,288,571 | |
Retroactive reinsurance transaction | [1] | 0 | 0 | (420,404) | 0 |
Net foreign exchange (gains) losses | (33,783) | 61,919 | (110,061) | 168,493 | |
Net paid losses and loss adjustment expenses relating to losses occurring in: | |||||
Current year | (149,999) | (167,450) | (245,021) | (282,952) | |
Prior years | (396,695) | (457,183) | (1,314,298) | (1,403,769) | |
Total net paid losses and loss adjustment expenses | (546,694) | (624,633) | (1,559,319) | (1,686,721) | |
Net reserve for losses and loss adjustment expenses at end of period | 8,891,531 | 8,887,728 | 8,891,531 | 8,887,728 | |
Unpaid losses and loss adjustment expenses recoverable | 2,662,790 | 2,463,539 | 2,662,790 | 2,463,539 | |
Reserve for losses and loss adjustment expenses at end of period | $ 11,554,321 | $ 11,351,267 | $ 11,554,321 | $ 11,351,267 | |
[1] | During the 2018 second quarter, a subsidiary of the Company entered into a retroactive reinsurance transaction with a third party reinsurer to reinsure run-off liabilities associated with certain discontinued U.S. specialty casualty and program exposures. |
Reserve for Losses and Loss A_4
Reserve for Losses and Loss Adjustment Expenses - Prior year development (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | $ 79,623 | $ 45,232 | $ 195,237 | $ 197,839 |
Underwriting segments | Reinsurance | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | $ 34,300 | $ 36,500 | $ 103,900 | $ 133,300 |
Percentage of prior year development | 11.70% | 11.30% | 11.40% | 15.10% |
Underwriting segments | Reinsurance | Short Tailed Lines | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | $ 26,500 | $ 16,900 | $ 77,600 | $ 85,800 |
Underwriting segments | Reinsurance | Short Tailed Lines | Property catastrophe and property other than property catastrophe | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 15,900 | 11,800 | 56,400 | 62,700 |
Underwriting segments | Reinsurance | Short Tailed Lines | Other product lines | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 10,300 | 10,700 | 20,300 | |
Underwriting segments | Reinsurance | Medium Tailed And Long Tailed Lines | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 7,800 | 19,600 | 26,300 | 47,500 |
Underwriting segments | Reinsurance | Medium Tailed And Long Tailed Lines | Casualty | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 7,900 | 13,400 | 16,000 | 28,000 |
Underwriting segments | Reinsurance | Medium Tailed And Long Tailed Lines | Marine | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 4,300 | 10,800 | 16,600 | |
Underwriting segments | Insurance | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | $ 5,900 | $ 3,000 | $ 14,100 | $ 7,200 |
Percentage of prior year development | 1.10% | 0.60% | 0.90% | 0.50% |
Underwriting segments | Insurance | Short Tailed Lines | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | $ 14,300 | $ 1,800 | $ 37,000 | $ 9,000 |
Underwriting segments | Insurance | Medium Tailed Lines | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | (39,300) | (9,200) | ||
Underwriting segments | Insurance | Medium Tailed Lines | Professional lines | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 11,900 | |||
Underwriting segments | Insurance | Medium Tailed Lines | Surety | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 4,200 | |||
Underwriting segments | Insurance | Medium Tailed Lines | Programs | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | (12,900) | (23,400) | (39,300) | |
Underwriting segments | Insurance | Medium Tailed Lines | Contract binding | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | (42,100) | |||
Underwriting segments | Insurance | Medium Tailed Lines | Other product lines | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 26,200 | 30,100 | ||
Underwriting segments | Insurance | Medium Tailed And Long Tailed Lines | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | (8,400) | 1,200 | ||
Underwriting segments | Insurance | Medium Tailed And Long Tailed Lines | Contract binding | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | (16,400) | |||
Underwriting segments | Insurance | Medium Tailed And Long Tailed Lines | Other product lines | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 8,000 | |||
Underwriting segments | Insurance | Long Tailed Lines | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 16,400 | 7,400 | ||
Underwriting segments | Insurance | Long Tailed Lines | Executive assurance | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 8,000 | |||
Underwriting segments | Insurance | Long Tailed Lines | Healthcare | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 8,100 | |||
Underwriting segments | Insurance | Long Tailed Lines | Construction | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | 17,200 | |||
Underwriting segments | Mortgage | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | $ 38,600 | $ 21,500 | $ 74,900 | $ 74,900 |
Percentage of prior year development | 12.80% | 7.80% | 8.60% | 9.60% |
Underwriting segments | Other | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||||
Prior years | $ 700 | $ (15,800) | $ 2,300 | $ (17,500) |
Investment Information - Summar
Investment Information - Summary of available for sale securities (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | |||
Available for sale securities: | ||||
Estimated Fair Value | $ 15,580,131 | $ 16,570,755 | ||
Gross Unrealized Gains | 31,949 | 267,433 | ||
Gross Unrealized Losses | (227,714) | (112,447) | ||
Cost or Amortized Cost | 15,775,896 | 16,415,769 | ||
OTTI Unrealized Losses | (75) | [1] | (88) | |
Fixed maturities | ||||
Available for sale securities: | ||||
Estimated Fair Value | 14,618,332 | 14,332,391 | ||
Gross Unrealized Gains | [2] | 31,754 | 111,098 | |
Gross Unrealized Losses | [2] | (227,325) | (106,181) | |
Cost or Amortized Cost | [2] | 14,813,903 | 14,327,474 | |
OTTI Unrealized Losses | [1],[2] | (75) | (88) | |
Fixed maturities | Corporate bonds | ||||
Available for sale securities: | ||||
Estimated Fair Value | 5,639,800 | 4,434,439 | ||
Gross Unrealized Gains | [2] | 7,363 | 30,943 | |
Gross Unrealized Losses | [2] | (95,474) | (32,340) | |
Cost or Amortized Cost | [2] | 5,727,911 | 4,435,836 | |
OTTI Unrealized Losses | [1],[2] | (69) | (73) | |
Fixed maturities | Mortgage backed securities | ||||
Available for sale securities: | ||||
Estimated Fair Value | 468,254 | 316,141 | ||
Gross Unrealized Gains | [2] | 1,412 | 1,640 | |
Gross Unrealized Losses | [2] | (7,772) | (2,561) | |
Cost or Amortized Cost | [2] | 474,614 | 317,062 | |
OTTI Unrealized Losses | [1],[2] | (6) | (15) | |
Fixed maturities | Municipal bonds | ||||
Available for sale securities: | ||||
Estimated Fair Value | 1,222,440 | 2,158,840 | ||
Gross Unrealized Gains | [2] | 4,236 | 20,285 | |
Gross Unrealized Losses | [2] | (26,460) | (12,308) | |
Cost or Amortized Cost | [2] | 1,244,664 | 2,150,863 | |
OTTI Unrealized Losses | [1],[2] | 0 | 0 | |
Fixed maturities | Commercial mortgage backed securities | ||||
Available for sale securities: | ||||
Estimated Fair Value | 682,516 | 545,817 | ||
Gross Unrealized Gains | [2] | 578 | 2,131 | |
Gross Unrealized Losses | [2] | (15,062) | (4,268) | |
Cost or Amortized Cost | [2] | 697,000 | 547,954 | |
OTTI Unrealized Losses | [1],[2] | 0 | 0 | |
Fixed maturities | US government and government agencies | ||||
Available for sale securities: | ||||
Estimated Fair Value | 3,276,243 | 3,484,257 | ||
Gross Unrealized Gains | [2] | 1,499 | 2,188 | |
Gross Unrealized Losses | [2] | (29,013) | (28,769) | |
Cost or Amortized Cost | [2] | 3,303,757 | 3,510,838 | |
OTTI Unrealized Losses | [1],[2] | 0 | 0 | |
Fixed maturities | Non-US government securities | ||||
Available for sale securities: | ||||
Estimated Fair Value | 1,722,606 | 1,612,754 | ||
Gross Unrealized Gains | [2] | 13,917 | 48,764 | |
Gross Unrealized Losses | [2] | (40,094) | (17,321) | |
Cost or Amortized Cost | [2] | 1,748,783 | 1,581,311 | |
OTTI Unrealized Losses | [1],[2] | 0 | 0 | |
Fixed maturities | Asset backed securities | ||||
Available for sale securities: | ||||
Estimated Fair Value | 1,606,473 | 1,780,143 | ||
Gross Unrealized Gains | [2] | 2,749 | 5,147 | |
Gross Unrealized Losses | [2] | (13,450) | (8,614) | |
Cost or Amortized Cost | [2] | 1,617,174 | 1,783,610 | |
OTTI Unrealized Losses | [1],[2] | 0 | 0 | |
Equity securities | ||||
Available for sale securities: | ||||
Estimated Fair Value | [3] | 504,333 | ||
Gross Unrealized Gains | [3] | 88,739 | ||
Gross Unrealized Losses | [3] | (5,583) | ||
Cost or Amortized Cost | [3] | 421,177 | ||
OTTI Unrealized Losses | [1] | 0 | ||
Other investments | ||||
Available for sale securities: | ||||
Estimated Fair Value | 0 | 264,989 | ||
Gross Unrealized Gains | 0 | 66,946 | ||
Gross Unrealized Losses | 0 | (120) | ||
Cost or Amortized Cost | 0 | 198,163 | ||
OTTI Unrealized Losses | [1] | 0 | 0 | |
Short-term investments | ||||
Available for sale securities: | ||||
Estimated Fair Value | 961,799 | 1,469,042 | ||
Gross Unrealized Gains | 195 | 650 | ||
Gross Unrealized Losses | (389) | (563) | ||
Cost or Amortized Cost | 961,993 | 1,468,955 | ||
OTTI Unrealized Losses | [1] | $ 0 | $ 0 | |
[1] | Represents the total other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income (“AOCI”). It does not include the change in fair value subsequent to the impairment measurement date. At September 30, 2018, the net unrealized gain related to securities for which a non-credit OTTI was recognized in AOCI was $0.2 million, compared to a net unrealized gain of $0.3 million at December 31, 2017. | |||
[2] | In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” | |||
[3] | Effective January 1, 2018, the Company adopted new accounting guidance for financial instruments (see Note 1). As a result, equity securities are no longer accounted for as available for sale and are excluded from this table. |
Investment Information - Aging
Investment Information - Aging of available for sale securities in an unrealized loss position (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | $ 11,636,576 | $ 9,064,672 | |
Gross Unrealized Losses - Less than 12 Months | (171,325) | (91,691) | |
Estimated Fair Value - 12 Months or More | 1,465,422 | 911,838 | |
Gross Unrealized Losses - 12 Months or More | (56,389) | (20,756) | |
Estimated Fair Value - Total | 13,101,998 | 9,976,510 | |
Gross Unrealized Losses - Total | (227,714) | (112,447) | |
Fixed maturities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 11,447,198 | 8,773,557 |
Gross Unrealized Losses - Less than 12 Months | [1] | (170,936) | (85,425) |
Estimated Fair Value - 12 Months or More | [1] | 1,465,422 | 911,838 |
Gross Unrealized Losses - 12 Months or More | [1] | (56,389) | (20,756) |
Estimated Fair Value - Total | [1] | 12,912,620 | 9,685,395 |
Gross Unrealized Losses - Total | [1] | (227,325) | (106,181) |
Fixed maturities | Corporate bonds | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 4,517,581 | 2,320,716 |
Gross Unrealized Losses - Less than 12 Months | [1] | (75,830) | (25,411) |
Estimated Fair Value - 12 Months or More | [1] | 483,379 | 279,082 |
Gross Unrealized Losses - 12 Months or More | [1] | (19,644) | (6,929) |
Estimated Fair Value - Total | [1] | 5,000,960 | 2,599,798 |
Gross Unrealized Losses - Total | [1] | (95,474) | (32,340) |
Fixed maturities | Mortgage backed securities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 402,443 | 221,113 |
Gross Unrealized Losses - Less than 12 Months | [1] | (6,721) | (1,715) |
Estimated Fair Value - 12 Months or More | [1] | 26,414 | 28,380 |
Gross Unrealized Losses - 12 Months or More | [1] | (1,051) | (846) |
