Accounting Changes and Error Corrections

12 Months Ended

Dec. 31, 2020

Accounting Changes and Error Corrections [Abstract]

Revisions of Previously Issued Financial Statements

Revisions of Previously Issued Financial Statements

In connection with the preparation, review and audit of the Company's consolidated financial statements required to be included in this Annual Report on Form 10-K for the year ended December 31, 2020, management identified certain immaterial errors in our historical financial statements primarily related to the accounting for (1) foreign currency exchange gains and losses associated with a specific reinsurance contract and (2) errors in the Company’s tax provision primarily related to the Company’s allocation of certain corporate-level expenses to our subsidiary companies, as well as other previously identified immaterial errors. In accordance with the guidance set forth in SEC Staff Bulletin 99, Materiality, and SEC Staff Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financials, the Company concluded these errors were not material to the previously issued Consolidated Financial Statements, however, correcting the cumulative effect of the errors in 2020 would materially misstate the 2020 consolidated financial statements. Accordingly, we are revising our historical financial statements to correct the immaterial errors. We will revise previously reported financial information for these immaterial errors in our future filings, as applicable.

As a result of the aforementioned revisions, the financial results herein vary from those furnished as an exhibit to the Form 8-K the Company filed with the Securities and Exchange Commission on February 17, 2021.

The adjustments to the Company’s annual and quarterly previously issued financial statements are shown on the following pages, grouped by (1) the audited financial statements and (2) interim period unaudited financial statements, as well as (3) the related adjustments to the Company’s parent company financial information. The Company’s parent company financial information is disclosed on Schedule II of this Annual Report on Form 10-K.

All adjustments to the Statements of Cash Flows for the periods affected by the errors noted below were reclassifications within cash provided by operating activities.

Adjusted Consolidated Balance Sheet as of December 31, 2019:

	December 31, 2019
(in millions)	As reported		Adjustments		As adjusted
Fixed maturities available-for-sale, at fair value	$	3,633.5	$	(3.6)	$	3,629.9
Equity securities available-for-sale, at fair value	124.4		11.6		136.0
Other investments	496.5		(9.9)		486.6
Total investments	5,099.4		(1.9)		5,097.5
Premiums receivable	688.2		(11.7)		676.5
Reinsurance recoverables	3,104.6		2.6		3,107.2
Deferred tax asset, net	6.1		4.5		10.6
Other assets	387.1		0.8		387.9
Total assets	10,514.5		(5.7)		10,508.8
Accrued underwriting expenses and other liabilities	226.0		(4.1)		221.9
Ceded reinsurance payable, net	1,203.1		(1.9)		1,201.2
Funds held	50.6		4.6		55.2
Current income taxes payable, net	0.8		13.1		13.9
Total liabilities	8,733.4		11.7		8,745.1
Retained earnings	811.1		(17.4)		793.7
Total shareholders’ equity	1,781.1		(17.4)		1,763.7
Total liabilities and shareholders' equity	10,514.5		(5.7)		10,508.8

Adjusted Consolidated Statement of Income (Loss) for the three months and year ended December 31, 2019:

	Three Months Ended December 31, 2019						Year Ended December 31, 2019
	As reported		Adjustments		As adjusted		As reported		Adjustments		As adjusted
(in millions, except per share amounts)	(Unaudited)
Earned premiums	$	425.8	$	—	$	425.8	$	1,729.5	$	0.2	$	1,729.7
Net realized investment gains	21.7		0.1		21.8		80.0		0.1		80.1
Total revenue	484.5		0.1		484.6		1,969.7		0.3		1,970.0
Underwriting, acquisition and insurance expenses	180.2		—		180.2		665.8		0.2		666.0
Interest expense	8.3		0.1		8.4		33.6		0.5		34.1
Foreign currency exchange gains	(3.4)		(1.1)		(4.5)		(9.6)		(0.2)		(9.8)
Total expenses	587.8		(1.0)		586.8		1,969.5		0.5		1,970.0
(Loss) income before income taxes	(103.3)		1.1		(102.2)		0.2		(0.2)		—
Income tax provision	—		0.5		0.5		8.6		5.5		14.1
Net loss	(103.3)		0.6		(102.7)		(8.4)		(5.7)		(14.1)
Net loss per common share:
Basic	$	(3.01)	$	0.02	$	(2.99)	$	(0.25)	$	(0.16)	$	(0.41)
Diluted	$	(3.01)	$	0.02	$	(2.99)	$	(0.25)	$	(0.16)	$	(0.41)

