Reinsurance and Insurance Loss Reserves

12 Months Ended

Apr. 01, 2023

Standard Casualty is primarily a specialty writer of manufactured home physical damage insurance. Certain of our premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. The ceded reinsurance agreements provide increased capacity to write larger risks while maintaining exposure to loss within our capital resources. We remain obligated for amounts ceded in the event that the reinsurers do not meet their obligations. Substantially all of the assumed reinsurance is with one entity.

The effects of reinsurance on premiums written and earned were as follows (in thousands):


	Year Ended
	April 1, 2023				April 2, 2022
	Written		Earned		Written		Earned
Direct premiums	$	32,671	$	29,775	$	27,639	$	25,543
Assumed premiums—nonaffiliated	34,153		32,809		31,693		30,579
Ceded premiums—nonaffiliated	(18,300)		(18,300)		(15,232)		(15,232)
	$	48,524	$	44,284	$	44,100	$	40,890

Typical insurance policies written or assumed have a maximum coverage of $0.4 million per claim, of which we cede $0.2 million of the risk of loss per reinsurance. Therefore, our risk of loss is limited to $0.2 million per claim on typical policies, subject to the reinsurers meeting their obligations. After this limit, amounts are recoverable through reinsurance for catastrophic losses in excess of $3.0 million per occurrence, up to a maximum of $100.0 million in the aggregate for that occurrence.

Purchasing reinsurance contracts mitigates the frequency and/or severity of losses incurred on insurance policies issued, such as in the case of a catastrophe that generates a large number of serious claims on multiple policies at the same time. Under these agreements, we may be required to repurchase and reestablish the reinsurance contracts for the remainder of the year to the extent that they have been utilized.

Standard Casualty establishes reserves for claims and claims expense on reported and IBNR claims of non-reinsured losses. The following details the activity in the reserve for fiscal years 2023, 2022 and 2021 (in thousands):


	April 1, 2023		April 2, 2022		April 3, 2021
Balance at beginning of period	$	8,149	$	7,451	$	5,582
Net incurred losses during the year	33,466		25,962		23,041
Net claim payments during the year	(30,676)		(25,264)		(21,172)
Balance at end of period	$	10,939	$	8,149	$	7,451