Estimated Fair Value - Total | [1] | 428,857 | 249,493 |
Gross Unrealized Losses - Total | [1] | (7,772) | (2,561) |
Fixed maturities | Municipal bonds | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 744,018 | 1,030,389 |
Gross Unrealized Losses - Less than 12 Months | [1] | (16,808) | (8,438) |
Estimated Fair Value - 12 Months or More | [1] | 198,243 | 132,469 |
Gross Unrealized Losses - 12 Months or More | [1] | (9,652) | (3,870) |
Estimated Fair Value - Total | [1] | 942,261 | 1,162,858 |
Gross Unrealized Losses - Total | [1] | (26,460) | (12,308) |
Fixed maturities | Commercial mortgage backed securities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 499,307 | 225,164 |
Gross Unrealized Losses - Less than 12 Months | [1] | (8,745) | (1,899) |
Estimated Fair Value - 12 Months or More | [1] | 103,813 | 57,291 |
Gross Unrealized Losses - 12 Months or More | [1] | (6,317) | (2,369) |
Estimated Fair Value - Total | [1] | 603,120 | 282,455 |
Gross Unrealized Losses - Total | [1] | (15,062) | (4,268) |
Fixed maturities | US government and government agencies | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 2,818,235 | 2,646,415 |
Gross Unrealized Losses - Less than 12 Months | [1] | (22,512) | (26,501) |
Estimated Fair Value - 12 Months or More | [1] | 214,570 | 111,879 |
Gross Unrealized Losses - 12 Months or More | [1] | (6,501) | (2,268) |
Estimated Fair Value - Total | [1] | 3,032,805 | 2,758,294 |
Gross Unrealized Losses - Total | [1] | (29,013) | (28,769) |
Fixed maturities | Non-US government securities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 1,289,557 | 1,218,514 |
Gross Unrealized Losses - Less than 12 Months | [1] | (29,224) | (15,546) |
Estimated Fair Value - 12 Months or More | [1] | 299,654 | 93,530 |
Gross Unrealized Losses - 12 Months or More | [1] | (10,870) | (1,775) |
Estimated Fair Value - Total | [1] | 1,589,211 | 1,312,044 |
Gross Unrealized Losses - Total | [1] | (40,094) | (17,321) |
Fixed maturities | Asset backed securities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [1] | 1,176,057 | 1,111,246 |
Gross Unrealized Losses - Less than 12 Months | [1] | (11,096) | (5,915) |
Estimated Fair Value - 12 Months or More | [1] | 139,349 | 209,207 |
Gross Unrealized Losses - 12 Months or More | [1] | (2,354) | (2,699) |
Estimated Fair Value - Total | [1] | 1,315,406 | 1,320,453 |
Gross Unrealized Losses - Total | [1] | (13,450) | (8,614) |
Equity securities | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | [2] | 166,562 | |
Gross Unrealized Losses - Less than 12 Months | [2] | (5,583) | |
Estimated Fair Value - 12 Months or More | [2] | 0 | |
Gross Unrealized Losses - 12 Months or More | [2] | 0 | |
Estimated Fair Value - Total | [2] | 166,562 | |
Gross Unrealized Losses - Total | [2] | (5,583) | |
Other investments | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | 0 | 15,025 | |
Gross Unrealized Losses - Less than 12 Months | 0 | (120) | |
Estimated Fair Value - 12 Months or More | 0 | 0 | |
Gross Unrealized Losses - 12 Months or More | 0 | 0 | |
Estimated Fair Value - Total | 0 | 15,025 | |
Gross Unrealized Losses - Total | 0 | (120) | |
Short-term investments | |||
Available for sale securities: | |||
Estimated Fair Value - Less than 12 Months | 189,378 | 109,528 | |
Gross Unrealized Losses - Less than 12 Months | (389) | (563) | |
Estimated Fair Value - 12 Months or More | 0 | 0 | |
Gross Unrealized Losses - 12 Months or More | 0 | 0 | |
Estimated Fair Value - Total | 189,378 | 109,528 | |
Gross Unrealized Losses - Total | $ (389) | $ (563) | |
[1] | In securities lending transactions, the Company receives collateral in excess of the fair value of the fixed maturities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” | ||
[2] | Effective January 1, 2018, the Company adopted new accounting guidance for financial instruments (see Note 1). As a result, equity securities are no longer accounted for as available for sale and are excluded from this table. |
Investment Information - Maturi
Investment Information - Maturity profile of available for sale securities) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Estimated Fair Value: | |||
Estimated fair value | $ 14,331,641 | $ 13,876,003 | |
Amortized Cost: | |||
Amortized cost | 14,510,474 | 13,869,460 | |
Fixed maturities | |||
Estimated Fair Value: | |||
Due in one year or less | 330,506 | 550,711 | |
Due after one year through five years | 8,334,661 | 7,436,153 | |
Due after five years through 10 years | 2,910,493 | 3,369,635 | |
Due after 10 years | 285,429 | 333,791 | |
Single maturity date | 11,861,089 | 11,690,290 | |
Estimated fair value | [1] | 14,618,332 | 14,332,391 |
Amortized Cost: | |||
Due in one year or less | 331,010 | 548,771 | |
Due after one year through five years | 8,431,730 | 7,434,801 | |
Due after five years through 10 years | 2,972,893 | 3,369,750 | |
Due after 10 years | 289,482 | 325,526 | |
Single maturity date | 12,025,115 | 11,678,848 | |
Amortized cost | [1] | 14,813,903 | 14,327,474 |
Fixed maturities | Mortgage backed securities | |||
Estimated Fair Value: | |||
Securities without single maturity date | 468,254 | 316,141 | |
Amortized Cost: | |||
Securities without single maturity date | 474,614 | 317,062 | |
Fixed maturities | Commercial mortgage backed securities | |||
Estimated Fair Value: | |||
Securities without single maturity date | 682,516 | 545,817 | |
Amortized Cost: | |||
Securities without single maturity date | 697,000 | 547,954 | |
Fixed maturities | Asset backed securities | |||
Estimated Fair Value: | |||
Securities without single maturity date | 1,606,473 | 1,780,143 | |
Amortized Cost: | |||
Securities without single maturity date | $ 1,617,174 | $ 1,783,610 | |
[1] | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See “—Securities Lending Agreements.” |
Investment Information - Securi
Investment Information - Securities lending agreements (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Disclosure Investment Information [Abstract] | ||
Fair value of cash collateral received on securities lending | $ 62,800 | $ 199,900 |
Fair value of non-cash collateral received on securities lending | 244,100 | 276,700 |
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 306,886 | 476,605 |
Gross amount of recognized liabilities for securities lending in offsetting disclosure in Note 8 | 0 | 0 |
Amounts related to securities lending not included in offsetting disclosure in Note 8 | 306,886 | 476,605 |
US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 271,662 | 439,820 |
Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 22,267 | 28,003 |
Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 12,957 | 8,782 |
Overnight and continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 151,613 | 380,210 |
Overnight and continuous | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 116,389 | 343,425 |
Overnight and continuous | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 22,267 | 28,003 |
Overnight and continuous | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 12,957 | 8,782 |
Less than 30 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 20,309 |
Less than 30 days | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 20,309 |
Less than 30 days | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
Less than 30 days | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
30 - 90 days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 155,273 | 76,086 |
30 - 90 days | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 155,273 | 76,086 |
30 - 90 days | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
30 - 90 days | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
90 days or more | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
90 days or more | US government and government agencies | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
90 days or more | Corporate bonds | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | 0 | 0 |
90 days or more | Equity securities | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Securities lending payable | $ 0 | $ 0 |
Investment Information - Other
Investment Information - Other investments (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | $ 2,341,676 | $ 2,401,370 | |
Available for sale | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | [1] | 0 | 264,989 |
Available for sale | Asian and emerging markets | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 0 | 135,140 | |
Available for sale | Investment grade fixed income | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 0 | 53,878 | |
Available for sale | Credit related funds | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 0 | 18,365 | |
Available for sale | Other | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 0 | 57,606 | |
Fair value option | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 2,341,676 | 2,136,381 | |
Fair value option | Term loan investments | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 1,351,098 | 1,200,882 | |
Other investments par | 1,376,013 | 1,223,453 | |
Fair value option | Mezzanine debt funds | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 241,968 | 252,160 | |
Fair value option | Asian and emerging markets | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 330,999 | 258,541 | |
Fair value option | Investment grade fixed income | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 97,347 | 102,347 | |
Fair value option | Credit related funds | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | 200,226 | 175,422 | |
Fair value option | Other | |||
Schedule Of Other Investments [Line Items] | |||
Other investments and fair value option investments | [2] | $ 120,038 | $ 147,029 |
[1] | The Company reviewed the accounting treatment for three limited partnership investments which were accounted for as available for sale at December 31, 2017 during the 2018 first quarter and determined, based on reconsideration during the period of the Company’s percentage ownership, that the equity method of accounting was appropriate for such investments. | ||
[2] | Includes fund investments with strategies in mortgage servicing rights, transportation, infrastructure assets and other. |
Investment Information - Fair v
Investment Information - Fair value option (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | $ 4,097,735 | $ 4,216,237 |
Fixed maturities | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 1,374,453 | 1,642,855 |
Other investments | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 2,341,676 | 2,136,381 |
Short-term investments | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | 248,834 | 297,426 |
Equity securities | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Investments accounted for using the fair value option | $ 132,772 | $ 139,575 |
Investment Information - Limite
Investment Information - Limited partnership interests (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Schedule of Equity Method Investments [Line Items] | |||
Maximum Exposure to Loss | $ 1,692,102 | $ 1,171,793 | |
Aggregate unfunded commitments | 1,570,000 | 1,700,000 | |
Equity method investments | |||
Schedule of Equity Method Investments [Line Items] | |||
Maximum Exposure to Loss | [1] | 1,524,242 | 1,041,322 |
Aggregate unfunded commitments | 1,040,000 | 1,020,000 | |
Fair value option | |||
Schedule of Equity Method Investments [Line Items] | |||
Maximum Exposure to Loss | [2] | 167,860 | 130,471 |
Aggregate unfunded commitments | $ 111,100 | $ 100,400 | |
[1] | Aggregate unfunded commitments were $1.04 billion at September 30, 2018, compared to $1.02 billion at December 31, 2017. | ||
