Reinsurance

3 Months Ended

Mar. 31, 2017

Reinsurance Disclosures [Abstract]

Reinsurance

5. Reinsurance

The Company reinsures, or cedes, a portion of its written premiums on a per risk and excess of loss basis to non-affiliated insurers in order to limit its loss exposure. Although reinsurance is intended to reduce the Company’s exposure risk, the ceding of insurance does not legally discharge the Company from its primary liability for the full amount of coverage under its policies. If our reinsurers fails to meet their obligations under the applicable reinsurance agreements, the Company would still be required to pay the insured for the loss.

Under the Company’s per-risk treaties, reinsurance recoveries are received for up to $1,750 in excess of a retention of $250 for each risk. The Company ceded $114 and $109 in written premiums under its per-risk treaties for the three months ended March 31, 2017 and 2016, respectively.

The Company’s excess of loss treaties are based upon a treaty year beginning on June 1^st of each year and expiring on May 31^st of the following year. Thus, the financial statements for the three month periods ending March 31, 2017 and 2016 contain premiums ceded under two separate excess of loss treaties. Under the Company’s 2015/2016 excess of loss treaty which expired on May 31, 2016, for each catastrophic event occurring within a 144-hour period, the Company receives reinsurance recoveries of up to $121,000 in excess of a retention of $4,000 per event. The Company had also procured a “top, drop and aggregate” layer of reinsurance protection that may be used for any event above $125,000, up to a maximum recovery of $15,000. This $15,000 second layer of coverage applied in total to all events occurring during the treaty year of June 1, 2015 through May 31, 2016.

On June 1, 2016 the Company entered into a new excess of loss treaty whereby for each catastrophic event occurring within a 144-hour period, the Company receives reinsurance recoveries of up to $170,000 in excess of a $5,000 retention per event. For any event above $175,000, the Company again purchased top, drop and aggregate coverage, with an additional limit of $25,000. The $25,000 aggregate coverage applies in total to all events occurring during the June 1, 2016 to May 31, 2017 treaty year.

The Company ceded $5,762 and $3,462 in written premiums under its excess of loss treaties for the three months ended March 31, 2017 and 2016, respectively.

In June 2015, we began writing business through a quota-share agreement with Brotherhood Mutual Insurance Company (“Brotherhood”). Through this agreement, we act as a reinsurer, and have assumed wind/hail only exposures on certain churches and related structures Brotherhood insures throughout the State of Texas. Our quota-share percentage varies from 25%-100% of the wind/hail premium written by Brotherhood, dependent upon the geographic location (coastal areas versus non-coastal areas) within the State of Texas. For the three months ended March 31, 2017, we have written $429 in assumed premiums through our agreement with Brotherhood, compared to $398 in assumed premiums for the same period in 2016.

On December 1, 2016 we participated TWIA’s inaugural depopulation program whereby Maison assumed personal lines policies for wind and hail only exposures along the Gulf Coast area of Texas. The depopulation program was structured such that Maison reinsures TWIA under a 100% quota share agreement. For the three months ended March 31, 2017, we have written $419 in assumed premiums through the TWIA earned quota share agreement.

The impact of reinsurance treaties on the Company’s financial statements is as follows:

	Three months ended March 31,
	2017		2016
Premium written:
Direct	$	11,987	$	10,406
Assumed		847		398
Ceded		5,876		3,571
Net premium written	$	6,958	$	7,233
Premium earned:
Direct	$	12,671	$	11,170
Assumed		847		398
Ceded		5,346		3,347
Net premium earned	$	8,172	$	8,221
Losses and LAE incurred:
Direct	$	4,831	$	9,712
Assumed		754		152
Ceded		1,954		3,228
Net losses and LAE incurred	$	3,631	$	6,636