In the normal course of business, the Company participates in reinsurance agreements in order to limit losses that may arise from catastrophes or other individually severe events. The Company ceded primarily all specific commercial liability risks in excess of $400,000 in 2024 and 2023. The Company ceded specific commercial property risks in excess of $400,000 in 2024 and 2023. The Company ceded homeowners specific risks in excess of $400,000 and $300,000 in 2024 and 2023, respectively.

A "treaty" is a reinsurance agreement in which coverage is provided for a class of risks and does not require policy by policy underwriting of the reinsurer. "Facultative" reinsurance is where a reinsurer negotiates an individual reinsurance agreement for every policy it will reinsure on a policy by policy basis. A loss is covered under a reinsurance contract if the loss occurs within the effective dates of the agreement notwithstanding when the loss is reported.

Reinsurance does not discharge the direct insurer from liability to its policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors the concentration of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. To date, the Company has not experienced any significant difficulties in collecting reinsurance recoverables.

The Company assumes written premiums under a few fronting arrangements. The fronting arrangements are with unaffiliated insurers who write on behalf of the Company in markets that require a minimum A.M. Best rating, or where the policies are written in a state where the Company is not licensed or for other strategic reasons.

On September 30, 2023, the Company entered into a 100% quota share reinsurance agreement with the buyer of the renewal rights of the Security Program. The Company ceded $30.9 million of its gross unearned premiums relating to the Security Program in exchange for a 22% - 27% ceding commission.

On November 1, 2022, the Company entered into a loss portfolio transfer (“LPT”) reinsurance agreement. As of June 30, 2024, the Company has recorded losses through the $5.5 million corridor and $9.9 million into the $20.0 million layer. As of December 31, 2023, the Company recorded losses through the $5.5 million corridor and $9.1 million into the $20.0 million layer.

As of June 30, 2024, the Consolidated Balance Sheets included $3.9 million and $6.0 million of reinsurance recoverables on paid and unpaid losses related to the LPT, respectively. As of December 31, 2023, the Consolidated Balance Sheets included $3.8 million and $10.9 million of reinsurance recoverables on paid and unpaid losses related to the LPT, respectively.

The following table presents the effects of reinsurance and assumption transactions on written premiums, earned premiums and losses and LAE (dollars in thousands):


	Three Months Ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
Written premiums:
Direct	$	19,200		$	27,183		$	43,299		$	51,524
Assumed		(229	)		17,491			(15	)		29,364
Ceded		(5,724	)		(15,346	)		(14,646	)		(33,218	)
Net written premiums	$	13,247		$	29,328		$	28,638		$	47,670

Earned premiums:
Direct	$	24,226		$	23,597		$	49,034		$	46,912
Assumed		5,155			12,416			14,579			23,395
Ceded		(12,715	)		(12,830	)		(30,060	)		(25,172	)
Net earned premiums	$	16,666		$	23,183		$	33,553		$	45,135

Losses and LAE:
Direct	$	8,850		$	24,570		$	30,832		$	26,539
Assumed		14,249			4,261			10,985			5,758
Ceded		(7,818	)		(9,512	)		(16,016	)		735
Net Losses and LAE	$	15,281		$	19,319		$	25,801		$	33,032