[2] | Aggregate unfunded commitments were $111.1 million at September 30, 2018, compared to $100.4 million at December 31, 2017. |
Investment Information - Net in
Investment Information - Net investment income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net investment income: | ||||
Gross investment income | $ 167,326 | $ 139,945 | $ 482,462 | $ 412,336 |
Investment expenses | (23,302) | (23,486) | (76,046) | (66,879) |
Net investment income | 144,024 | 116,459 | 406,416 | 345,457 |
Fixed maturities | ||||
Net investment income: | ||||
Gross investment income | 120,516 | 96,144 | 343,513 | 284,807 |
Equity securities | ||||
Net investment income: | ||||
Gross investment income | 3,165 | 2,887 | 10,510 | 9,184 |
Short-term investments | ||||
Net investment income: | ||||
Gross investment income | 4,547 | 2,957 | 13,799 | 6,732 |
Other | ||||
Net investment income: | ||||
Gross investment income | $ 39,098 | $ 37,957 | $ 114,640 | $ 111,613 |
Investment Information - Net re
Investment Information - Net realized gains and losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Net realized gains and losses: | |||||
Available for sale securities, gross gains on investment sales | $ 10,990 | $ 66,565 | $ 44,732 | $ 212,470 | |
Available for sale securities, gross losses on investment sales | (34,879) | (39,015) | (175,141) | (152,996) | |
Net realized gains (losses) on sales during the period | (2,012) | 0 | (13,298) | 0 | |
Net unrealized gains (losses) on equity securities still held at reporting date | 10,798 | 0 | (4,063) | 0 | |
Derivative instruments | [1] | (17,556) | 4,298 | (23,665) | (9,653) |
Other | [2] | (6,773) | (782) | (16,111) | (20,655) |
Net realized gains (losses) | (51,705) | 66,275 | (239,314) | 122,163 | |
Fixed maturities | |||||
Net realized gains and losses: | |||||
Change in fair value of assets and liabilities accounted for using the fair value option | (6,604) | 4,035 | (47,082) | 34,232 | |
Other investments | |||||
Net realized gains and losses: | |||||
Change in fair value of assets and liabilities accounted for using the fair value option | (7,950) | 24,264 | (14,578) | 42,149 | |
Equity securities | |||||
Net realized gains and losses: | |||||
Change in fair value of assets and liabilities accounted for using the fair value option | 2,752 | 10,230 | 10,650 | 16,604 | |
Short-term investments | |||||
Net realized gains and losses: | |||||
Change in fair value of assets and liabilities accounted for using the fair value option | $ (471) | $ (3,320) | $ (758) | $ 12 | |
[1] | See Note 8 for information on the Company’s derivative instruments. | ||||
[2] | Includes the re-measurement of contingent consideration liability amounts. |
Investment Information - Net im
Investment Information - Net impairment losses recognized in earnings (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | $ (492) | $ (1,878) | $ (1,124) | $ (5,415) |
Fixed maturities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (492) | (938) | (1,124) | (4,122) |
Fixed maturities | Mortgage backed securities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (73) | (50) | (196) | (1,461) |
Fixed maturities | Corporate bonds | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (270) | (82) | (631) | (1,484) |
Fixed maturities | Non-US government securities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (149) | (178) | (149) | (376) |
Fixed maturities | Asset backed securities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | (148) | 0 | ||
Fixed maturities | US government and government agencies | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | 0 | (426) | 0 | (426) |
Fixed maturities | Municipal bonds | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | 0 | (202) | 0 | (375) |
Equity securities | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | $ 0 | $ (940) | 0 | (1,126) |
Other investments | ||||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||||
Net impairment losses recognized in earnings | $ 0 | $ (167) |
Investment Information - Othe_2
Investment Information - Other than temporary impairments rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Rollforward: | ||||
Balance at start of period | $ 698 | $ 4,437 | $ 767 | $ 13,138 |
Credit loss impairments recognized on securities not previously impaired | 0 | 0 | 0 | 31 |
Credit loss impairments recognized on securities previously impaired | 0 | 15 | 0 | 210 |
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security | 0 | 0 | 0 | 0 |
Reductions for securities sold during the period | (47) | (689) | (116) | (9,616) |
Balance at end of period | $ 651 | $ 3,763 | $ 651 | $ 3,763 |
Investment Information - Restri
Investment Information - Restricted assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Restricted Assets [Line Items] | ||
Restricted assets | $ 7,080,251 | $ 6,670,912 |
Collateral or guarantees - affiliated transactions | ||
Restricted Assets [Line Items] | ||
Restricted assets | 4,235,515 | 4,323,726 |
Collateral or guarantees - third party agreements | ||
Restricted Assets [Line Items] | ||
Restricted assets | 2,094,952 | 1,674,304 |
Deposits with US regulatory authorities | ||
Restricted Assets [Line Items] | ||
Restricted assets | 688,574 | 616,987 |
Deposits with non-US regulatory authorities | ||
Restricted Assets [Line Items] | ||
Restricted assets | $ 61,210 | $ 55,895 |
Investment Information - Narrat
Investment Information - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2018USD ($)lots | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)lots | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)lots | Jun. 30, 2018companies | ||
Narrative items: | |||||||
Equity securities, at fair value | $ 444,118 | $ 444,118 | $ 495,804 | ||||
Number of Limited Partnerships | companies | 3 | ||||||
Investable assets | 22,320,000 | 22,320,000 | |||||
Equity in net income (loss) of investment funds accounted for using the equity method | 15,982 | $ 31,090 | 52,523 | $ 111,884 | |||
OTTI unrealized (losses) gains at current fair value | $ 200 | $ 200 | $ 300 | ||||
Continuous unrealized loss, qualitative disclosures: | |||||||
Number of positions in an unrealized loss position (lots) | lots | 5,610 | 5,610 | 3,830 | ||||
Total number of positions (lots) | lots | 7,690 | 7,690 | 7,450 | ||||
Largest single loss | $ 2,400 | $ 2,400 | $ 1,300 | ||||
OTTI unrealized losses (gains) | $ 75 | [1] | $ 88 | ||||
Minimum | |||||||
Narrative items: | |||||||
Time lag for reporting | 1 month | ||||||
Maximum | |||||||
Narrative items: | |||||||
Time lag for reporting | 3 months | ||||||
Underwriting segments | |||||||
Narrative items: | |||||||
Investable assets | 19,590,000 | $ 19,590,000 | |||||
Equity in net income (loss) of investment funds accounted for using the equity method | 15,982 | 31,090 | 52,523 | 111,884 | |||
Other | |||||||
Narrative items: | |||||||
Investable assets | 2,730,000 | 2,730,000 | |||||
Equity in net income (loss) of investment funds accounted for using the equity method | $ 0 | $ 0 | $ 0 | $ 0 | |||
[1] | Represents the total other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income (“AOCI”). It does not include the change in fair value subsequent to the impairment measurement date. At September 30, 2018, the net unrealized gain related to securities for which a non-credit OTTI was recognized in AOCI was $0.2 million, compared to a net unrealized gain of $0.3 million at December 31, 2017. |
Investment Information - Cash a
Investment Information - Cash and restricted cash (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Disclosure Investment Information [Abstract] | ||||
Cash | $ 651,037 | $ 606,199 | ||
Restricted cash (included in ‘other assets’) | 58,782 | 121,085 | ||
Cash and restricted cash | $ 709,819 | $ 727,284 | $ 980,614 | $ 969,569 |
Fair Value - Fair Value Hierarc
Fair Value - Fair Value Hierarchy (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | $ 4,820,653 | $ 5,823,343 | |
Liabilities measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 3,125,520 | 3,408,902 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 3,125,520 | 3,408,902 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 819,294 | 1,420,732 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 408,436 | 498,182 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 74,611 | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other investments at fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 74,611 | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 467,403 | 420,916 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 119,547 | 231,019 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 230,836 | 40,166 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 67,441 | 67,440 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 49,579 | 82,291 | |
Significant Other Observable Inputs (Level 2) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 14,231,897 | 13,695,776 | |
Liabilities measured at fair value | (58,254) | (54,839) | |
Significant Other Observable Inputs (Level 2) | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | (9,065) | (34,375) |
Significant Other Observable Inputs (Level 2) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (49,189) | (20,464) | |
Significant Other Observable Inputs (Level 2) | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 11,484,183 | 10,908,102 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 5,631,516 | 4,424,979 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 467,923 | 315,754 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 1,222,440 | 2,158,840 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 682,502 | 545,277 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 150,723 | 75,355 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 1,722,606 | 1,612,754 |
Significant Other Observable Inputs (Level 2) | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 1,606,473 | 1,775,143 |
Significant Other Observable Inputs (Level 2) | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 142,505 | 48,310 | |
Significant Other Observable Inputs (Level 2) | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 48,400 | 6,151 | |
Significant Other Observable Inputs (Level 2) | Other investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,816 | ||
Significant Other Observable Inputs (Level 2) | Other investments at fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,816 | ||
Significant Other Observable Inputs (Level 2) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 37,341 | 15,747 | |
Significant Other Observable Inputs (Level 2) | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 2,519,468 | 2,715,650 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 903,321 | 1,056,508 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 15,845 | 20,491 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 7,037 | 15,210 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 11,997 | |
Significant Other Observable Inputs (Level 2) | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 107 | 271 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 105,019 | 195,788 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 213,971 | 99,354 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 17,998 | 257,260 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 65,331 | 72,135 | |
Significant Other Observable Inputs (Level 2) | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,190,839 | 986,636 | |
Significant Unobservable Inputs (Level 3) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 81,166 | 86,771 | |
Liabilities measured at fair value | (65,641) | (60,996) | |
Significant Unobservable Inputs (Level 3) | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (65,641) | (60,996) | |
