Insurance and reinsurance

12 Months Ended

Dec. 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 a Malta based insurance company that reinsures a significant proportion of its portfolio (“Outward Reinsurance”). The Company's wholly owned Luxembourg subsidiary, Cowen Reinsurance S.A. (formerly “Hollenfels Re S.A.”) (“Cowen Re”) provides reinsurance to third party insurance and reinsurance companies (“Inward Reinsurance”). Cowen Insurance Co’s and Cowen Re's 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:

	Year Ended December 31,
	2021		2020		2019
	(dollars in thousands)
Incurred and paid claims
Insurance (net of Outward Reinsurance)	$	3,285	$	—	$	—
Inward Reinsurance	17,140		14,838		24,380
Total	$	20,425	$	14,838	$	24,380
Change in claims outstanding and claims IBNR
Insurance (net of Outward Reinsurance)	$	112	$	—	$	—
Inward Reinsurance	3,304		11,599		5,700
Total	$	3,416	$	11,599	$	5,700

Cowen Insurance Co and Cowen Re utilize several methods to determine their claims IBNR. Cowen Insurance Co and Cowen Re 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 Cowen Re 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 Cowen Re's IBNR provision. During the year ended December 31, 2021, claims liability and claim adjustment expenses were calculated using the above-mentioned methods consistent with prior years.

While Cowen Insurance Co and Cowen Re typically settle their premiums and claim payments on a quarterly basis, the frequency of claims in the underlying policies is impractical for Cowen Insurance Co and Cowen Re to obtain. Cowen Insurance Co and Cowen Re write contracts on both a proportional and non-proportional basis. The contracts contain inspection rights to allow the companies to inspect the policy documents that provide the source for the underlying data provided by the cedant. This negates the need for them to collect and hold the documents themselves which would be impracticable. Cowen Insurance Co and Cowen Re did not discount any of its reserves and did not cede any portion of its exposures during the years ended December 31, 2021, 2020, and 2019.

From time to time, Cowen Insurance Co and Cowen Re 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 December 31, 2021, Cowen Re had pledged $60.1 million of collateral towards such reinsurance obligations, of which $44.1 million was in cash and $16.0 million was in U.S. government bonds. As of December 31, 2020, total collateral pledged was $120.5 million, of which 106.8 million was cash and $13.7 million was U.S. government bonds. The collateral pledged as of December 31, 2021 was $60.4 million lower than the amounts pledged at December 31, 2020. This is due to the Company’s redemption of the September 2023 Loan Notes. Cowen Re expects $40.5 million of the cash collateral pledged to be released on September 30, 2023. The remaining collateral of $19.6 million is expected to be released periodically between October 1, 2021 and March 31, 2024 in accordance with the terms of the underlying insurance and reinsurance agreements. As of December 31, 2021, Cowen Insurance Co had no pledged collateral.