Allowance for expected credit losses |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Allowance for expected credit losses | 11. Allowance for expected credit losses The Company is exposed to credit losses primarily through sales of its insurance and reinsurance products and services. The financial assets in scope of the current expected credit losses impairment model primarily include the Company’s insurance and reinsurance balances receivable and loss and loss adjustment expenses recoverable. The Company pools these amounts by counterparty credit rating and applies a credit default rate that is determined based on the studies published by the rating agencies (e.g., AM Best, Standard & Poor's (“S&P”), Fitch Ratings, Demotech). In circumstances where ratings are unavailable, the Company applies an internally developed default rate based on historical experience, reference data including research publications, and other relevant inputs. The Company's assets in scope of the current expected credit loss assessment as of June 30, 2025 and December 31, 2024 are as follows:
(1)Relates to MGA trade receivables (included in Other assets in the Company’s consolidated balance sheets), loans receivables (included in Other long-term investments in the Company’s consolidated balance sheets) and interest and dividend receivables. The Company’s allowance for expected credit losses was $28.8 million as of June 30, 2025 (December 31, 2024 - $28.8 million). For the three and six months ended June 30, 2025, the Company did not record a current expected credit loss (2024 - $0.4 million and $0.4 million, respectively). Changes to the current expected credit losses are included in net corporate and other expenses in the consolidated statements of income. The Company monitors counterparty credit ratings and macroeconomic conditions, and considers the most current ratings from credit rating agencies to determine the allowance each quarter. As of June 30, 2025, approximately 61% of the total gross assets in scope were balances with counterparties rated by major credit rating agencies and, of the total rated, 96% were rated A- or better.
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