Reinsurance

3 Months Ended

Mar. 31, 2025

Reinsurance [Abstract]

Reinsurance

5. Reinsurance

External Reinsurance

The Company’s consolidated financial statements reflect the effects of assumed and ceded reinsurance transactions. Assumed reinsurance refers to the acceptance of certain insurance risks that other insurance companies have underwritten. Ceded reinsurance involves transferring certain insurance risks (along with the related written and earned premiums) the Company has underwritten to other insurance companies who agree to share these risks. The Company reinsures a portion of the risks it underwrites, through these ceded reinsurance agreements, in order to control its exposure to losses. Our ceded reinsurance is placed either on an automatic basis under general reinsurance contracts known as treaties or through facultative contracts placed on substantial individual risks. These contracts do not relieve the Company from its obligations to policyholders. Treaty reinsurance contracts are typically effective from January 1 through December 31 each year.

During the three-month period ended March 31, 2025, the Company maintained property catastrophe reinsurance protection covering $117,000 in excess of a $20,000 retention. Our per risk excess of loss treaty provides coverage of $4,000 in excess of $1,000 for property risks and $11,000 in excess of $1,000 for casualty risks. Additionally, a property per-risk facultative contract is in place to provide coverage up to $20,000 in excess of $5,000 per property. Aggregate stop loss reinsurance agreements are also in place for both crop hail and multi-peril crop coverage. The crop hail aggregate attaches at a 100% net loss ratio providing 50 points of cover. The multi-peril crop aggregate attaches at a 105% net loss ratio providing 45 points of cover. In addition to the aggregate covers, underlying multi-peril crop reinsurance is provided through the Federal Crop Insurance Corporation (“FCIC”).

During the year ended December 31, 2024, the Company maintained property catastrophe reinsurance protection covering $133,000 in excess of a $20,000 retention. With the exception of Westminster, a per risk excess of loss treaty provides coverage of $4,000 in excess of $1,000 for property risks and $11,000 in excess of $1,000 for casualty risks. For Westminster, a per risk excess of loss treaty provided coverage of $3,000 in excess of $2,000 for property risks and $10,000 in excess of $2,000 for casualty risks until July 1, 2024. Additionally, a property per-risk facultative contract is in place to provide coverage up to $20,000 in excess of $5,000 per property. Aggregate stop loss reinsurance agreements are also in place for both crop hail and multi-peril crop coverage. The crop hail aggregate attaches at a 100% net loss ratio providing 50 points of cover. The multi-peril crop aggregate attaches at a 105% net loss ratio providing 45 points of cover. In addition to the aggregate covers, underlying multi-peril crop reinsurance is provided through the FCIC.

Effective July 1, 2024, the Company’s reinsurance contracts were modified to exclude any Westminster losses occurring on or after that date, while maintaining all other existing limits, retentions, and attachment points.

The Company actively monitors and evaluates the financial condition of the reinsurers and develops estimates of the uncollectible amounts due from reinsurers, which would be recognized as credit losses through an allowance account developed using the current expected credit losses (“CECL”) model. See the Part II, Item 8, Note 3 “Summary of Significant Accounting Policies and Basis of Presentation” section of the 2024 Annual Report for additional information. Credit loss estimates are made based on periodic evaluation of balances due from reinsurers, changes in reinsurer credit standing, judgments regarding reinsurers’ solvency, known disputes, reporting characteristics of the underlying reinsured business, historical experience, current economic conditions, and the state of reinsurer relations in general. Collection risk is mitigated by entering into reinsurance arrangements only with reinsurers that have strong credit ratings and statutory surplus above certain levels. At March 31, 2025, and December 31, 2024, management has concluded that it is not necessary to record an allowance for expected credit losses related to reinsurance recoverables. All of our significant reinsurance partners are rated “A-” (Excellent) or better by AM Best or “A+” or better by Standard & Poor’s, and there is no history of write-offs.

A reconciliation of direct to net premiums on both a written and an earned basis, presented on a consolidated basis, including both continuing and discontinued operations, is as follows:

	Three Months Ended March 31, 2025
	Premiums Written			Premiums Earned
Direct premium	$	67,728		$	72,161
Assumed premium		38			39
Ceded premium		(4,704	)		(4,703	)
Net premiums	$	63,062		$	67,497

	Three Months Ended March 31, 2024
	Premiums Written			Premiums Earned
Direct premium	$	102,657		$	94,900
Assumed premium		137			151
Ceded premium		(9,807	)		(9,494	)
Net premiums	$	92,987		$	85,557

The reconciliations of the Company’s direct to net premiums on both a written and an earned basis for the current and comparable prior year quarter, segregated between continuing and discontinued operations, are shown below:

	Three Months Ended March 31, 2025						Three Months Ended March 31, 2024
	Premiums Written			Premiums Earned			Premiums Written			Premiums Earned
Continuing operations:
Direct premium	$	67,728		$	72,161		$	83,041		$	75,398
Assumed premium		38			39			137			151
Ceded premium		(4,704	)		(4,703	)		(5,666	)		(5,665	)
Net premiums	$	63,062		$	67,497		$	77,512		$	69,884

	Three Months Ended March 31, 2025				Three Months Ended March 31, 2024
	Premiums Written		Premiums Earned		Premiums Written			Premiums Earned
Discontinued operations:
Direct premium	$	—	$	—	$	19,616		$	19,502
Assumed premium		—		—		—			—
Ceded premium		—		—		(4,141	)		(3,829	)
Net premiums	$	—	$	—	$	15,475		$	15,673

A reconciliation of direct to net losses and loss adjustment expenses, presented on a consolidated basis, including both continuing and discontinued operations, is as follows:

	Three Months Ended March 31,
	2025			2024
Direct losses and loss adjustment expenses	$	40,379		$	54,654
Assumed losses and loss adjustment expenses		(233	)		45
Ceded losses and loss adjustment expenses		(1,621	)		(2,490	)
Net losses and loss adjustment expenses	$	38,525		$	52,209

The reconciliations for the current and comparable prior year quarter continuing and discontinued operations of direct to net losses and loss adjustment expenses are as follows:

	Three Months Ended March 31,
	2025			2024
Continuing operations:
Direct losses and loss adjustment expenses	$	40,379		$	41,519
Assumed losses and loss adjustment expenses		(233	)		45
Ceded losses and loss adjustment expenses		(1,621	)		(1,420	)
Net losses and loss adjustment expenses	$	38,525		$	40,144

	Three Months Ended March 31,
	2025		2024
Discontinued operations:
Direct losses and loss adjustment expenses	$	—	$	13,135
Assumed losses and loss adjustment expenses		—		—
Ceded losses and loss adjustment expenses		—		(1,070	)
Net losses and loss adjustment expenses	$	—	$	12,065

Intercompany Reinsurance Pooling Arrangement

Effective January 1, 2020, all of our insurance subsidiary and affiliate companies entered into an intercompany reinsurance pooling agreement. Nodak Insurance is the lead company of the pool, and assumes the net premiums, net losses, and underwriting expenses from each of the other five companies. Nodak Insurance then retrocedes balances back to each company, while retaining its own share of the pool’s net underwriting results, based on individual pool percentages established in the respective pooling agreement. This arrangement allows each insurance company to rely upon the capacity of the pool’s total statutory capital and surplus. As a result, they are evaluated by AM Best on a group basis and hold a single combined financial strength rating, long-term issuer credit rating, and financial size category. Subsequent to the June 30, 2024, date of sale, Westminster is no longer a member of the pool, and the pooling percentages for the remaining insurance subsidiaries were updated based on their respective surplus as a percentage of the pool as of December 31, 2023.