ARCH REINSURANCE LTD. AND SUBSIDIARIES
(a wholly-owned subsidiary of Arch Capital Group Ltd.)
Consolidated Financial Statements
December 31, 2020 and 2019
INDEX TO FINANCIAL STATEMENTS | |
Page No. | |
Report of Independent Auditors | 1 |
At December 31, 2020 and 2019 | |
Consolidated Statements of Income | |
For the years ended December 31, 2020 and 2019 | 4 |
Consolidated Statements of Comprehensive Income | |
For the years ended December 31, 2020 and 2019 | 5 |
Consolidated Statements of Changes in Shareholder's Equity | |
For the years ended December 31, 2020 and 2019 | 6 |
Consolidated Statements of Cash Flows | |
For the years ended December 31, 2020 and 2019 | 7 |
Notes to Consolidated Financial Statements | 8 |
Report of Independent Auditors
To the Board of Directors of Arch Reinsurance Ltd.:
We have audited the accompanying consolidated financial statements of Arch Reinsurance Ltd. and its subsidiaries (the "Company"), which comprise the consolidated balance sheets as of December 31, 2020 and December 31, 2019, and the related consolidated statements of income, comprehensive income, changes in shareholder's equity and cash flows for the years then ended.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Arch Reinsurance Ltd. and its subsidiaries as of December 31, 2020 and December 31, 2019, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matter
Accounting principles generally accepted in the United States of America require that the incurred and paid loss development for the years ended December 31, 2011 to December 31, 2019 on pages 30 to 38 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Financial Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
New York, New York
April 2, 2021
ARCH REINSURANCE LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share data)
December 31, | |||||
2020 | 2019 | ||||
Assets | |||||
Investments: | |||||
Fixed maturities available for sale, at fair value (amortized cost: $18,143,305 and $16,593,210; net of | |||||
allowance for credit losses: $2,397 at December 31, 2020) | $ | 18,717,825 | $ | 16,888,927 | |
Short-term investments available for sale, at fair value (amortized cost: $1,922,006 and $957,085; net | |||||
of allowance for credit losses: $0 at December 31, 2020) | 1,922,637 | 956,353 | |||
Collateral received under securities lending, at fair value (amortized cost: $301,089 and $388,366) | 301,096 | 388,376 | |||
Equity securities, at fair value | 1,444,830 | 838,925 | |||
Other Investments (portion measured at fair value:$ 3,824,796 and $3,663,477) | 4,324,796 | 3,663,477 | |||
Investments accounted for using the equity method | 2,047,889 | 1,660,396 | |||
Total investments | 28,759,073 | 24,396,454 | |||
Cash | 860,835 | 631,536 | |||
Accrued investment income | 103,299 | 117,920 | |||
Securities pledged under securities lending, at fair value (amortized cost: $294,493 and $378,910) | 294,912 | 379,868 | |||
Premiums receivable (net of allowance for credit losses: $37,781 and $21,003) | 2,064,586 | 1,778,717 | |||
Reinsurance recoverable on unpaid and paid losses and loss adjustment expenses (net of allowance | |||||
for credit losses: $11,636 and 1,364) | 4,500,802 | 4,346,816 | |||
Contractholder receivables (Net of allowance for credit losses: $8,638 and $0) | 1,986,924 | 2,119,460 | |||
Ceded unearned premiums | 1,234,075 | 1,234,683 | |||
Deferred acquisition costs | 790,708 | 633,400 | |||
Receivable for securities sold | 92,743 | 24,133 | |||
Goodwill and intangible assets | 692,863 | 738,083 | |||
Other assets | 1,801,751 | 1,281,833 | |||
Total assets | $ | 43,182,571 | $ | 37,682,903 | |
Liabilities | |||||
Reserve for losses and loss adjustment expenses | $ | 16,513,929 | $ | 13,891,842 | |
Unearned premiums | 4,838,965 | 4,339,549 | |||
Reinsurance balances payable | 683,263 | 667,072 | |||
Contractholder payables | 1,995,562 | 2,119,460 | |||
Collateral held for insured obligations | 215,581 | 206,698 | |||
Senior notes | 1,575,246 | 1,574,372 | |||
Revolving credit agreement borrowings | 155,687 | 484,287 | |||
Securities lending payable | 301,089 | 388,366 | |||
Payable for securities purchased | 218,779 | 87,579 | |||
Other liabilities | 1,466,449 | 1,453,970 | |||
Total liabilities | 27,964,550 | 25,213,195 | |||
Commitments and Contingencies | |||||
Redeemable noncontrolling interests | 58,548 | 55,404 | |||
Redeemable preferred shares | 111,000 | - | |||
Shareholder's Equity | |||||
Common shares ($1.00 par, shares authorized: 2,625,000, issued: 2,549,323) | 2,549 | 2,560 | |||
Additional paid-in capital | 5,171,462 | 4,138,555 | |||
Retained earnings | 8,566,658 | 7,299,888 | |||
Accumulated other comprehensive income (loss), net of deferred income tax | 484,797 | 210,524 | |||
Total shareholder's equity available to Arch | 14,225,466 | 11,651,527 | |||
Non-redeemable noncontrolling interests | 823,007 | 762,777 | |||
Total shareholder's equity | 15,048,473 | 12,414,304 | |||
Total liabilities, noncontrolling interests and shareholder's equity | $ | 43,182,571 | $ | 37,682,903 |
See Notes to Consolidated Financial Statements
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Arch Capital Group Ltd. published this content on 02 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 April 2021 13:45:02 UTC.