Consolidated Balance Sheet impact on opening balances as of January 1, 2019 and 2018:

	Impact on opening balances as of January 1, 2019
(in millions)	As reported		Adjustments		As adjusted
Equity securities available-for-sale, at fair value	$	354.5	$	11.6	$	366.1
Other investments	489.8		(9.9)		479.9
Cash	139.2		0.5		139.7
Premiums receivable	649.9		(4.7)		645.2
Reinsurance recoverables	2,688.3		0.9		2,689.2
Current income taxes receivable, net	8.2		(8.2)		—
Deferred tax asset, net	—		1.3		1.3
Accrued underwriting expenses and other liabilities	261.9		1.1		263.0
Ceded reinsurance payable, net	970.5		(1.3)		969.2
Funds held	37.2		7.2		44.4
Current income taxes payable, net	—		2.4		2.4
Deferred tax liabilities, net	6.2		(6.2)		—
Retained earnings	862.6		(11.7)		850.9

	Impact on opening balances as of January 1, 2018
(in millions)	As reported		Adjustments		As adjusted
Other investments	$	543.6	$	0.8	$	544.4
Premiums receivable	598.6		(4.6)		594.0
Current income taxes receivable, net	1.4		(1.2)		0.2
Other assets	309.6		0.2		309.8
Accrued underwriting expenses and other liabilities	146.9		(0.3)		146.6
Ceded reinsurance payable, net	734.0		0.4		734.4
Deferred tax liabilities, net	31.3		1.9		33.2
Retained earnings	977.0		(6.8)		970.2

Adjusted Consolidated Statement of Income (Loss) for the year ended December 31, 2018:

	Year Ended December 31, 2018
(in millions, except per share amounts)	As reported		Adjustments		As adjusted
Earned premiums	$	1,731.7	$	(0.2)	$	1,731.5
Net investment income	133.1		(0.8)		132.3
Total revenue	1,801.8		(1.0)		1,800.8
Underwriting, acquisition and insurance expenses	654.7		1.4		656.1
Interest expense	31.6		0.3		31.9
Foreign currency exchange losses (gains)	(0.1)		4.0		3.9
Total expenses	1,734.1		5.7		1,739.8
(Loss) income before income taxes	67.7		(6.7)		61.0
Income tax (benefit) provision	4.1		(0.1)		4.0
Net (loss) income	63.6		(6.6)		57.0
Net income (loss) per common share:
Basic	$	1.87	$	(0.19)	$	1.68
Diluted	$	1.83	$	(0.18)	$	1.65

Adjusted Consolidated Balance Sheet as of September 30, 2020:

	September 30, 2020
	As reported		Adjustments		As adjusted
(in millions)	(Unaudited)
Premiums receivable	$	797.0	$	(6.8)	$	790.2
Current income taxes receivable, net	11.2		(3.7)		7.5
Deferred tax asset, net	17.0		(2.2)		14.8
Other assets	358.5		0.1		358.6
Total assets	10,734.3		(12.6)		10,721.7
Accrued underwriting expenses and other liabilities	202.8		2.5		205.3
Ceded reinsurance payable, net	1,085.0		0.7		1,085.7
Total liabilities	8,869.8		3.2		8,873.0
Retained earnings	714.2		(15.8)		698.4
Total shareholders' equity	1,864.5		(15.8)		1,848.7
Total liabilities and shareholders' equity	10,734.3		(12.6)		10,721.7

Adjusted Consolidated Statement of Income (Loss) for the three and nine months ended September 30, 2020:

	Three Months Ended September 30, 2020						Nine Months  Ended September 30, 2020
	As reported		Adjustments		As adjusted		As reported		Adjustments		As adjusted
(in millions, except per share amounts)	(Unaudited)						(Unaudited)
Net realized investment (losses) gains	$	(5.7)	$	—	$	(5.7)	$	33.3	$	(0.1)	$	33.2
Change in fair value of equity securities	10.5		—		10.5		(12.0)		(1.7)		(13.7)
Net realized investment losses	(5.7)		—		(5.7)		(21.7)		(1.8)		(23.5)
Total revenue	483.5		—		483.5		1,377.0		(1.8)		1,375.2
Underwriting, acquisition and insurance expenses	164.3		0.2		164.5		493.7		0.2		493.9
Interest expense	6.8		0.1		6.9		21.3		0.4		21.7
Foreign currency exchange losses	11.6		(3.2)		8.4		15.0		(1.4)		13.6
Total expenses	512.9		(2.9)		510.0		1,422.3		(0.8)		1,421.5
Loss before income taxes	(29.4)		2.9		(26.5)		(45.3)		(1.0)		(46.3)
Income tax provision	0.2		(3.6)		(3.4)		9.5		(2.6)		6.9
Net loss	(29.6)		6.5		(23.1)		(54.8)		1.6		(53.2)
Net loss attributable to common shareholders	(31.6)		6.5		(25.1)		(56.8)		1.6		(55.2)
Net loss attributable to common shareholders per common share:
Basic	$	(0.91)	$	0.19	$	(0.72)	$	(1.64)	$	0.04	$	(1.60)
Diluted	$	(0.91)	$	0.19	$	(0.72)	$	(1.64)	$	0.04	$	(1.60)