Significant Unobservable Inputs (Level 3) | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 8,629 | 15,387 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 8,284 | 9,460 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 331 | 387 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 14 | 540 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [2] | 0 | 5,000 |
Significant Unobservable Inputs (Level 3) | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Other investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | ||
Significant Unobservable Inputs (Level 3) | Other investments at fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | ||
Significant Unobservable Inputs (Level 3) | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 72,537 | 71,384 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 9,606 | 12,217 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 62,931 | 59,167 | |
Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 20,172,043 | 20,802,739 | |
Liabilities measured at fair value | (123,895) | (115,835) | |
Estimated Fair Value | Contingent consideration liability | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (65,641) | (60,996) | |
Estimated Fair Value | Securities sold but not yet purchased | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | [1] | (9,065) | (34,375) |
Estimated Fair Value | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Liabilities measured at fair value | (49,189) | (20,464) | |
Estimated Fair Value | Fixed maturities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 14,618,332 | 14,332,391 | |
Estimated Fair Value | Fixed maturities | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 5,639,800 | 4,434,439 | |
Estimated Fair Value | Fixed maturities | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 468,254 | 316,141 | |
Estimated Fair Value | Fixed maturities | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,222,440 | 2,158,840 | |
Estimated Fair Value | Fixed maturities | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 682,516 | 545,817 | |
Estimated Fair Value | Fixed maturities | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 3,276,243 | 3,484,257 | |
Estimated Fair Value | Fixed maturities | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,722,606 | 1,612,754 | |
Estimated Fair Value | Fixed maturities | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,606,473 | 1,780,143 | |
Estimated Fair Value | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 961,799 | 1,469,042 | |
Estimated Fair Value | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 456,836 | 504,333 | |
Estimated Fair Value | Other investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 264,989 | ||
Estimated Fair Value | Other investments at fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 76,427 | ||
Estimated Fair Value | Other investments measured at net asset value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [3] | 188,562 | |
Estimated Fair Value | Derivative instruments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 37,341 | 15,747 | |
Estimated Fair Value | Fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 4,097,735 | 4,216,237 | |
Estimated Fair Value | Fair value option | Corporate bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 912,927 | 1,068,725 | |
Estimated Fair Value | Fair value option | Mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 15,845 | 20,491 | |
Estimated Fair Value | Fair value option | Municipal bonds | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 7,037 | 15,210 | |
Estimated Fair Value | Fair value option | Commercial mortgage backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 0 | 11,997 | |
Estimated Fair Value | Fair value option | US government and government agencies | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 119,654 | 231,290 | |
Estimated Fair Value | Fair value option | Non-US government securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 105,019 | 195,788 | |
Estimated Fair Value | Fair value option | Asset backed securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 213,971 | 99,354 | |
Estimated Fair Value | Fair value option | Short-term investments | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 248,834 | 297,426 | |
Estimated Fair Value | Fair value option | Equity securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 132,772 | 139,575 | |
Estimated Fair Value | Fair value option | Other investments fair value option | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | 1,303,349 | 1,128,094 | |
Estimated Fair Value | Fair value option | Other investments measured at net asset value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value | [3] | $ 1,038,327 | $ 1,008,287 |
[1] | Represents the Company’s obligations to deliver securities that it did not own at the time of sale. Such amounts are included in “other liabilities” on the Company’s consolidated balance sheets. | ||
[2] | In securities lending transactions, the Company receives collateral in excess of the fair value of the securities pledged. For purposes of this table, the Company has excluded the collateral received under securities lending, at fair value and included the securities pledged under securities lending, at fair value. See Note 6, “Investment Information—Securities Lending Agreements.” | ||
[3] | In accordance with applicable accounting guidance, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. |
Fair Value - Rollforward of Lev
Fair Value - Rollforward of Level 3 assets and liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Balance at beginning of period | $ 78,698 | $ 36,570 | $ 86,771 | $ 54,633 | |
Total gains or (losses) (realized/unrealized) - included in earnings | (1,963) | 0 | (2,950) | 4,672 | |
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | (30) | 289 | (206) | 289 | |
Purchases, issuances, sales and settlements | |||||
Purchases | 6,250 | 1,348 | 6,643 | 6,283 | |
Issuances | 0 | 0 | 0 | 0 | |
Sales | (74) | 0 | (5,151) | (26,242) | |
Settlements | (1,715) | 0 | (3,941) | (1,428) | |
Transfers in and/or out of Level 3 | 0 | 22,350 | 0 | 22,350 | |
Balance at end of period | 81,166 | 60,557 | 81,166 | 60,557 | |
Contingent consideration liability | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Balance at beginning of period | (63,930) | (57,246) | (60,996) | (122,350) | |
Total gains or (losses) (realized/unrealized) - included in earnings | (1,711) | (2,002) | (4,645) | (9,089) | |
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |
Purchases, issuances, sales and settlements | |||||
Purchases | 0 | 0 | 0 | 0 | |
Issuances | 0 | 0 | 0 | 0 | |
Sales | 0 | 0 | 0 | 0 | |
Settlements | 0 | 0 | 0 | 72,191 | |
Transfers in and/or out of Level 3 | 0 | 0 | 0 | 0 | |
Balance at end of period | (65,641) | (59,248) | (65,641) | (59,248) | |
Available for sale | Structured securities | |||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Balance at beginning of period | [1] | 376 | 0 | 5,927 | 11,289 |
Total gains or (losses) (realized/unrealized) - included in earnings | [1] | 0 | 0 | 4 | 3,779 |
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | [1] | 2 | 0 | (6) | 0 |
Purchases, issuances, sales and settlements | |||||
Purchases | [1] | 0 | 0 | 0 | 0 |
Issuances | [1] | 0 | 0 | 0 | 0 |
Sales | [1] | 0 | 0 | (5,003) | (13,640) |
Settlements | [1] | (33) | 0 | (577) | (1,428) |
Transfers in and/or out of Level 3 | [1] | 0 | 5,949 | 0 | 5,949 |
Balance at end of period | [1] | 345 | 5,949 | 345 | 5,949 |
Available for sale | Corporate bonds | |||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Balance at beginning of period | 8,773 | 11,570 | 9,460 | 18,344 | |
Total gains or (losses) (realized/unrealized) - included in earnings | (1) | 0 | (1) | 893 | |
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | (32) | 289 | (200) | 289 | |
Purchases, issuances, sales and settlements | |||||
Purchases | 0 | 0 | 393 | 4,935 | |
Issuances | 0 | 0 | 0 | 0 | |
Sales | 0 | 0 | 0 | (12,602) | |
Settlements | (456) | 0 | (1,368) | 0 | |
Transfers in and/or out of Level 3 | 0 | 132 | 0 | 132 | |
Balance at end of period | 8,284 | 11,991 | 8,284 | 11,991 | |
Fair value option | Corporate bonds | |||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Balance at beginning of period | 11,335 | 0 | 12,217 | 0 | |
Total gains or (losses) (realized/unrealized) - included in earnings | (503) | 0 | (1,115) | 0 | |
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |
Purchases, issuances, sales and settlements | |||||
Purchases | 0 | 0 | 0 | 0 | |
Issuances | 0 | 0 | 0 | 0 | |
Sales | 0 | 0 | 0 | 0 | |
Settlements | (1,226) | 0 | (1,496) | 0 | |
Transfers in and/or out of Level 3 | 0 | 11,471 | 0 | 11,471 | |
Balance at end of period | 9,606 | 11,471 | 9,606 | 11,471 | |
Fair value option | Other investments | |||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Balance at beginning of period | 58,214 | 25,000 | 59,167 | 25,000 | |
Total gains or (losses) (realized/unrealized) - included in earnings | (1,459) | 0 | (1,838) | 0 | |
Total gains or (losses) (realized/unrealized) - included in other comprehensive income | 0 | 0 | 0 | 0 | |
Purchases, issuances, sales and settlements | |||||
Purchases | 6,250 | 1,348 | 6,250 | 1,348 | |
Issuances | 0 | 0 | 0 | 0 | |
Sales | (74) | 0 | (148) | 0 | |
Settlements | 0 | 0 | (500) | 0 | |
Transfers in and/or out of Level 3 | 0 | 4,798 | 0 | 4,798 | |
Balance at end of period | $ 62,931 | $ 31,146 | $ 62,931 | $ 31,146 | |
[1] | Includes asset backed securities, mortgage backed securities and commercial mortgage backed securities. |
Fair Value - Narrative (Details
Fair Value - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Disclosures [Abstract] | ||
Total assets and liabilities measured at fair value | $ 20,300,000 | $ 20,920,000 |
Total assets and liabilities measured at fair value priced using non-binding broker quotes | $ 212,200 | $ 181,500 |
Total assets and liabilities measured at fair value priced using non-binding broker quotes (percentage) | 1.10% | 0.90% |
Senior notes | $ 1,733,364 | $ 1,732,884 |
Estimated fair value of senior notes | $ 1,880,000 | $ 2,040,000 |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | ||||
Derivative offsetting [Abstract] | ||||||||
Derivative assets subject to master netting agreements | $ 60,400 | $ 60,400 | $ 40,600 | |||||
Derivative liabilities subject to master netting agreements | 31,900 | 31,900 | 19,600 | |||||
Net realized gains (losses) on derivative instruments | ||||||||
Net realized gains (losses) on derivative instruments | [1] | (17,556) | $ 4,298 | (23,665) | $ (9,653) | |||
Not Designated as Hedging Instrument [Member] | ||||||||
Derivative [Line Items] | ||||||||
Asset derivatives - fair value | 62,548 | 62,548 | 42,931 | |||||
Liability derivatives - fair value | (49,189) | (49,189) | (20,464) | |||||
Net realized gains (losses) on derivative instruments | ||||||||
Net realized gains (losses) on derivative instruments | (17,556) | 4,298 | (23,665) | (9,653) | ||||
Not Designated as Hedging Instrument [Member] | Futures contracts | ||||||||
Derivative [Line Items] | ||||||||
Net derivatives - notional value | [2],[3] | 1,547,523 | 1,547,523 | 1,452,497 | ||||
Net realized gains (losses) on derivative instruments | ||||||||
Net realized gains (losses) on derivative instruments | (15,399) | 4,899 | (10,609) | 7,309 | ||||
Not Designated as Hedging Instrument [Member] | Futures contracts | Other assets | ||||||||
Derivative [Line Items] | ||||||||
Asset derivatives - fair value | 2,794 | [3] | 2,794 | [3] | 3,371 | |||
