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Insurance and reinsurance
 3 Months Ended
Mar. 31, 2021
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract]  
Reinsurance Insurance and reinsurance
The Company completed the acquisition of Cowen Insurance Co on February 26, 2021. (See Note 3). Cowen Insurance Co is an insurance company that reinsures a significant proportion of its portfolio (“Outward Reinsurance”). The Company's wholly owned Luxembourg subsidiary, Hollenfels Re SA ("Hollenfels") provides reinsurance to third party insurance and reinsurance companies (“Inward Reinsurance”). Cowen Insurance Co’s and Hollenfels' share of claims incurred and paid during the periods below, as well as the change in claims outstanding and claims incurred but not reported ("IBNR") during these periods, net of reinsurance, were as follows:
Three Months Ended March 31,
20212020
(dollars in thousands)
Incurred and paid claims
Insurance (net of Outward Reinsurance)$744 $— 
Inward Reinsurance3,904 4,235 
Total$4,648 $4,235 
Change in claims outstanding and claims IBNR
Insurance (net of Outward Reinsurance)$(136)$— 
Inward Reinsurance(559)17,293 
Total$(695)$17,293 

Cowen Insurance Co and Hollenfels utilizes several methods to determine its claims IBNR. Cowen Insurance Co and Hollenfels generally employ an estimation methodology whereby historical average claims ratios over a period of up to 10 years are utilized, based on availability of data. In cases where current claims development contradicts historical results, Cowen
Insurance Co and Hollenfels employ a method to average claims ratios derived through different actuarial calculation methods. If an event occurs that may give rise to significant future claims in excess of the amount calculated using the above-mentioned methodologies, the impact of such an event is calculated using existing claims data and actuarial estimation methods to adjust Cowen Insurance Co's and Hollenfels's IBNR provision. During the three months ended March 31, 2021, claims liability and claim adjustment expenses were calculated using the above-mentioned methods consistent with prior years.
Whilst Cowen Insurance Co and Hollenfels typically settles its premiums and claim payments on a quarterly basis, the frequency of claims in the underlying policies is impractical for Cowen Insurance Co and Hollenfels to obtain. Certain contracts Cowen Insurance Co and Hollenfels has written are on a quota-share basis while the rest of the policies provide aggregate loss protection, rendering the collection of information for all underlying contracts impracticable. Cowen Insurance Co and Hollenfels did not discount any of its reserves and did not cede any portion of its exposures during the three months ended March 31, 2021 and 2020.
From time to time, Cowen Insurance Co and Hollenfels may enter into insurance and reinsurance agreements that require it to post collateral of cash or U.S. government bonds to cover certain exposures as defined in the respective insurance and reinsurance agreements. As of March 31, 2021, Hollenfels pledged $120.5 million of collateral towards such reinsurance obligations, of which $106.8 million was cash and $13.7 million was U.S. government bonds. These are the same amounts that had been pledged at December 31, 2020. Hollenfels expects $101.2 million of the cash collateral pledged to be released on September 30, 2023. The remaining cash collateral of $5.6 million and all of the U.S. government bonds are expected to be released periodically between June 30, 2021 and March 31, 2024 in accordance with the terms of the underlying insurance and reinsurance agreements.