Adjusted Consolidated Balance Sheet as of June 30, 2020:

	June 30, 2020
	As reported		Adjustments		As adjusted
(in millions)	(Unaudited)
Premiums receivable	$	800.2	$	(15.2)	$	785.0
Deferred tax asset, net	18.9		(3.0)		15.9
Other assets	414.7		(0.2)		414.5
Total assets	10,396.7		(18.4)		10,378.3
Accrued underwriting expenses and other liabilities	154.8		2.2		157.0
Ceded reinsurance payable, net	1,042.7		(4.7)		1,038.0
Current income taxes payable, net	27.1		6.4		33.5
Total liabilities	8,666.7		3.9		8,670.6
Retained earnings	756.7		(22.3)		734.4
Total shareholders' equity	1,730.0		(22.3)		1,707.7
Total liabilities and shareholders' equity	10,396.7		(18.4)		10,378.3

Adjusted Consolidated Statement of Income (Loss) for the three and six months ended June 30, 2020:

	Three Months Ended June 30, 2020						Six Months Ended June 30, 2020
	As reported		Adjustments		As adjusted		As reported		Adjustments		As adjusted
(in millions, except per share amounts)	(Unaudited)						(Unaudited)
Net investment income	1.5		(0.1)		1.4		37.0		—		37.0
Net realized investment gains	$	11.1	$	—	$	11.1	$	39.0	$	(0.1)	$	38.9
Change in fair value of equity securities	16.8		(1.7)		15.1		(22.5)		(1.7)		(24.2)
Net realized investment gains (losses)	20.1		(1.7)		18.4		(16.0)		(1.8)		(17.8)
Total revenue	457.0		(1.8)		455.2		893.5		(1.8)		891.7
Underwriting, acquisition and insurance expenses	161.4		(0.1)		161.3		329.4		—		329.4
Interest expense	6.8		0.2		7.0		14.5		0.3		14.8
Foreign currency exchange losses	6.4		(2.1)		4.3		3.4		1.8		5.2
Total expenses	451.3		(2.0)		449.3		909.4		2.1		911.5
Income (loss) before income taxes	5.7		0.2		5.9		(15.9)		(3.9)		(19.8)
Income tax provision	12.1		(0.8)		11.3		9.3		1.0		10.3
Net loss	(6.4)		1.0		(5.4)		(25.2)		(4.9)		(30.1)
Net loss per common share:
Basic	$	(0.18)	$	0.02	$	(0.16)	$	(0.73)	$	(0.14)	$	(0.87)
Diluted	$	(0.18)	$	0.02	$	(0.16)	$	(0.73)	$	(0.14)	$	(0.87)

Adjusted Consolidated Balance Sheet as of March 31, 2020:

	March 31, 2020
	As reported		Adjustments		As adjusted
(in millions)	(Unaudited)
Equity securities available-for-sale, at fair value	$	132.9	$	11.6	$	144.5
Other investments	422.4		(9.9)		412.5
Total investments	4,811.4		1.7		4,813.1
Premiums receivable	739.1		(20.9)		718.2
Deferred tax asset, net	44.5		(3.6)		40.9
Other assets	435.4		(0.6)		434.8
Total assets	10,201.3		(23.4)		10,177.9
Accrued underwriting expenses and other liabilities	185.3		2.1		187.4
Ceded reinsurance payable, net	1,094.8		(8.8)		1,086.0
Current income taxes payable, net	17.7		6.6		24.3
Total liabilities	8,564.5		(0.1)		8,564.4
Retained earnings	773.7		(23.3)		750.4
Total shareholders' equity	1,636.8		(23.3)		1,613.5
Total liabilities and shareholders' equity	10,201.3		(23.4)		10,177.9

