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Reinsurance
 9 Months Ended
Sep. 30, 2024
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract]  
Reinsurance Reinsurance
We reinsure a portion of our policy risks to third parties in order to reduce our ultimate losses, diversify our exposures and comply with regulatory requirements. We also assume certain policy risks written by other companies.
Reinsurance does not relieve us from our obligations to policyholders. In the event that the reinsurers are unable to meet their obligations, we remain liable for the reinsured claims. We monitor both the financial condition of individual reinsurers and risk concentrations arising from similar geographic regions, activities and economic characteristics of reinsurers to lessen the risk of default by such reinsurers.
The following table sets forth the effects of reinsurance on premiums written and earned for the periods indicated:
Three months ended
September 30,		Nine months ended
September 30,
(Amounts in thousands)
2024202320242023
Net premiums written:
Direct$262,723 $250,044 $777,148 $736,143 
Assumed6,782 577 11,813 892 
Ceded(28,937)(20,256)(82,540)(61,198)
Net premiums written$240,568 $230,365 $706,421 $675,837 
Net premiums earned:
Direct$271,210 $263,025 $805,096 $777,280 
Assumed6,782 577 11,813 892 
Ceded(28,937)(20,256)(82,540)(61,198)
Net premiums earned$249,055 $243,346 $734,369 $716,974 
The difference between written premiums of $240.6 million and earned premiums of $249.1 million represents the decrease in unearned premiums for the three months ended September 30, 2024. The difference between written premiums of $706.4 million and earned premiums of $734.4 million represents the decrease in unearned premiums for the nine months ended September 30, 2024. In both periods, the decrease in unearned premiums was primarily the result of premiums earned over time coupled with low originations of our single premium mortgage insurance product.
Excess-of-loss reinsurance
We engage in excess-of-loss (“XOL”) insurance transactions either through a panel of traditional reinsurance providers or through collateralized reinsurance with unaffiliated special purpose insurers (“Triangle Re Entities”). During the respective coverage periods of these agreements, EMICO retains the first layer of aggregate loss exposure on covered policies while the reinsurer provides the second layer of coverage, up to the defined reinsurance coverage amount. EMICO retains losses in excess of the respective reinsurance coverage amount.
The Triangle Re Entities fully collateralize their coverage by issuing insurance-linked notes (“ILNs”) to eligible capital market investors in unregistered private offerings. Traditional reinsurance providers collateralize a portion of their coverage by holding funds in trust. We believe that the risk transfer requirements for reinsurance accounting were met as these XOL insurance transactions assume significant insurance risk and a reasonable possibility of significant loss.
EMICO has rights to terminate the ILNs or traditional XOL reinsurance agreements upon the occurrence of certain events.
The following table presents the issue date, policy dates, initial and current first layer retained aggregate loss and initial and current reinsurance coverage amount under each reinsurance transaction. Current amounts are presented as of September 30, 2024:
Mortgage insurance-linked notes
(Amounts in millions)Issue datePolicy datesInitial first layer retained lossCurrent first layer retained lossInitial reinsurance coverageCurrent reinsurance coverage
Triangle Re 2021-2 Ltd.4/16/20219/01/2020 - 12/31/2020$189$188$303$132
Triangle Re 2021-3 Ltd.9/02/20211/01/2021 - 6/30/2021$304$302$372$200
Triangle Re 2023-1 Ltd.11/15/20237/01/2022 - 6/30/2023$244$244$248$248
Total$580
Traditional excess-of-loss reinsurance
(Amounts in millions)Issue datePolicy datesInitial first layer retained lossCurrent first layer retained lossInitial reinsurance coverageCurrent reinsurance coverage
2021 XOL2/04/20211/01/2021 - 12/31/2021$671$667$206$97
2022-1 XOL1/27/20221/01/2022 - 12/31/2022$462$457$196$173
2022-2 XOL1/27/20221/01/2022 - 12/31/2022$385$380$25$25
2022-3 XOL3/24/20227/01/2021 - 12/31/2021$317$314$289$177
2022-4 XOL3/24/20227/01/2021 - 12/31/2021$264$261$36$36
2022-5 XOL 9/15/20221/01/2022 - 6/30/2022$256$253$201$162
2023-1 XOL3/08/20231/01/2023 - 12/31/2023$360$359$180$180
2024-1 XOL1/30/20241/01/2024 - 12/31/2024$273$273$180$180
2024-2 XOL6/25/20247/01/2023-12/31/2023$134$134$90$90
Total$1,120
Quota Share Reinsurance
EMICO engages in quota share reinsurance agreements with panels of traditional third-party reinsurers. Under the agreements, we cede premiums earned on all eligible policies in exchange for reimbursement of ceded claims and claims expenses on covered policies, a specific ceding commission and profit commission determined based on ceded claims. EMICO has rights to terminate the reinsurance agreements upon the occurrence of certain events. Reinsurance recoverables are recorded in Other assets on the consolidated balance sheets.
AgreementIssue datePolicy datesCeding percentageCeding commissionProfit commission
QS 2023-16/30/20231/01/2023 - 12/31/202316.125%20%
up to 55%
QS 2024-11/03/20241/01/2024 - 12/31/202421.225%20%
up to 55%