Reinsurance for the Reciprocal

3 Months Ended

Mar. 31, 2025

Note 12. Reinsurance for the Reciprocal

2024 Program

As of April 1, 2024, our third-party quota share program consists of one combined program covering all business in all states and is placed at 27.5% of P&C losses. All programs are effective for the period April 1, 2024, through March 31, 2025, and are subject to certain limits and exclusions, which vary by participating reinsurer.

Coverage for catastrophe events starts immediately within the quota share contracts and at $45.0 million per occurrence within the property catastrophe excess of loss treaties placed on April 1, 2024. Losses are shared at various levels up to $75.0 million. Over $75.0 million losses are covered up to a loss of $465.0 million. We also place reinstatement premium protection to cover any reinstatement premiums due on the first five layers.

We placed a parametric reinsurance contract to cover aggregate severe convective storm losses from January 1, 2024, to January 1, 2025. This contract would provide up to $30.0 million in recovery over $85.0 million in modeled losses.

2025 Program

As of April 1, 2025, coverage for excess of loss catastrophe reinsurance starts at $25.0 million per occurrence up to a loss of $410.0 million. Additionally, the third party quota share reinsurance contracts start immediately at 7.5% of P&C losses, which includes catastrophe events. We also place reinstatement premium protection to cover any reinstatement premiums due on the second through fourth layers.

The Reciprocal’s third-party quota share program consists of one combined program covering all business in all states and is placed at 7.5% of P&C losses.

Reinsurance Impact

The effects of reinsurance on premiums written by the Reciprocal and earned for the three months ended March 31, 2025 and 2024, were as follows:


	Three Months Ended March 31,
	2025				2024
	Written		Earned		Written		Earned
Direct premiums	$	75,496	$	102,380	$	75,104	$	108,588
Ceded premiums	(31,641)		(39,066)		(30,329)		(36,363)
Net premiums	$	43,855	$	63,314	$	44,775	$	72,225

The effects of reinsurance on incurred losses and loss adjustment expense (“LAE”) for the three months ended March 31, 2025 and 2024, were as follows:


	Three Months Ended March 31,
	2025		2024
Direct losses and LAE	$	44,692	$	79,416
Ceded losses and LAE	(15,557)		(10,483)
Net losses and LAE	$	29,135	$	68,933

The detail of reinsurance balances due is as follows:


	March 31, 2025		December 31, 2024
Ceded unearned premium	$	62,697	$	64,571
Losses and LAE reserve	24,076		19,793
Reinsurance recoverable	7,208		7,111
Other	404		828
Reinsurance balance due	$	94,385	$	92,303

On January 19, 2024, we entered into a five-year business collaboration agreement with Aon Corp. and Aon Re, Inc. ("Aon"), resulting in payments to us of approximately $25 million in January 2024 and additional cash payments through the end of the contract term. Of the cash payments that we have or will receive through the end of the contract term, $8.7 million is non-refundable and was immediately recognized in other income, net, in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). A portion of the remaining amount is potentially refundable to Aon if we breach the agreement, including if we directly or indirectly place reinsurance with brokers unaffiliated with Aon, subject to customary cure rights. The remaining amount is being recognized in other income, net, over the term of the agreement.