Adjusted Consolidated Statement of Income (Loss) for the three months ended March 31, 2020:

	Three Months Ended March 31, 2020
	As reported		Adjustments		As adjusted
(in millions, except per share amounts)	(Unaudited)
Net investment income	35.5		0.1		35.6
Net realized investment gains	$	27.9	$	(0.1)	$	27.8
Net realized investment losses	(36.1)		(0.1)		(36.2)
Total revenue	436.5		—		436.5
Underwriting, acquisition and insurance expenses	168.0		0.1		168.1
Interest expense	7.7		0.1		7.8
Foreign currency exchange gains (losses)	(3.0)		3.9		0.9
Total expenses	458.1		4.1		462.2
Loss before income taxes	(21.6)		(4.1)		(25.7)
Income tax benefit	(2.8)		1.8		(1.0)
Net loss	(18.8)		(5.9)		(24.7)
Net loss per common share:
Basic	$	(0.55)	$	(0.17)	$	(0.72)
Diluted	$	(0.55)	$	(0.17)	$	(0.72)

Adjusted Consolidated Balance Sheet as of September 30, 2019:

	September 30, 2019
	As reported		Adjustments		As adjusted
(in millions)	(Unaudited)
Equity securities, at fair value	$	400.6	$	11.6	$	412.2
Other investments	500.0		(9.9)		490.1
Total investments	5,127.0		1.7		5,128.7
Premiums receivable	740.3		(12.8)		727.5
Current income taxes receivable, net	0.2		(0.2)		—
Other assets	390.6		(0.1)		390.5
Total assets	10,445.8		(11.4)		10,434.4
Accrued underwriting expenses and other liabilities	283.9		1.8		285.7
Ceded reinsurance payable, net	1,175.7		(2.9)		1,172.8
Current income taxes payable, net	—		9.8		9.8
Deferred tax liabilities, net	19.9		(2.1)		17.8
Total liabilities	8,552.4		6.6		8,559.0
Retained earnings	925.0		(18.0)		907.0
Total shareholders' equity	1,893.4		(18.0)		1,875.4
Total liabilities and shareholders' equity	10,445.8		(11.4)		10,434.4

Adjusted Consolidated Statement of Income (Loss) for the three and nine months ended September 30, 2019:

	Three Months Ended September 30, 2019						Nine Months Ended September 30, 2019
	As reported		Adjustments		As adjusted		As reported		Adjustments		As adjusted
(in millions, except per share amounts)	(Unaudited)						(Unaudited)
Earned premiums	$	451.5	$	—	$	451.5	$	1,303.7	$	0.2	$	1,303.9
Total revenue	487.4		—		487.4		1,485.2		0.2		1,485.4
Underwriting, acquisition and insurance expenses	164.0		—		164.0		485.6		0.2		485.8
Interest expense	7.5		0.2		7.7		25.3		0.4		25.7
Foreign currency exchange gains	(1.6)		0.7		(0.9)		(6.2)		0.9		(5.3)
Total expenses	513.6		0.9		514.5		1,381.7		1.5		1,383.2
(Loss) income before income taxes	(26.2)		(0.9)		(27.1)		103.5		(1.3)		102.2
Income tax (benefit) provision	(1.1)		—		(1.1)		8.6		5.0		13.6
Net (loss) income	(25.1)		(0.9)		(26.0)		94.9		(6.3)		88.6
Net (loss) income attributable to common shareholders	(25.1)		(0.9)		(26.0)		94.9		(6.3)		88.6
Net (loss) income per common share:
Basic	$	(0.73)	$	(0.03)	$	(0.76)	$	2.78	$	(0.19)	$	2.59
Diluted	$	(0.73)	$	(0.03)	$	(0.76)	$	2.73	$	(0.18)	$	2.55

Adjusted Consolidated Balance Sheet as of June 30, 2019:

	June 30, 2019
	As reported		Adjustments		As adjusted
(in millions)	(Unaudited)
Equity securities, at fair value	$	421.0	$	11.6	$	432.6
Other investments	509.4		(9.9)		499.5
Total investments	4,877.6		1.7		4,879.3
Premiums receivable	728.0		(11.2)		716.8
Current income taxes receivable, net	3.8		(3.8)		—
Total assets	10,166.7		(13.3)		10,153.4
Accrued underwriting expenses and other liabilities	279.4		1.6		281.0
Ceded reinsurance payable, net	1,052.8		(2.0)		1,050.8
Current income taxes payable, net	—		6.2		6.2
Deferred tax liabilities, net	25.4		(2.0)		23.4
Total liabilities	8,237.7		3.8		8,241.5
Retained earnings	959.9		(17.1)		942.8
Total shareholders' equity	1,929.0		(17.1)		1,911.9
Total liabilities and shareholders' equity	10,166.7		(13.3)		10,153.4

