Note 5 - Reinsurance

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Reinsurance [Text Block]

5. REINSURANCE

In the ordinary course of business, the Company assumes and cedes premiums and selected insured risks with other insurance companies, known as reinsurance. A large portion of the reinsurance is put into effect under contracts known as treaties and, in some instances, by negotiation on each individual risk (known as facultative reinsurance). In addition, there are several types of treaties including quota share, excess of loss and catastrophe reinsurance contracts that protect against losses over stipulated amounts arising from any one occurrence or event. The arrangements allow the Company to pursue greater diversification of business and serve to limit the maximum net loss to a single event, such as a catastrophe. Through the quantification of exposed policy limits in each region and the extensive use of computer-assisted modeling techniques, management monitors the concentration of risks exposed to catastrophic events.

Through the purchase of reinsurance, the Company also generally limits its net loss on any individual risk to a maximum of $1,000,000 for casualty and workers’ compensation business and $750,000 for property, although certain treaties contain an annual aggregate deductible before reinsurance applies.

Premiums, written and earned, along with losses and settlement expenses incurred for the periods presented is summarized as follows:

	Three-Month Periods Ended September 30,
	2022			2021
WRITTEN
Direct	$	20,900,412		$	18,356,903
Reinsurance assumed		59,970			41,008
Reinsurance ceded		(2,550,345	)		(2,812,181	)
Net	$	18,410,037		$	15,585,730
EARNED
Direct	$	20,224,145		$	16,839,315
Reinsurance assumed		54,569			37,998
Reinsurance ceded		(2,554,273	)		(2,797,918	)
Net	$	17,724,441		$	14,079,395
LOSS AND SETTLEMENT EXPENSES INCURRED
Direct	$	11,226,504		$	11,186,326
Reinsurance assumed		20,590			16,452
Reinsurance ceded		(860,570	)		(2,388,256	)
Net	$	10,386,524		$	8,814,522

	Nine-Month Periods Ended September 30,
	2022			2021
WRITTEN
Direct	$	61,695,027		$	52,045,372
Reinsurance assumed		129,328			34,661
Reinsurance ceded		(7,087,338	)		(8,183,606	)
Net	$	54,737,017		$	43,896,427
EARNED
Direct	$	57,720,789		$	46,897,960
Reinsurance assumed		122,048			49,958
Reinsurance ceded		(7,077,077	)		(8,087,003	)
Net	$	50,765,760		$	38,860,915
LOSS AND SETTLEMENT EXPENSES INCURRED
Direct	$	39,364,381		$	33,992,513
Reinsurance assumed		68,283			26,703
Reinsurance ceded		(5,042,334	)		(8,737,708	)
Net	$	34,390,330		$	25,281,508