Net premiums written by the insurance segment were 19.4% higher in 2019 than in 2018. Approximately thirty percent of the growth in net premiums written resulted from our new businesses acquired during 2019 or new business initiatives or product lines. The remaining growth came from expansion in existing products and accounts, and rate increases across most lines of business.
Other underwriting income, which is primarily related to GSE risk-sharing transactions receiving derivative accounting treatment, was $16.0 million for 2019, compared to $13.0 million for 2018.
Amounts include dividends and other distributions on investment funds, term loan investments, funds held balances, cash balances and other.
The insurance in force and risk in force for our U.S. primary mortgage insurance business by policy year were as follows at December 31, 2019:
The following table provides supplemental disclosures for our U.S. primary mortgage insurance business related to insured loans and loss metrics for the years ended December 31, 2019 and 2018:
In the normal course of business, our insurance and mortgage insurance operations cede a portion of their premium on a quota share or excess of loss basis through treaty or facultative reinsurance agreements. Our reinsurance operations also obtain reinsurance whereby another reinsurer contractually agrees to indemnify it for all or a portion of the reinsurance risks
A significant portion of amounts included as premiums receivable, which represent estimated premiums written, net of commissions, are not currently due based on the terms of the underlying contracts. Based on currently available information, management believes that the premium estimates included in premiums receivable will be collectible and, therefore, no provision for doubtful accounts has been recorded on the premium estimates at December 31, 2019.
especially during an extended economic downturn or a period of extreme market volatility and uncertainty.
The following table summarizes our other investments, which are accounted for using the fair value option:
At December 31, 2019 and 2018, approximately 61.2% and 63.0% of reinsurance recoverables on paid and unpaid losses (not including ceded unearned premiums) of $4.35 billion and $2.92 billion, respectively, were due from carriers which had an A.M. Best rating of “A-” or better while 38.8% and 37.0%, respectively, were from companies not rated. For items not rated, over 90% of such amount was collateralized through reinsurance trusts or letters of credit at December 31, 2019 and 2018. The largest reinsurance recoverables from any one carrier was approximately 1.7% and 2.7%, respectively, of total shareholders’ equity available to Arch at December 31, 2019 and 2018.
Our investments in certain securities, including certain fixed income and structured securities, investments in funds accounted for using the equity method, other alternative investments and investments in ventures such as Watford and others may be illiquid due to contractual provisions or investment market conditions. If we require significant amounts of cash on short notice in excess of anticipated cash requirements, then we may have difficulty selling these investments in a timely manner or may be forced to sell or terminate them at unfavorable values. Our unfunded investment commitments totaled approximately $1.69 billion at December 31, 2019 and are callable by our investment managers. The timing of the funding of investment commitments is uncertain and may require us to access cash on short notice.
The Company adopted ASU 2018-07 “Improvements to Nonemployee Share-Based Payment Accounting,” which was issued in June 2018 to simplify the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The ASU is effective for reporting periods beginning after December 15, 2018. This guidance and the adoption of this provision did not have a material effect on the Company's financial position, results of operations or cash flows.
The Company adopted ASU 2017-08 “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities,” which was issued in March 2017. This ASU shortens the amortization period for certain callable debt securities held at a premium and requires the premium to be amortized to the earliest call date. However, the new guidance does not require an accounting change for securities held at a discount whose discount continues to be amortized to maturity. The standard is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The adoption of the guidance requires a modified retrospective approach with a cumulative-effect adjustment to retained earnings. The adoption of this ASU did not have a material effect on the Company’s consolidated financial statements.
ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326),” was issued in June 2016. The ASU changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The ASU requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The ASU is effective for the 2020 first quarter, and should be applied on a modified retrospective basis for the majority of the provisions with a cumulative-effect adjustment to retained earnings at the beginning of the year of adoption. Upon adoption, the Company expects the new standard to have an impact on certain type of investment securities, reinsurance recoverables and contractholder receivables. The Company will adopt the ASU on January 1, 2020 by applying the modified retrospective approach. The Company anticipates recording a cumulative-effect adjustment to the opening balance of retained earnings, which is not expected to have a material effect on the consolidated financial statements.
The Company monitors the financial condition of its reinsurers and attempts to place coverages only with substantial, financially sound carriers. Although the Company has not experienced any material credit losses to date, an inability of its reinsurers or retrocessionaires to meet their obligations to it over the relevant exposure periods for any reason could have a material adverse effect on its financial condition and results of operations.
The Company’s derivative instruments can be traded under master netting agreements, which establish terms that apply to all derivative transactions with a counterparty. In the event of a bankruptcy or other stipulated event of default, such agreements provide that the non-defaulting party may elect to terminate all outstanding derivative transactions, in which case all individual derivative positions (loss or gain) with a counterparty are closed out and netted and replaced with a single amount, usually referred to as the termination amount, which is expressed in a single currency. The resulting single net amount, where positive, is payable to the party “in-the-money” regardless of whether or not it is the defaulting party, unless the parties have agreed that only the non-defaulting party is entitled to receive a termination payment where the net amount is positive and is in its favor. Effectively, contractual close-out netting reduces the derivatives credit exposure from a gross to a net exposure. At December 31, 2019, $97.8 million and $37.8 million, respectively, of asset derivatives and liability derivatives were subject to a master netting agreement compared to $80.4 million and $18.9 million, respectively, at December 31, 2018. The remaining derivatives
Preferred dividends on the Watford Preference Shares, including the accretion of the discount and issuance costs, was $17.8 million for 2019, compared to $19.6 million for 2018 and 2017.
The impairment to the indefinite-lived intangible assets during the year ended December 31, 2019 and 2018 of $1.0 million and $6.3 million related to insurance licenses from the acquisition of UGC.
circumstances. The net proceeds from the Series F Preferred Share offerings were used to redeem the Company’s outstanding 6.75% Series C Non-Cumulative Preferred Shares.
On September 29, 2016, Arch Capital completed a $450 million underwritten public offering of 18.0 million depositary shares (the “Series E Depositary Shares”), each of which represents a 1/1,000th interest in a share of its 5.25% Non-Cumulative Preferred Shares, Series E, with a $0.01 par value and $25,000 liquidation preference per share (equivalent to $25 liquidation preference per Series E Depositary Share) (the “Series E Preferred Shares”). Each Series E Depositary Share, evidenced by a depositary receipt, entitles the holder, through the depositary, to a proportional fractional interest in all rights and preferences of the Series E Preferred Shares represented thereby (including any dividend, liquidation, redemption and voting rights).