Reinsurance

6 Months Ended

Jun. 30, 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 fail 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 treaty, reinsurance recoveries are received for up to $1,750 in excess of a retention of $250 for each loss occurring prior to June 1, 2017. Effective June 1, 2017, the Company amended its per-risk treaty such that recoveries are received for up to $1,600 in excess of a retention of $400 for each loss occurring on June 1, 2017 or thereafter. The Company has ceded $404 and $222 in written premiums under its per-risk treaties for the six months ended June 30, 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 six month periods ending June 30, 2017 and 2016 contain premiums ceded under three 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.

For both the treaty years beginning June 1, 2016 and June 1, 2017, the Company’s excess of loss treaties cover losses 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 each of the treaty years.

The Company ceded $9,971 and $9,219 in written premiums under its excess of loss treaties for the six months ended June 30, 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 that 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 six months ended June 30, 2017, we have written $896 in assumed premiums through our agreement with Brotherhood, compared to $858 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 six months ended June 30, 2017, we have written $1,302 in assumed premiums through the TWIA quota share agreement.

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

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Premium written:
Direct	$	17,469		$	14,254		$	29,456		$	24,660
Assumed		1,351			460			2,198			858
Ceded		(4,499	)		(5,870	)		(10,375	)		(9,441	)
Net premium written	$	14,321		$	8,844		$	21,279		$	16,077
Premium earned:
Direct	$	13,289		$	11,248		$	25,959		$	22,418
Assumed		755			460			1,603			858
Ceded		(5,816	)		(4,196	)		(11,162	)		(7,543	)
Net premium earned	$	8,228		$	7,512		$	16,400		$	15,733
Losses and LAE incurred:
Direct	$	6,015		$	3,743		$	10,846		$	13,456
Assumed		2,449			1,627			3,203			1,778
Ceded		(6,081	)		(3,532	)		(8,035	)		(6,760	)
Net losses and LAE incurred	$	2,383		$	1,838		$	6,014		$	8,474