Third party reinsurance

9 Months Ended

Sep. 30, 2021

Insurance [Abstract]

Third party reinsurance

11. Third party reinsurance

In the normal course of business, the Company seeks to protect its businesses from losses due to concentration of risk and losses arising from catastrophic events by reinsuring with third-party reinsurers. Additionally, retrocession can be used as a mechanism to share the risks and rewards of business written and therefore can be used as a tool to align the Company’s interests with those of its counterparties. The Company remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts.

Premiums ceded for the three and nine months ended September 30, 2021 were $162.4 million and $322.4 million, respectively (2020 - $8.3 million and $29.2 million, respectively). Loss and loss adjustment expenses recoverable from the retrocessionaire are recorded as assets. As of September 30, 2021, the Company had loss and loss adjustment expenses recoverable of $843.5 million (December 31, 2020 - $14.4 million).

Because retrocessional reinsurance contracts do not relieve the Company of its obligation to its insureds, the collectability of balances due from the Company's reinsurers is important to its financial strength. The Company monitors the financial strength and ratings of retrocessionaires on an ongoing basis. See Note 12 for additional information.