Not Designated as Hedging Instrument [Member] | Futures contracts | Other liabilities | ||||||||
Derivative [Line Items] | ||||||||
Liability derivatives - fair value | [3] | (14,085) | (14,085) | (1,542) | ||||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | ||||||||
Derivative [Line Items] | ||||||||
Net derivatives - notional value | [2],[3] | 1,315,080 | 1,315,080 | 686,941 | ||||
Net realized gains (losses) on derivative instruments | ||||||||
Net realized gains (losses) on derivative instruments | (5,458) | (228) | (13,074) | (12,266) | ||||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | Other assets | ||||||||
Derivative [Line Items] | ||||||||
Asset derivatives - fair value | [3] | 8,203 | 8,203 | 4,478 | ||||
Not Designated as Hedging Instrument [Member] | Foreign currency forward contracts | Other liabilities | ||||||||
Derivative [Line Items] | ||||||||
Liability derivatives - fair value | [3] | (7,490) | (7,490) | (4,381) | ||||
Not Designated as Hedging Instrument [Member] | TBAs | ||||||||
Derivative [Line Items] | ||||||||
Net derivatives - notional value | [2],[4] | 24,964 | 24,964 | 27,066 | ||||
Net realized gains (losses) on derivative instruments | ||||||||
Net realized gains (losses) on derivative instruments | (3) | 122 | (100) | 143 | ||||
Not Designated as Hedging Instrument [Member] | TBAs | Fixed maturities available for sale | ||||||||
Derivative [Line Items] | ||||||||
Asset derivatives - fair value | 25,207 | [4] | 25,207 | [4] | 27,184 | |||
Liability derivatives - fair value | [4] | 0 | 0 | 0 | ||||
Not Designated as Hedging Instrument [Member] | Other | ||||||||
Derivative [Line Items] | ||||||||
Net derivatives - notional value | [2],[3] | 2,220,054 | 2,220,054 | 1,457,345 | ||||
Net realized gains (losses) on derivative instruments | ||||||||
Net realized gains (losses) on derivative instruments | 3,304 | $ (495) | 118 | $ (4,839) | ||||
Not Designated as Hedging Instrument [Member] | Other | Other assets | ||||||||
Derivative [Line Items] | ||||||||
Asset derivatives - fair value | [3] | 26,344 | 26,344 | 7,898 | ||||
Not Designated as Hedging Instrument [Member] | Other | Other liabilities | ||||||||
Derivative [Line Items] | ||||||||
Liability derivatives - fair value | [3] | $ (27,614) | $ (27,614) | $ (14,541) | ||||
[1] | See Note 8 for information on the Company’s derivative instruments. | |||||||
[2] | Represents the absolute notional value of all outstanding contracts, consisting of long and short positions. | |||||||
[3] | The fair value of asset derivatives are included in ‘other assets’ and the fair value of liability derivatives are included in ‘other liabilities.’ | |||||||
[4] | The fair value of TBAs are included in ‘fixed maturities available for sale, at fair value.’ |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Investment commitments | $ 1,570 | $ 1,700 | |
Interest expense on senior notes and other borrowings | $ 67.6 | $ 64.6 |
Variable Interest Entities an_3
Variable Interest Entities and Noncontrolling Interests - Carrying amount of assets and liabilities of variable interest entity (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Variable Interest Entity [Line Items] | ||||||
Investments accounted for using the fair value option | $ 4,097,735 | $ 4,216,237 | ||||
Fixed maturities available for sale, at fair value | 14,331,641 | 13,876,003 | ||||
Equity securities, at fair value | 444,118 | 495,804 | ||||
Cash | 651,037 | 606,199 | ||||
Accrued investment income | 106,543 | 113,133 | ||||
Premiums receivable | 1,307,466 | 1,135,249 | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 2,749,785 | 2,540,143 | ||||
Ceded unearned premiums | 1,011,850 | 926,611 | ||||
Deferred acquisition costs net | 572,987 | 535,824 | ||||
Receivable for securities sold | 278,753 | 205,536 | ||||
Goodwill and intangible assets | 566,662 | 652,611 | $ 684,405 | |||
Other assets | 974,346 | 1,053,009 | ||||
Total assets | 32,252,534 | 32,051,658 | ||||
Reserve for losses and loss adjustment expenses | 11,554,321 | $ 11,424,337 | 11,383,792 | 11,351,267 | $ 10,520,511 | $ 10,200,960 |
Unearned premiums | 3,868,379 | 3,622,314 | ||||
Reinsurance balances payable | 404,936 | 323,496 | ||||
Revolving credit agreement borrowings | 554,756 | 816,132 | ||||
Payable for securities purchased | 255,427 | 449,186 | ||||
Other liabilities | 819,373 | 782,717 | ||||
Total liabilities of consolidated VIE | 21,814,433 | 21,805,723 | ||||
Redeemable noncontrolling interests | 206,199 | 205,922 | ||||
Watford Re | ||||||
Variable Interest Entity [Line Items] | ||||||
Redeemable noncontrolling interests | 206,199 | $ 206,105 | 205,922 | $ 205,829 | $ 205,736 | $ 205,553 |
Variable Interest Entity, Primary Beneficiary | Watford Re | ||||||
Variable Interest Entity [Line Items] | ||||||
Investments accounted for using the fair value option | 2,424,009 | 2,426,066 | ||||
Fixed maturities available for sale, at fair value | 305,388 | 0 | ||||
Equity securities, at fair value | 46,581 | 0 | ||||
Cash | 64,684 | 54,503 | ||||
Accrued investment income | 17,650 | 18,261 | ||||
Premiums receivable | 217,582 | 177,492 | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 69,849 | 42,777 | ||||
Ceded unearned premiums | 63,772 | 24,762 | ||||
Deferred acquisition costs net | 84,980 | 85,961 | ||||
Receivable for securities sold | 36,153 | 36,374 | ||||
Goodwill and intangible assets | 7,650 | 7,650 | ||||
Other assets | 81,152 | 140,808 | ||||
Total assets | 3,419,450 | 3,014,654 | ||||
Reserve for losses and loss adjustment expenses | 962,927 | 798,262 | ||||
Unearned premiums | 407,957 | 330,644 | ||||
Reinsurance balances payable | 24,696 | 18,424 | ||||
Revolving credit agreement borrowings | 429,756 | 441,132 | ||||
Payable for securities purchased | 135,690 | 42,501 | ||||
Other liabilities | 252,171 | 215,186 | ||||
Total liabilities of consolidated VIE | 2,213,197 | 1,846,149 | ||||
Redeemable noncontrolling interests | $ 220,899 | $ 220,622 |
Variable Interest Entities an_4
Variable Interest Entities and Noncontrolling Interests - Variable interest entity (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Mar. 31, 2014 | Sep. 30, 2018 | Sep. 30, 2017 | |
Variable Interest Entity [Line Items] | |||
Net cash provided by operating activities | $ 1,120,987 | $ 1,060,709 | |
Net cash used for investing activities | (390,083) | (872,638) | |
Net cash used for financing activities | (736,744) | (194,914) | |
Variable Interest Entity, Primary Beneficiary | Watford Holdings Ltd | |||
Variable Interest Entity [Line Items] | |||
Initial investment contribution amount | $ 100,000 | ||
Ownership percentage | 11.00% | ||
Variable Interest Entity, Primary Beneficiary | Watford Re | |||
Variable Interest Entity [Line Items] | |||
Net cash provided by operating activities | 174,300 | 221,900 | |
Net cash used for investing activities | (208,300) | (386,800) | |
Net cash used for financing activities | $ (24,200) | $ 152,500 |
Variable Interest Entities an_5
Variable Interest Entities and Noncontrolling Interests - Non-redeemable noncontrolling interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Noncontrolling Interest [Line Items] | ||||
Non-redeemable noncontrolling interests, beginning of period | $ 843,411 | |||
Amounts attributable to noncontrolling interests | $ 16,759 | $ (16,147) | 36,251 | $ 9,523 |
Non-redeemable noncontrolling interests, end of period | 876,754 | 860,898 | 876,754 | 860,898 |
Watford Re | ||||
Noncontrolling Interest [Line Items] | ||||
Non-redeemable noncontrolling interests, beginning of period | 861,153 | 877,456 | 843,411 | 851,854 |
Amounts attributable to noncontrolling interests | 16,759 | (16,147) | 36,251 | 9,523 |
Other comprehensive income attributable to noncontrolling interests | (1,158) | (411) | (2,908) | (479) |
Non-redeemable noncontrolling interests, end of period | $ 876,754 | $ 860,898 | $ 876,754 | $ 860,898 |
Common shares | Watford Re | ||||
Noncontrolling Interest [Line Items] | ||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 89.00% | 89.00% |
Variable Interest Entities an_6
Variable Interest Entities and Noncontrolling Interests - Redeemable noncontrolling interests (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Redeemable Noncontrolling Interest [Line Items] | ||||
Redeemable noncontrolling interests, beginning of period | $ 205,922 | |||
Redeemable noncontrolling interests, end of period | $ 206,199 | 206,199 | ||
Watford Re | ||||
Redeemable Noncontrolling Interest [Line Items] | ||||
Redeemable noncontrolling interests, beginning of period | 206,105 | $ 205,736 | 205,922 | $ 205,553 |
Accretion of preference share issuance costs | 94 | 93 | 277 | 276 |
Redeemable noncontrolling interests, end of period | $ 206,199 | $ 205,829 | $ 206,199 | $ 205,829 |
Cumulative redeemable preference shares | Watford Re | ||||
Redeemable Noncontrolling Interest [Line Items] | ||||
Preference shares, number of shares issued | 9,065,200 | 9,065,200 | ||
Par value per share | $ 0.01 | $ 0.01 | ||
Liquidation preference per share | $ 25 | $ 25 |
Variable Interest Entities an_7
Variable Interest Entities and Noncontrolling Interests - Income or loss attributable to third party investors (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Noncontrolling Interest [Abstract] | ||||
Amounts attributable to non-redeemable noncontrolling interests | $ (16,759) | $ 16,147 | $ (36,251) | $ (9,523) |
Dividends attributable to redeemable noncontrolling interests | (4,599) | (4,586) | (13,769) | (13,756) |
Net (income) loss attributable to noncontrolling interests | $ (21,358) | $ 11,561 | $ (50,020) | $ (23,279) |
Variable Interest Entities an_8
Variable Interest Entities and Noncontrolling Interests - Other variable interest entity disclosures (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | $ 1,692,102 | $ 1,171,793 |
Variable Interest Entity, Not Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Total VIE Assets | 1,438,867 | 574,730 |
Maximum Exposure to Loss | 5,823 | 4,108 |
Variable Interest Entity, Not Primary Beneficiary | On-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 788 | 882 |
Variable Interest Entity, Not Primary Beneficiary | Off-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 5,035 | 3,226 |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2015-1 Ltd. (Jul-15) | ||
Variable Interest Entity [Line Items] | ||
Total VIE Assets | 59,729 | 92,390 |
Maximum Exposure to Loss | 480 | 1,303 |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2015-1 Ltd. (Jul-15) | On-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 166 | 471 |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2015-1 Ltd. (Jul-15) | Off-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 314 | 832 |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2016-1 Ltd. (May-16) | ||
Variable Interest Entity [Line Items] | ||
Total VIE Assets | 31,765 | 135,201 |
Maximum Exposure to Loss | 32 | 547 |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2016-1 Ltd. (May-16) | On-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 4 | 20 |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2016-1 Ltd. (May-16) | Off-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 28 | 527 |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2017-1 Ltd. (Oct-17) | ||
Variable Interest Entity [Line Items] | ||
Total VIE Assets | 319,635 | 347,139 |
Maximum Exposure to Loss | 1,302 | 2,258 |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2017-1 Ltd. (Oct-17) | On-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 198 | 391 |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2017-1 Ltd. (Oct-17) | Off-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 1,104 | $ 1,867 |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2018-1 Ltd. (Apr-18) | ||
