Reinsurance

3 Months Ended

Mar. 31, 2023

Certain premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. The reinsurance agreements provide the Company with increased capacity to write larger risks and maintain its exposure to loss within its capital resources. The Company remains obligated for amounts ceded in the event that the reinsurers do not meet their obligations.

The following table sets forth the effects of reinsurance on premiums written and earned for the three months ended March 31, 2023 and 2022:



	2023				2022
($ in thousands)	Written		Earned		Written		Earned
Direct premiums	$	308,213	$	262,658	$	248,635	$	222,637
Assumed premiums	52,285		39,131		34,007		26,595
Ceded premiums	(158,357)		(118,958)		(147,241)		(107,506)
Net premiums	$	202,141	$	182,831	$	135,401	$	141,726
Ceded losses and LAE incurred			$	64,794			$	61,527

The following table sets forth the components of reinsurance recoverables and ceded unearned premium as of March 31, 2023 and December 31, 2022:


($ in thousands)	March 31, 2023		December 31, 2022
Unpaid losses and loss adjustment expenses ceded	$	429,752	$	435,986
Paid losses and loss adjustment expense ceded	107,463		107,228
Loss portfolio transfer	35,584		38,145
Allowance for credit losses	(2,295)		—
Reinsurance recoverables	$	570,504	$	581,359
Ceded unearned premium	$	197,044	$	157,645

The Company entered into agreements with several of its reinsurers, whereby the reinsurer established funded trust accounts with the Company as the sole beneficiary. These trust accounts provide the Company additional security to collect claim recoverables under reinsurance contracts and the Company does not carry these on the balance sheet because the Company will only have custody over these accounts upon the failure of the reinsurer to pay amounts due. At March 31, 2023, the market value of these accounts was approximately $127.1 million. The agreements provide that, as was customary in the past, the reinsurer will continue claim payment reimbursements without disturbing the trust balances. The trust amount will be adjusted periodically, by mutual agreement, based on loss reserve recoverables.

Certain ceded reinsurance contracts that transfer only significant timing risk and do not transfer sufficient underwriting risk are accounted for using the deposit method of accounting. The Company’s deposit asset at March 31, 2023 and December 31, 2022 was $36.8 million and $41.8 million, respectively, and was included in other assets on the condensed consolidated balance sheets.