Reinsurance

12 Months Ended

Dec. 31, 2025

On January 1, 2024, the Company entered into a 27%% quota share reinsurance treaty for its personal lines business, which primarily consisted of homeowners’ and dwelling fire policies covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”). Upon the expiration of the 2024/2025 Treaty on January 1, 2025, the Company entered into a new 16% quota share reinsurance treaty for its personal lines business, covering the period from January 1, 2025 through January 1, 2026 (“2025/2026 Treaty”). Upon the expiration of the 2025/2026 Treaty on January 1, 2026, the Company entered into a new 5% quota share reinsurance treaty for its personal lines business written in all states except California (for which the Company entered into a new 30% quota share reinsurance treaty) covering the period from January 1, 2026 through January 1, 2027 (“2026/2027 Treaty”). See Note 21- Subsequent Events, Reinsurance.

The Company’s excess of loss and catastrophe reinsurance treaties expired on June 30, 2025 and the Company entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2025. The new catastrophe reinsurance treaties include the issuance of a $125,000,000 catastrophe bond ("Series 2025-1 Notes"). The Series 2025-1 Notes were priced at 4.5% and issued through a Bermuda-registered special purpose insurer, 1886 Re Ltd., providing KICO with $125,000,000 of collateralized reinsurance protection. The Series 2025-1 Notes offer multi-year protection against named storm events across New York, New Jersey, Connecticut, Massachusetts and Rhode Island on an indemnity trigger and per-occurrence basis. The Series 2025-1 Notes, which were structured and placed by AON Securities LLC, cover four annual risk periods from July 1, 2025, through June 30, 2029.

Effective January 1, 2024, the Company renewed an underlying excess of loss reinsurance treaty (“Underlying XOL Treaty”) covering the period from January 1, 2024 through January 1, 2025. The treaty provided 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty. Effective January 1, 2025, the Underlying XOL Treaty was renewed covering the period from January 1, 2025 through June 30, 2025. Effective July 1, 2025, the Underlying XOL Treaty was renewed along with the Company's excess of loss reinsurance treaty covering the period from July 1, 2025 through June 30, 2026. Combined, the renewed treaties provide 50% reinsurance coverage for losses of $250,000 in excess of $750,000, and 100% reinsurance coverage for losses in excess of $1,000,000 up to $9,000,000 together with facultative coverage. For the period October 1, 2024 through April 30, 2025, the Company purchased catastrophe reinsurance which provides coverage for winter storm losses to the extent of 71% of $4,500,000 in excess of $5,500,000. For the period October 15, 2025 through April 30, 2026, the Company purchased catastrophe reinsurance which provides coverage for winter storm losses to the extent of 90% of $5,000,000 in excess of $5,000,000.

Material terms for reinsurance treaties in effect for the treaty years shown below are as follows:


	Treaty Period
	2026/2027 Treaty						2025/2026 Treaty						2024/2025 Treaty
Line of Business	July 1, 2026 to January 1, 2027			January 2, 2026 to June 30, 2026			July 1, 2025 to January 1, 2026			January 2, 2025 to June 30, 2025			July 1, 2024 to January 1, 2025			January 1, 2024 to June 30, 2024

Personal Lines:
Homeowners, dwelling fire and canine legal liability
Quota share treaty:
Percent ceded (6)	5		%	5		%	16		%	16		%	27		%	27		%
Risk retained on initial
$1,000,000 of losses (4) (5) (6)	$	950,000		$	950,000		$	840,000		$	840,000		$	730,000		$	730,000
Losses per occurrence
subject to quota share
reinsurance coverage	$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000		$	1,000,000
Expiration date	January 1, 2027			January 1, 2027			January 1, 2026			January 1, 2026			January 1, 2025			January 1, 2025
Excess of loss coverage and
facultative facility
coverage (1) (4) (5)	$	(5)		$	8,250,000		$	8,250,000		$	8,400,000		$	8,400,000		$	8,400,000
				in excess of			in excess of			in excess of			in excess of			in excess of
				$	750,000		$	750,000		$	600,000		$	600,000		$	600,000
Total reinsurance coverage
per occurrence (4) (5)	$	50,000		$	8,175,000		$	8,285,000		$	8,360,000		$	8,470,000		$	8,470,000
Losses per occurrence
subject to reinsurance
coverage (5)	$	1,000,000		$	9,000,000		$	9,000,000		$	9,000,000		$	9,000,000		$	9,000,000
Expiration date	(5)			June 30, 2026			June 30, 2026			June 30, 2025			June 30, 2025			June 30, 2024

