Note 5 - Reinsurance

9 Months Ended

Sep. 30, 2024

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,
	2024			2023
WRITTEN
Direct	$	27,661,918		$	24,495,429
Reinsurance assumed		70,721			60,457
Reinsurance ceded		(3,514,356	)		(2,870,582	)
Net	$	24,218,283		$	21,685,304
EARNED
Direct	$	25,126,580		$	22,057,631
Reinsurance assumed		64,138			54,269
Reinsurance ceded		(3,479,311	)		(2,878,383	)
Net	$	21,711,407		$	19,233,517
LOSS AND SETTLEMENT EXPENSES INCURRED
Direct	$	15,088,964		$	17,854,337
Reinsurance assumed		46,296			18,080
Reinsurance ceded		(991,057	)		(4,435,953	)
Net	$	14,144,203		$	13,436,464

	Nine-Month Periods Ended September 30,
	2024			2023
WRITTEN
Direct	$	76,788,373		$	68,899,622
Reinsurance assumed		94,323			135,570
Reinsurance ceded		(10,534,586	)		(7,865,311	)
Net	$	66,348,110		$	61,169,881
EARNED
Direct	$	72,749,157		$	63,468,235
Reinsurance assumed		97,545			127,080
Reinsurance ceded		(10,514,736	)		(8,066,448	)
Net	$	62,331,966		$	55,528,867
LOSS AND SETTLEMENT EXPENSES INCURRED
Direct	$	43,628,846		$	43,754,741
Reinsurance assumed		69,403			58,499
Reinsurance ceded		(2,664,050	)		(7,114,609	)
Net	$	41,034,199		$	36,698,631