Variable Interest Entity [Line Items] | ||
Total VIE Assets | 374,460 | |
Maximum Exposure to Loss | 1,226 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2018-1 Ltd. (Apr-18) | On-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 32 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2018-1 Ltd. (Apr-18) | Off-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 1,194 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2018-2 Ltd. | ||
Variable Interest Entity [Line Items] | ||
Total VIE Assets | 653,278 | |
Maximum Exposure to Loss | 2,783 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2018-2 Ltd. | On-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | 388 | |
Variable Interest Entity, Not Primary Beneficiary | Bellemeade 2018-2 Ltd. | Off-Balance Sheet | ||
Variable Interest Entity [Line Items] | ||
Maximum Exposure to Loss | $ 2,395 |
Other Comprehensive Income (L_3
Other Comprehensive Income (Loss) - Amounts reclassified from accumulated other comprehensive income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Other-than-temporary impairment losses | $ (492) | $ (1,878) | $ (1,124) | $ (5,415) |
Income (loss) before income taxes | 282,122 | (37,028) | 750,436 | 498,672 |
Income tax expense | (33,356) | (8,189) | (78,939) | (70,755) |
Net of tax | 227,408 | (33,656) | 621,477 | 404,638 |
Reclassification out of accumulated other comprehensive income | Unrealized appreciation on available-for-sale investments | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net realized gains (losses) | (23,888) | 27,550 | (130,409) | 59,474 |
Other-than-temporary impairment losses | (492) | (1,878) | (1,124) | (5,415) |
Income (loss) before income taxes | (24,380) | 25,672 | (131,533) | 54,059 |
Income tax expense | 1,177 | (1,760) | 9,226 | (7,879) |
Net of tax | $ (23,203) | $ 23,912 | $ (122,307) | $ 46,180 |
Other Comprehensive Income (L_4
Other Comprehensive Income (Loss) - Components of other comprehensive income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Before tax amount: | ||||
Unrealized holding gains (losses) arising during period, before tax | $ (57,812) | $ 69,330 | $ (335,789) | $ 288,813 |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), before tax | 0 | 0 | 0 | 0 |
Less reclassification of net realized gains included in net income, before tax | (24,380) | 25,672 | (131,533) | 54,059 |
Foreign currency translation adjustments, before tax | 2,167 | 8,590 | (9,102) | 30,264 |
Other comprehensive income (loss), before tax | (31,265) | 52,248 | (213,358) | 265,018 |
Tax expense (benefit): | ||||
Unrealized holding gains (losses) arising during period, tax | (4,504) | 2,868 | (30,533) | 28,590 |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), tax | 0 | 0 | 0 | 0 |
Less reclassification of net realized gains included in net income, tax | (1,177) | 1,760 | (9,226) | 7,879 |
Foreign currency translation adjustments, tax | 104 | 310 | 148 | 563 |
Other comprehensive income (loss), tax | (3,223) | 1,418 | (21,159) | 21,274 |
Net of tax amount: | ||||
Unrealized holding gains (losses) arising during period, net of tax | (53,308) | 66,462 | (305,256) | 260,223 |
Portion of other-than-temporary impairment losses recognized in other comprehensive income (loss), net of tax | 0 | 0 | 0 | 0 |
Less reclassification of net realized gains included in net income, net of tax | (23,203) | 23,912 | (122,307) | 46,180 |
Foreign currency translation adjustments, net of tax | 2,063 | 8,280 | (9,250) | 29,701 |
Net current period other comprehensive income (loss) | $ (28,042) | $ 50,830 | $ (192,199) | $ 243,744 |
Guarantor Financial Informati_3
Guarantor Financial Information - Condensed consolidating balance sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Assets | ||||||
Total investments | $ 21,666,428 | $ 21,840,012 | ||||
Cash | 651,037 | 606,199 | ||||
Investments in subsidiaries | 0 | 0 | ||||
Due from subsidiaries and affiliates | 0 | 0 | ||||
Premiums receivable | 1,307,466 | 1,135,249 | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 2,749,785 | 2,540,143 | ||||
Contractholder receivables | 2,067,268 | 1,978,414 | ||||
Ceded unearned premiums | 1,011,850 | 926,611 | ||||
Deferred acquisition costs net | 572,987 | 535,824 | ||||
Goodwill and intangible assets | 566,662 | 652,611 | $ 684,405 | |||
Other assets | 1,659,051 | 1,836,595 | ||||
Total assets | 32,252,534 | 32,051,658 | ||||
Liabilities | ||||||
Reserve for losses and loss adjustment expenses | 11,554,321 | $ 11,424,337 | 11,383,792 | 11,351,267 | $ 10,520,511 | $ 10,200,960 |
Unearned premiums | 3,868,379 | 3,622,314 | ||||
Reinsurance balances payable | 404,936 | 323,496 | ||||
Contractholder payables | 2,067,268 | 1,978,414 | ||||
Collateral held for insured obligations | 249,723 | 240,183 | ||||
Senior notes | 1,733,364 | 1,732,884 | ||||
Revolving credit agreement borrowings | 554,756 | 816,132 | ||||
Due to subsidiaries and affiliates | 0 | 0 | ||||
Other liabilities | 1,381,686 | 1,708,508 | ||||
Total liabilities | 21,814,433 | 21,805,723 | ||||
Redeemable noncontrolling interests | 206,199 | 205,922 | ||||
Shareholders' Equity | ||||||
Total shareholders’ equity available to Arch | 9,355,148 | 9,196,602 | 8,911,144 | |||
Non-redeemable noncontrolling interests | 876,754 | 843,411 | 860,898 | |||
Total shareholders’ equity | 10,231,902 | 10,040,013 | $ 9,772,042 | |||
Total liabilities, noncontrolling interests and shareholders’ equity | 32,252,534 | 32,051,658 | ||||
Reportable Legal Entities | Arch Capital (Parent Guarantor) | ||||||
Assets | ||||||
Total investments | 183 | 96,540 | ||||
Cash | 8,058 | 9,997 | ||||
Investments in subsidiaries | 9,655,977 | 9,396,621 | ||||
Due from subsidiaries and affiliates | 16 | 394 | ||||
Premiums receivable | 0 | 0 | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 0 | 0 | ||||
Contractholder receivables | 0 | 0 | ||||
Ceded unearned premiums | 0 | 0 | ||||
Deferred acquisition costs net | 0 | 0 | ||||
Goodwill and intangible assets | 0 | 0 | ||||
Other assets | 11,966 | 13,176 | ||||
Total assets | 9,676,200 | 9,516,728 | ||||
Liabilities | ||||||
Reserve for losses and loss adjustment expenses | 0 | 0 | ||||
Unearned premiums | 0 | 0 | ||||
Reinsurance balances payable | 0 | 0 | ||||
Contractholder payables | 0 | 0 | ||||
Collateral held for insured obligations | 0 | 0 | ||||
Senior notes | 297,125 | 297,053 | ||||
Revolving credit agreement borrowings | 0 | 0 | ||||
Due to subsidiaries and affiliates | 3,386 | 235 | ||||
Other liabilities | 20,541 | 22,838 | ||||
Total liabilities | 321,052 | 320,126 | ||||
Redeemable noncontrolling interests | 0 | 0 | ||||
Shareholders' Equity | ||||||
Total shareholders’ equity available to Arch | 9,355,148 | 9,196,602 | ||||
Non-redeemable noncontrolling interests | 0 | 0 | ||||
Total shareholders’ equity | 9,355,148 | 9,196,602 | ||||
Total liabilities, noncontrolling interests and shareholders’ equity | 9,676,200 | 9,516,728 | ||||
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||||||
Assets | ||||||
Total investments | 198,843 | 46,281 | ||||
Cash | 52,784 | 30,380 | ||||
Investments in subsidiaries | 4,126,722 | 4,097,765 | ||||
Due from subsidiaries and affiliates | 2 | 0 | ||||
Premiums receivable | 0 | 0 | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 0 | 0 | ||||
Contractholder receivables | 0 | 0 | ||||
Ceded unearned premiums | 0 | 0 | ||||
Deferred acquisition costs net | 0 | 0 | ||||
Goodwill and intangible assets | 0 | 0 | ||||
Other assets | 30,477 | 49,585 | ||||
Total assets | 4,408,828 | 4,224,011 | ||||
Liabilities | ||||||
Reserve for losses and loss adjustment expenses | 0 | 0 | ||||
Unearned premiums | 0 | 0 | ||||
Reinsurance balances payable | 0 | 0 | ||||
Contractholder payables | 0 | 0 | ||||
Collateral held for insured obligations | 0 | 0 | ||||
Senior notes | 494,697 | 494,621 | ||||
Revolving credit agreement borrowings | 0 | 0 | ||||
Due to subsidiaries and affiliates | 542,365 | 536,919 | ||||
Other liabilities | 34,661 | 29,317 | ||||
Total liabilities | 1,071,723 | 1,060,857 | ||||
Redeemable noncontrolling interests | 0 | 0 | ||||
Shareholders' Equity | ||||||
Total shareholders’ equity available to Arch | 3,337,105 | 3,163,154 | ||||
Non-redeemable noncontrolling interests | 0 | 0 | ||||
Total shareholders’ equity | 3,337,105 | 3,163,154 | ||||
Total liabilities, noncontrolling interests and shareholders’ equity | $ 4,408,828 | 4,224,011 | ||||
Percentage Ownership of Subsidiary | 100.00% | |||||
Reportable Legal Entities | Other Arch Capital Subsidiaries | ||||||
Assets | ||||||
Total investments | $ 21,482,102 | 21,711,891 | ||||
Cash | 590,195 | 565,822 | ||||
Investments in subsidiaries | 0 | 0 | ||||
Due from subsidiaries and affiliates | 1,870,606 | 1,828,864 | ||||
Premiums receivable | 1,852,571 | 2,967,701 | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | 8,264,202 | 8,442,192 | ||||
Contractholder receivables | 2,067,268 | 1,978,414 | ||||
Ceded unearned premiums | 1,809,979 | 2,165,789 | ||||
Deferred acquisition costs net | 632,637 | 693,053 | ||||
Goodwill and intangible assets | 566,662 | 652,611 | ||||
Other assets | 1,759,537 | 1,860,505 | ||||
Total assets | 40,895,759 | 42,866,842 | ||||
Liabilities | ||||||
Reserve for losses and loss adjustment expenses | 16,847,736 | 17,236,401 | ||||
Unearned premiums | 4,666,508 | 4,861,491 | ||||
Reinsurance balances payable | 950,041 | 2,155,947 | ||||
Contractholder payables | 2,067,268 | 1,978,414 | ||||
Collateral held for insured obligations | 249,723 | 240,183 | ||||
Senior notes | 941,542 | 941,210 | ||||
Revolving credit agreement borrowings | 554,756 | 816,132 | ||||
Due to subsidiaries and affiliates | 1,324,873 | 1,292,104 | ||||
Other liabilities | 1,750,063 | 1,949,696 | ||||
Total liabilities | 29,352,510 | 31,471,578 | ||||
Redeemable noncontrolling interests | 220,899 | 220,622 | ||||
Shareholders' Equity | ||||||
Total shareholders’ equity available to Arch | 10,445,596 | 10,331,231 | ||||
Non-redeemable noncontrolling interests | 876,754 | 843,411 | ||||
Total shareholders’ equity | 11,322,350 | 11,174,642 | ||||
Total liabilities, noncontrolling interests and shareholders’ equity | 40,895,759 | 42,866,842 | ||||
Consolidating Adjustments and Eliminations | ||||||
Assets | ||||||
Total investments | (14,700) | (14,700) | ||||
Cash | 0 | 0 | ||||
Investments in subsidiaries | (13,782,699) | (13,494,386) | ||||
Due from subsidiaries and affiliates | (1,870,624) | (1,829,258) | ||||
Premiums receivable | (545,105) | (1,832,452) | ||||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses | (5,514,417) | (5,902,049) | ||||
Contractholder receivables | 0 | 0 | ||||
Ceded unearned premiums | (798,129) | (1,239,178) | ||||
Deferred acquisition costs net | (59,650) | (157,229) | ||||
Goodwill and intangible assets | 0 | 0 | ||||
Other assets | (142,929) | (86,671) | ||||
Total assets | (22,728,253) | (24,555,923) | ||||
Liabilities | ||||||
Reserve for losses and loss adjustment expenses | (5,293,415) | (5,852,609) | ||||
Unearned premiums | (798,129) | (1,239,177) | ||||
Reinsurance balances payable | (545,105) | (1,832,451) | ||||
Contractholder payables | 0 | 0 | ||||
Collateral held for insured obligations | 0 | |||||
Senior notes | 0 | 0 | ||||
Revolving credit agreement borrowings | 0 | 0 | ||||
Due to subsidiaries and affiliates | (1,870,624) | (1,829,258) | ||||
Other liabilities | (423,579) | (293,343) | ||||
Total liabilities | (8,930,852) | (11,046,838) | ||||
Redeemable noncontrolling interests | (14,700) | (14,700) | ||||
Shareholders' Equity | ||||||
