Note 5 - Reinsurance

9 Months Ended

Sep. 30, 2023

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 $1,000,000 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,
	2023			2022
WRITTEN
Direct	$	24,495,429		$	20,900,412
Reinsurance assumed		60,457			59,970
Reinsurance ceded		(2,870,582	)		(2,550,345	)
Net	$	21,685,304		$	18,410,037
EARNED
Direct	$	22,057,631		$	20,224,145
Reinsurance assumed		54,269			54,569
Reinsurance ceded		(2,878,383	)		(2,554,273	)
Net	$	19,233,517		$	17,724,441
LOSS AND SETTLEMENT EXPENSES INCURRED
Direct	$	17,854,337		$	11,226,504
Reinsurance assumed		18,080			20,590
Reinsurance ceded		(4,435,953	)		(860,570	)
Net	$	13,436,464		$	10,386,524

	Nine-Month Periods Ended September 30,
	2023			2022
WRITTEN
Direct	$	68,899,622		$	61,695,027
Reinsurance assumed		135,570			129,328
Reinsurance ceded		(7,865,311	)		(7,087,338	)
Net	$	61,169,881		$	54,737,017
EARNED
Direct	$	63,468,235		$	57,720,789
Reinsurance assumed		127,080			122,048
Reinsurance ceded		(8,066,448	)		(7,077,077	)
Net	$	55,528,867		$	50,765,760
LOSS AND SETTLEMENT EXPENSES INCURRED
Direct	$	43,754,741		$	39,364,381
Reinsurance assumed		58,499			68,283
Reinsurance ceded		(7,114,609	)		(5,042,334	)
Net	$	36,698,631		$	34,390,330