Adjusted Consolidated Statement of Income (Loss) for the three and six months ended June 30, 2019:

	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	As reported		Adjustments		As adjusted		As reported		Adjustments		As adjusted
(in millions, except per share amounts)	(Unaudited)						(Unaudited)
Earned premiums	$	431.7	$	—	$	431.7	$	852.2	$	0.2	$	852.4
Total revenue	488.6		—		488.6		997.8		0.2		998.0
Underwriting, acquisition and insurance expenses	161.4		0.2		161.6		321.6		0.2		321.8
Interest expense	9.3		0.1		9.4		17.8		0.2		18.0
Foreign currency exchange gains	(5.3)		1.5		(3.8)		(4.6)		0.2		(4.4)
Total expenses	459.0		1.8		460.8		868.1		0.6		868.7
Income before income taxes	29.6		(1.8)		27.8		129.7		(0.4)		129.3
Income tax provision	0.8		—		0.8		9.7		5.0		14.7
Net income	28.8		(1.8)		27.0		120.0		(5.4)		114.6
Net income per common share:
Basic	$	0.84	$	(0.05)	$	0.79	$	3.52	$	(0.16)	$	3.36
Diluted	$	0.83	$	(0.05)	$	0.78	$	3.45	$	(0.15)	$	3.30

Adjusted Consolidated Balance Sheet as of March 31, 2019:

	March 31, 2019
	As reported		Adjustments		As adjusted
(in millions)	(Unaudited)
Equity securities, at fair value	$	403.2	$	11.6	$	414.8
Other investments	483.3		(9.9)		473.4
Total investments	4,903.5		1.7		4,905.2
Premiums receivable	673.2		(8.3)		664.9
Current income taxes receivable, net	5.0		(5.0)		—
Total assets	9,954.5		(11.6)		9,942.9
Accrued underwriting expenses and other liabilities	248.2		1.3		249.5
Ceded reinsurance payable, net	1,047.1		(0.7)		1,046.4
Current income taxes payable, net	—		5.1		5.1
Deferred tax liabilities, net	20.7		(2.0)		18.7
Total liabilities	8,073.9		3.7		8,077.6
Retained earnings	943.0		(15.3)		927.7
Total shareholders' equity	1,880.6		(15.3)		1,865.3
Total liabilities and shareholders' equity	9,954.5		(11.6)		9,942.9

Adjusted Consolidated Statement of Income (Loss) for the three months ended March 31, 2019:

	Three Months Ended March 31, 2019
	As reported		Adjustments		As adjusted
(in millions, except per share amounts)	(Unaudited)
Earned premiums	$	420.5	$	0.2	$	420.7
Total revenue	509.2		0.2		509.4
Interest expense	8.5		0.1		8.6
Foreign currency exchange losses (gains)	0.7		(1.3)		(0.6)
Total expenses	409.1		(1.2)		407.9
Income before income taxes	100.1		1.4		101.5
Income tax provision	8.9		5.0		13.9
Net income	91.2		(3.6)		87.6
Net income per common share:
Basic	$	2.68	$	(0.10)	$	2.58
Diluted	$	2.63	$	(0.11)	$	2.52

Adjusted Condensed Financial Information of the Registrant as of December 31, 2019:

	December 31, 2019
(in millions)	As reported		Adjustments		As adjusted
Investments in subsidiaries	$	1,916.7	$	(17.4)	$	1,899.3
Total assets	1,974.7		(17.4)		1,957.3
Total shareholders’ equity	1,781.1		(17.4)		1,763.7
Total liabilities and shareholders' equity	1,974.7		(17.4)		1,957.3

Adjusted Condensed Financial Information of the Registrant for the years ended December 31, 2019 and 2018:

	Year Ended December 31, 2019						Year Ended December 31, 2018
(in millions)	As reported		Adjustments		As adjusted		As reported		Adjustments		As adjusted
Equity in undistributed earnings of subsidiaries	$	(22.8)	$	46.4	$	23.6	$	44.8	$	29.9	$	74.7
Net (loss) income	(8.4)		(5.7)		(14.1)		63.6		(6.6)		57.0