Total shareholders’ equity available to Arch | (13,782,701) | (13,494,385) | ||||
Non-redeemable noncontrolling interests | 0 | 0 | ||||
Total shareholders’ equity | (13,782,701) | (13,494,385) | ||||
Total liabilities, noncontrolling interests and shareholders’ equity | $ (22,728,253) | $ (24,555,923) |
Guarantor Financial Informati_4
Guarantor Financial Information - Condensed consolidating statement of income and comprehensive income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | ||||
Net premiums earned | $ 1,290,878 | $ 1,261,886 | $ 3,862,540 | $ 3,619,777 |
Net investment income | 144,024 | 116,459 | 406,416 | 345,457 |
Net realized gains (losses) | (51,705) | 66,275 | (239,314) | 122,163 |
Net impairment losses recognized in earnings | (492) | (1,878) | (1,124) | (5,415) |
Other underwriting income | 5,823 | 6,064 | 15,046 | 15,519 |
Equity in net income (loss) of investment funds accounted for using the equity method | 15,982 | 31,090 | 52,523 | 111,884 |
Other income (loss) | (726) | (342) | 2,461 | (3,118) |
Total revenues | 1,403,784 | 1,479,554 | 4,098,548 | 4,206,267 |
Expenses | ||||
Losses and loss adjustment expenses | 699,420 | 1,046,141 | 2,062,433 | 2,288,571 |
Acquisition expenses | 201,602 | 193,854 | 595,816 | 566,579 |
Other operating expenses | 161,098 | 170,127 | 512,294 | 514,827 |
Corporate expenses | 14,335 | 17,098 | 52,159 | 69,766 |
Amortization of intangible assets | 26,315 | 31,824 | 79,523 | 93,942 |
Interest expense | 29,730 | 29,510 | 90,710 | 86,935 |
Net foreign exchange (gains) losses | (10,838) | 28,028 | (44,823) | 86,975 |
Total expenses | 1,121,662 | 1,516,582 | 3,348,112 | 3,707,595 |
Income (loss) before income taxes | 282,122 | (37,028) | 750,436 | 498,672 |
Income tax (expense) benefit | (33,356) | (8,189) | (78,939) | (70,755) |
Income (loss) before equity in net income of subsidiaries | 248,766 | (45,217) | 671,497 | 427,917 |
Equity in net income of subsidiaries | 0 | 0 | 0 | 0 |
Net income (loss) | 248,766 | (45,217) | 671,497 | 427,917 |
Net (income) loss attributable to noncontrolling interests | (21,358) | 11,561 | (50,020) | (23,279) |
Net income available to Arch | 227,408 | (33,656) | 621,477 | 404,638 |
Preferred dividends | (10,402) | (12,369) | (31,242) | (34,936) |
Loss on redemption of preferred shares | 0 | (6,735) | (2,710) | (6,735) |
Net income available to Arch common shareholders | 217,006 | (52,760) | 587,525 | 362,967 |
Comprehensive income available to Arch | 200,524 | 17,585 | 432,186 | 648,861 |
Reportable Legal Entities | Arch Capital (Parent Guarantor) | ||||
Revenues | ||||
Net premiums earned | 0 | 0 | 0 | 0 |
Net investment income | 2 | 117 | 37 | 123 |
Net realized gains (losses) | 0 | 0 | 29 | 0 |
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 |
Other underwriting income | 0 | 0 | 0 | 0 |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 |
Other income (loss) | (195) | (102) | 2,066 | (368) |
Total revenues | (193) | 15 | 2,132 | (245) |
Expenses | ||||
Losses and loss adjustment expenses | 0 | 0 | 0 | 0 |
Acquisition expenses | 0 | 0 | 0 | 0 |
Other operating expenses | 0 | 0 | 0 | 0 |
Corporate expenses | 15,170 | 14,576 | 47,981 | 53,639 |
Amortization of intangible assets | 0 | 0 | 0 | 0 |
Interest expense | 5,536 | 5,934 | 16,609 | 18,024 |
Net foreign exchange (gains) losses | 0 | 0 | 29 | 0 |
Total expenses | 20,706 | 20,510 | 64,619 | 71,663 |
Income (loss) before income taxes | (20,899) | (20,495) | (62,487) | (71,908) |
Income tax (expense) benefit | 0 | 0 | 0 | 0 |
Income (loss) before equity in net income of subsidiaries | (20,899) | (20,495) | (62,487) | (71,908) |
Equity in net income of subsidiaries | 248,307 | (13,161) | 683,964 | 476,546 |
Net income (loss) | 227,408 | (33,656) | 621,477 | 404,638 |
Net (income) loss attributable to noncontrolling interests | 0 | 0 | 0 | 0 |
Net income available to Arch | 227,408 | (33,656) | 621,477 | 404,638 |
Preferred dividends | (10,402) | (12,369) | (31,242) | (34,936) |
Loss on redemption of preferred shares | (6,735) | (2,710) | (6,735) | |
Net income available to Arch common shareholders | 217,006 | (52,760) | 587,525 | 362,967 |
Comprehensive income available to Arch | 200,524 | 17,585 | 432,186 | 648,861 |
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | ||||
Revenues | ||||
Net premiums earned | 0 | 0 | 0 | 0 |
Net investment income | 1,202 | 151 | 2,020 | 1,151 |
Net realized gains (losses) | (64) | 0 | (71) | 0 |
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 |
Other underwriting income | 0 | 0 | 0 | 0 |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 |
Other income (loss) | 0 | 0 | 0 | 0 |
Total revenues | 1,138 | 151 | 1,949 | 1,151 |
Expenses | ||||
Losses and loss adjustment expenses | 0 | 0 | 0 | 0 |
Acquisition expenses | 0 | 0 | 0 | 0 |
Other operating expenses | 0 | 0 | 0 | 0 |
Corporate expenses | 446 | 410 | 1,205 | 3,727 |
Amortization of intangible assets | 0 | 0 | 0 | 0 |
Interest expense | 12,075 | 12,037 | 36,014 | 35,956 |
Net foreign exchange (gains) losses | 0 | 0 | 0 | 0 |
Total expenses | 12,521 | 12,447 | 37,219 | 39,683 |
Income (loss) before income taxes | (11,383) | (12,296) | (35,270) | (38,532) |
Income tax (expense) benefit | 2,276 | 4,432 | 7,704 | 13,374 |
Income (loss) before equity in net income of subsidiaries | (9,107) | (7,864) | (27,566) | (25,158) |
Equity in net income of subsidiaries | 92,906 | 50,057 | 266,053 | 213,586 |
Net income (loss) | 83,799 | 42,193 | 238,487 | 188,428 |
Net (income) loss attributable to noncontrolling interests | 0 | 0 | 0 | 0 |
Net income available to Arch | 83,799 | 42,193 | 238,487 | 188,428 |
Preferred dividends | 0 | 0 | 0 | 0 |
Loss on redemption of preferred shares | 0 | 0 | 0 | |
Net income available to Arch common shareholders | 83,799 | 42,193 | 238,487 | 188,428 |
Comprehensive income available to Arch | 77,389 | 47,676 | 153,992 | 240,759 |
Reportable Legal Entities | Other Arch Capital Subsidiaries | ||||
Revenues | ||||
Net premiums earned | 1,290,878 | 1,261,886 | 3,862,540 | 3,619,777 |
Net investment income | 165,289 | 138,784 | 471,588 | 410,392 |
Net realized gains (losses) | (51,641) | 66,275 | (239,272) | 122,163 |
Net impairment losses recognized in earnings | (492) | (1,878) | (1,124) | (5,415) |
Other underwriting income | 5,823 | 6,064 | 15,046 | 15,519 |
Equity in net income (loss) of investment funds accounted for using the equity method | 15,982 | 31,090 | 52,523 | 111,884 |
Other income (loss) | (531) | (240) | 395 | (2,750) |
Total revenues | 1,425,308 | 1,501,981 | 4,161,696 | 4,271,570 |
Expenses | ||||
Losses and loss adjustment expenses | 699,420 | 1,046,141 | 2,062,433 | 2,288,571 |
Acquisition expenses | 201,602 | 193,854 | 595,816 | 566,579 |
Other operating expenses | 161,098 | 170,127 | 512,294 | 514,827 |
Corporate expenses | (1,281) | 2,112 | 2,973 | 12,400 |
Amortization of intangible assets | 26,315 | 31,824 | 79,523 | 93,942 |
Interest expense | 34,276 | 33,811 | 104,359 | 98,197 |
Net foreign exchange (gains) losses | (10,426) | 20,510 | (37,347) | 65,701 |
Total expenses | 1,111,004 | 1,498,379 | 3,320,051 | 3,640,217 |
Income (loss) before income taxes | 314,304 | 3,602 | 841,645 | 631,353 |
Income tax (expense) benefit | (35,632) | (12,621) | (86,643) | (84,129) |
Income (loss) before equity in net income of subsidiaries | 278,672 | (9,019) | 755,002 | 547,224 |
Equity in net income of subsidiaries | 0 | 0 | 0 | 0 |
Net income (loss) | 278,672 | (9,019) | 755,002 | 547,224 |
Net (income) loss attributable to noncontrolling interests | (21,669) | 11,238 | (50,976) | (24,247) |
Net income available to Arch | 257,003 | 2,219 | 704,026 | 522,977 |
Preferred dividends | 0 | 0 | 0 | 0 |
Loss on redemption of preferred shares | 0 | 0 | 0 | |
Net income available to Arch common shareholders | 257,003 | 2,219 | 704,026 | 522,977 |
Comprehensive income available to Arch | 230,565 | 45,936 | 522,448 | 745,856 |
Consolidating Adjustments and Eliminations | ||||
Revenues | ||||
Net premiums earned | 0 | 0 | 0 | 0 |
Net investment income | (22,469) | (22,593) | (67,229) | (66,209) |
Net realized gains (losses) | 0 | 0 | 0 | 0 |
Net impairment losses recognized in earnings | 0 | 0 | 0 | 0 |
Other underwriting income | 0 | 0 | 0 | 0 |
Equity in net income (loss) of investment funds accounted for using the equity method | 0 | 0 | 0 | 0 |
Other income (loss) | 0 | 0 | 0 | 0 |
Total revenues | (22,469) | (22,593) | (67,229) | (66,209) |
Expenses | ||||
Losses and loss adjustment expenses | 0 | 0 | 0 | 0 |
Acquisition expenses | 0 | 0 | 0 | 0 |
Other operating expenses | 0 | 0 | 0 | 0 |
Corporate expenses | 0 | 0 | 0 | 0 |
Amortization of intangible assets | 0 | 0 | 0 | 0 |
Interest expense | (22,157) | (22,272) | (66,272) | (65,242) |
Net foreign exchange (gains) losses | (412) | 7,518 | (7,505) | 21,274 |
Total expenses | (22,569) | (14,754) | (73,777) | (43,968) |
Income (loss) before income taxes | 100 | (7,839) | 6,548 | (22,241) |
Income tax (expense) benefit | 0 | 0 | 0 | 0 |
Income (loss) before equity in net income of subsidiaries | 100 | (7,839) | 6,548 | (22,241) |
Equity in net income of subsidiaries | (341,213) | (36,896) | (950,017) | (690,132) |
Net income (loss) | (341,113) | (44,735) | (943,469) | (712,373) |
Net (income) loss attributable to noncontrolling interests | 311 | 323 | 956 | 968 |
Net income available to Arch | (340,802) | (44,412) | (942,513) | (711,405) |
Preferred dividends | 0 | 0 | 0 | 0 |
Loss on redemption of preferred shares | 0 | 0 | 0 | |
Net income available to Arch common shareholders | (340,802) | (44,412) | (942,513) | (711,405) |
Comprehensive income available to Arch | $ (307,954) | $ (93,612) | $ (676,440) | $ (986,615) |
Guarantor Financial Informati_5
Guarantor Financial Information - Condensed consolidating statement of cash flows (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | ||
Operating Activities | |||
Net Cash Provided by (Used in) Operating Activities | $ 1,120,987 | $ 1,060,709 | |
Investing Activities | |||
Purchases of fixed maturity investments | (24,837,917) | (28,079,129) | |
Purchases of equity securities | (819,342) | (667,135) | |
Purchases of other investments | (1,543,332) | (1,406,528) | |
Proceeds from sales of fixed maturity investments | 23,310,203 | 27,629,474 | |
Proceeds from sales of equity securities | 866,919 | 751,873 | |
Proceeds from sales, redemptions and maturities of other investments | 1,178,035 | 938,581 | |
Proceeds from redemptions and maturities of fixed maturity investments | 724,021 | 747,621 | |
Net settlements of derivative instruments | 765 | (20,952) | |
Net (purchases) sales of short-term investments | 554,315 | (964,653) | |
Change in cash collateral related to securities lending | 137,073 | 148,692 | |
Contributions to subsidiaries | 0 | 0 | |
Issuance of intercompany loans | 0 | ||
Repayment of intercompany loans | 0 | ||
Acquisitions, net of cash | 0 | (27,709) | |
Purchases of fixed assets | (19,050) | (16,862) | |
Other | 58,227 | 94,089 | |
Net Cash Provided By (Used For) Investing Activities | (390,083) | (872,638) | |
Financing Activities | |||
Proceeds from issuance of preferred shares, net | 0 | 222,054 | |
Redemption of preferred shares | (92,555) | (230,000) | |
Purchases of common shares under share repurchase program | (184,529) | 0 | |
Proceeds from common shares issued, net | (12,029) | (7,484) | |
Proceeds From Intercompany Loans Financing Activities | 0 | ||
Proceeds from borrowings | 167,259 | 238,915 | |
Repayments of Intercompany Debt Financing Activities | 0 | ||
Repayments of borrowings | (427,000) | (172,000) | |
Change in cash collateral related to securities lending | (137,073) | (148,692) | |
Dividends paid to redeemable noncontrolling interests | (13,491) | (13,491) | |
Dividends paid to parent | [1] | 0 | 0 |
Other | (6,084) | (49,280) | |
Preferred dividends paid | (31,242) | (34,936) | |
Net Cash Provided By (Used For) Financing Activities | (736,744) | (194,914) | |
Effects of exchange rate changes on foreign currency cash and restricted cash | (11,625) | 17,888 | |
Increase (decrease) in cash and restricted cash | (17,465) | 11,045 | |
Cash and restricted cash, beginning of year | 727,284 | 969,569 | |
Cash and restricted cash, end of period | 709,819 | 980,614 | |
Reportable Legal Entities | Arch Capital (Parent Guarantor) | |||
Operating Activities | |||
Net Cash Provided by (Used in) Operating Activities | 222,097 | 130,715 | |
Investing Activities | |||
Purchases of fixed maturity investments | 0 | 0 | |
Purchases of equity securities | 0 | 0 | |
Purchases of other investments | 0 | 0 | |
Proceeds from sales of fixed maturity investments | 0 | 0 | |
Proceeds from sales of equity securities | 0 | 0 | |
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | |
Proceeds from redemptions and maturities of fixed maturity investments | 0 | 0 | |
Net settlements of derivative instruments | 0 | 0 | |
Net (purchases) sales of short-term investments | 96,397 | 2,209 | |
Change in cash collateral related to securities lending | 0 | 0 | |
Contributions to subsidiaries | 0 | 20,641 | |
Issuance of intercompany loans | 0 | ||
Repayment of intercompany loans | 0 | ||
Acquisitions, net of cash | 0 | ||
Purchases of fixed assets | (71) | (18) | |
Other | (4) | 0 | |
Net Cash Provided By (Used For) Investing Activities | 96,322 | 22,832 | |
Financing Activities | |||
Proceeds from issuance of preferred shares, net | 222,054 | ||
Redemption of preferred shares | (92,555) | (230,000) | |
Purchases of common shares under share repurchase program | (184,529) | ||
Proceeds from common shares issued, net | (12,029) | (7,484) | |
Proceeds From Intercompany Loans Financing Activities | 0 | ||
Proceeds from borrowings | 0 | 0 | |
Repayments of Intercompany Debt Financing Activities | 0 | ||
Repayments of borrowings | 0 | (100,000) | |
Change in cash collateral related to securities lending | 0 | 0 | |
Dividends paid to redeemable noncontrolling interests | 0 | 0 | |
Dividends paid to parent | [1] | 0 | 0 |
Other | 0 | 0 | |
Preferred dividends paid | (31,242) | (34,936) | |
Net Cash Provided By (Used For) Financing Activities | (320,355) | (150,366) | |
Effects of exchange rate changes on foreign currency cash and restricted cash | 0 | 0 | |
Increase (decrease) in cash and restricted cash | (1,936) | 3,181 | |
Cash and restricted cash, beginning of year | 10,048 | 1,738 | |
Cash and restricted cash, end of period | 8,112 | 4,919 | |
Reportable Legal Entities | Arch-U.S. (Subsidiary Issuer) | |||
Operating Activities | |||
Net Cash Provided by (Used in) Operating Activities | 176,851 | 70,761 | |
Investing Activities | |||
Purchases of fixed maturity investments | (214,449) | 0 | |
Purchases of equity securities | 0 | 0 | |
Purchases of other investments | 0 | 0 | |
Proceeds from sales of fixed maturity investments | 111,533 | 0 | |
Proceeds from sales of equity securities | 0 | 0 | |
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | |
Proceeds from redemptions and maturities of fixed maturity investments | 0 | 0 | |
Net settlements of derivative instruments | 0 | 0 | |
Net (purchases) sales of short-term investments | (49,031) | (27,998) | |
Change in cash collateral related to securities lending | 0 | 0 | |
Contributions to subsidiaries | (2,500) | (72,900) | |
Issuance of intercompany loans | 0 | ||
Repayment of intercompany loans | 47,000 | ||
Acquisitions, net of cash | 0 | ||
Purchases of fixed assets | 0 | 0 | |
Other | 0 | 0 | |
Net Cash Provided By (Used For) Investing Activities | (154,447) | (53,898) | |
Financing Activities | |||
Proceeds from issuance of preferred shares, net | 0 | ||
Redemption of preferred shares | 0 | 0 | |
Purchases of common shares under share repurchase program | 0 | ||
Proceeds from common shares issued, net | 0 | 0 | |
Proceeds From Intercompany Loans Financing Activities | 0 | ||
Proceeds from borrowings | 0 | 0 | |
Repayments of Intercompany Debt Financing Activities | 0 | ||
Repayments of borrowings | 0 | 0 | |
Change in cash collateral related to securities lending | 0 | 0 | |
Dividends paid to redeemable noncontrolling interests | 0 | 0 | |
Dividends paid to parent | [1] | 0 | 0 |
Other | 0 | 0 | |
Preferred dividends paid | 0 | 0 | |
Net Cash Provided By (Used For) Financing Activities | 0 | 0 | |
Effects of exchange rate changes on foreign currency cash and restricted cash | 0 | 0 | |
Increase (decrease) in cash and restricted cash | 22,404 | 16,863 | |
Cash and restricted cash, beginning of year | 30,380 | 71,955 | |
Cash and restricted cash, end of period | 52,784 | 88,818 | |
Reportable Legal Entities | Other Arch Capital Subsidiaries | |||
Operating Activities | |||
Net Cash Provided by (Used in) Operating Activities | 1,622,248 | 1,444,276 | |
Investing Activities | |||
Purchases of fixed maturity investments | (25,229,184) | (28,079,129) | |
Purchases of equity securities | (819,342) | (667,135) | |
Purchases of other investments | (1,543,332) | (1,406,528) | |
Proceeds from sales of fixed maturity investments | 23,804,386 | 27,629,474 | |
Proceeds from sales of equity securities | 866,919 | 751,873 | |
Proceeds from sales, redemptions and maturities of other investments | 1,178,035 | 938,581 | |
Proceeds from redemptions and maturities of fixed maturity investments | 724,021 | 747,621 | |
Net settlements of derivative instruments | 765 | (20,952) | |
Net (purchases) sales of short-term investments | 506,949 | (938,864) | |
Change in cash collateral related to securities lending | 137,073 | 148,692 | |
Contributions to subsidiaries | (29,646) | (353,588) | |
Issuance of intercompany loans | (47,000) | ||
Repayment of intercompany loans | 0 | ||
Acquisitions, net of cash | (27,709) | ||
Purchases of fixed assets | (18,979) | (16,844) | |
Other | 58,231 | 114,730 | |
Net Cash Provided By (Used For) Investing Activities | (364,104) | (1,226,778) | |
Financing Activities | |||
Proceeds from issuance of preferred shares, net | 0 | ||
Redemption of preferred shares | 0 | 0 | |
Purchases of common shares under share repurchase program | 0 | ||
Proceeds from common shares issued, net | 32,146 | 405,847 | |
Proceeds From Intercompany Loans Financing Activities | 47,000 | ||
Proceeds from borrowings | 167,259 | 238,915 | |
Repayments of Intercompany Debt Financing Activities | (47,000) | ||
Repayments of borrowings | (427,000) | (72,000) | |
Change in cash collateral related to securities lending | (137,073) | (148,692) | |
Dividends paid to redeemable noncontrolling interests | (14,447) | (14,447) | |
Dividends paid to parent | [1] | (899,253) | (584,087) |
Other | (6,084) | (69,921) | |
Preferred dividends paid | 0 | 0 | |
Net Cash Provided By (Used For) Financing Activities | (1,284,452) | (244,385) | |
Effects of exchange rate changes on foreign currency cash and restricted cash | (11,625) | 17,888 | |
Increase (decrease) in cash and restricted cash | (37,933) | (8,999) | |
Cash and restricted cash, beginning of year | 686,856 | 895,876 | |
Cash and restricted cash, end of period | 648,923 | 886,877 | |
Consolidating Adjustments and Eliminations | |||
Operating Activities | |||
Net Cash Provided by (Used in) Operating Activities | (900,209) | (585,043) | |
Investing Activities | |||
Purchases of fixed maturity investments | 605,716 | 0 | |
Purchases of equity securities | 0 | 0 | |
Purchases of other investments | 0 | 0 | |
Proceeds from sales of fixed maturity investments | (605,716) | 0 | |
Proceeds from sales of equity securities | 0 | 0 | |
Proceeds from sales, redemptions and maturities of other investments | 0 | 0 | |
Proceeds from redemptions and maturities of fixed maturity investments | 0 | 0 | |
Net settlements of derivative instruments | 0 | 0 | |
Net (purchases) sales of short-term investments | 0 | 0 | |
Change in cash collateral related to securities lending | 0 | 0 | |
Contributions to subsidiaries | 32,146 | 405,847 | |
Issuance of intercompany loans | 47,000 | ||
Repayment of intercompany loans | (47,000) | ||
Acquisitions, net of cash | 0 | ||
Purchases of fixed assets | 0 | 0 | |
Other | 0 | (20,641) | |
Net Cash Provided By (Used For) Investing Activities | 32,146 | 385,206 | |
Financing Activities | |||
Proceeds from issuance of preferred shares, net | 0 | ||
Redemption of preferred shares | 0 | 0 | |
Purchases of common shares under share repurchase program | 0 | ||
Proceeds from common shares issued, net | (32,146) | (405,847) | |
Proceeds From Intercompany Loans Financing Activities | (47,000) | ||
Proceeds from borrowings | 0 | 0 | |
Repayments of Intercompany Debt Financing Activities | 47,000 | ||
Repayments of borrowings | 0 | 0 | |
Change in cash collateral related to securities lending | 0 | 0 | |
Dividends paid to redeemable noncontrolling interests | 956 | 956 | |
Dividends paid to parent | [1] | 899,253 | 584,087 |
Other | 0 | 20,641 | |
Preferred dividends paid | 0 | 0 | |
Net Cash Provided By (Used For) Financing Activities | 868,063 | 199,837 | |
Effects of exchange rate changes on foreign currency cash and restricted cash | 0 | 0 | |
Increase (decrease) in cash and restricted cash | 0 | 0 | |
Cash and restricted cash, beginning of year | 0 | 0 | |
Cash and restricted cash, end of period | $ 0 | $ 0 | |
[1] | Dividends received by parent are included in net cash provided by (used for) operating activities |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate on income before income taxes (percentage) | 10.50% | 14.20% | |
Statutory federal tax rate | 21.00% | ||
Tax benefit on share-based compensation | 0.30% | ||
Net deferred tax assets | $ 17.2 | $ 39.6 | |
Income taxes paid | $ (34) | $ 47.9 |
Subsequent Events (Details)
Subsequent Events (Details) £ in Millions, shares in Millions, $ in Millions | Nov. 01, 2018USD ($)employee | Nov. 01, 2018GBP (£)employee | Oct. 23, 2018USD ($) | Nov. 07, 2018USD ($)shares | Sep. 30, 2018USD ($) | Nov. 09, 2018USD ($) | Oct. 31, 2018USD ($) |
Share Repurchase Authorization | |||||||
Shares repurchased for treasury | $ 184.5 | ||||||
Subsequent Event | |||||||
Share Repurchase Authorization | |||||||
Shares repurchased during the period | shares | 0.9 | ||||||
Shares repurchased for treasury | $ 23.5 | ||||||
Remaining authorized repurchase amount | $ 238.5 | ||||||
Aggregate authorized repurchase amount | $ 1,000 | ||||||
Subsequent Event | McNeil & Co. | |||||||
Business Acquisitions | |||||||
Gross premiums written | $ 153.7 | ||||||
Number of employees of acquired company | employee | 140 | 140 | |||||
Subsequent Event | The Ardonagh Group | |||||||
Business Acquisitions | |||||||
Gross premiums written | £ | £ 150 | ||||||
Number of employees of acquired company | employee | 250 | 250 | |||||
Subsequent Event | Bellemeade Re 2018-3 Ltd. | |||||||
Bellemeade 2018-3 Ltd. | |||||||
Aggregate excess of loss reinsurance agreement | $ 506.1 | ||||||
Aggregate losses | $ 179.3 | ||||||
Agreement period | 10 years | ||||||
Subsequent Event | Catastrophe | Hurricane Michael | Minimum | |||||||
Hurricane Michael | |||||||
Preliminary loss estimate, net of reinsurance and reinstatement premiums | $ 40 | ||||||
Preliminary industry loss estimate | 7,000 | ||||||
Subsequent Event | Catastrophe | Hurricane Michael | Maximum | |||||||
Hurricane Michael | |||||||
Preliminary loss estimate, net of reinsurance and reinstatement premiums | 60 | ||||||
Preliminary industry loss estimate | $ 10,000 |