Catastrophe Reinsurance:
Initial loss subject to personal
lines quota share treaty (5)	$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000		$	10,000,000
Risk retained per catastrophe
occurrence (5) (6) (7) (8)	(5)			$	5,500,000		$	5,000,000		$	4,250,000		$	4,750,000		$	9,500,000
Catastrophe loss coverage
in excess of quota share
coverage (2) (5) (8)	(5)			$	434,500,000		$	435,000,000		$	275,000,000		$	275,000,000		$	315,000,000

Reinstatement premium
protection (3)	(5)			Yes			Yes			Yes			Yes			Yes

(1)For personal lines, includes the addition of an automatic facultative facility allowing KICO to obtain homeowners single risk coverage up to $9,000,000 in total insured value, which covers direct losses from $3,500,000 to $9,000,000 through June 30, 2026.

(2)Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts, except for one occurrence on 80% of the first layer of $5,000,000 in excess of $5,000,000, and one occurrence on 52% of the top layer of $240,000,000 in excess of $200,000,000, which is covered under the catastrophe bond. Duration of 168 consecutive hours for a catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone, except for winter storm coverage, which is covered under a specific declared catastrophe event.

(3)For the period July 1, 2024 through June 30, 2025 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $50,000,000 of catastrophe coverage in excess of $10,000,000. For the period July 1, 2025 through June 30, 2026 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $50,000,000 of catastrophe coverage in excess of $10,000,000.

(4)For the period January 1, 2024 through June 30, 2025, the Underlying XOL Treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Excludes losses from named storms. Reduces retention to $530,000 from $730,000 under the 2024/2025 Treaty. Retention increases to $640,000 from $530,000 under the 2025/2026 Treaty. For the period July 1, 2025 through June 30, 2026, the Underlying XOL Treaty combined with the excess of loss treaty provide 50% reinsurance coverage for losses of $250,000 in excess of $750,000, and 100% reinsurance coverage for losses in excess of $1,000,000 up to $9,000,000 together with facultative coverage. Increased retention to $715,000 from $640,000 under the 2025/2026 Treaty, and increased retention to $825,000 under the 2026/2027 Treaty (see note 5 below).

(5)Excess of loss coverage and facultative facility and catastrophe reinsurance treaties will expire on June 30,2026, with none of these coverages to be in effect during the period from July 1 2026 through January 1, 2027. If and when these treaties are renewed on July 1, 2026, the excess of loss and facultative facility, underlying excess of loss treaty, and the catastrophe reinsurance treaty, will be as provided for therein. Reinsurance coverage in effect from July 1, 2026 through January 1, 2027 is currently only covered under the 2026/2027 Treaty. The 2026/2027 Treaty will expire on January 1, 2027.

(6)For the 2024/2025 Treaty, 22% of the 27% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2025/2026 Treaty, 6% of the 16% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2026/2027 Treaty, there is no exclusion for catastrophe events.

(7)Plus losses in excess of catastrophe coverage.

(8)Effective July 1, 2025 through June 30, 2026, catastrophe coverage is 80% of the first layer of $5,000,000 in excess of $5,000,000. The remaining coverage is at 100% of $430,000,000 in excess of $10,000,000. For the period October 1, 2024 through April 30, 2025, additional catastrophe reinsurance treaty provided coverage for winter storm losses to the extent of 71% of $4,500,000 in excess of $5,500,000. For the period October 15, 2025 through April 30, 2026, additional catastrophe reinsurance treaty will provide coverage for winter storm losses to the extent of 90% of $5,000,000 in excess of $5,000,000. Retention for winter storms is $4,800,000 under the 2024/2025 Treaty, $5,200,000 under the 2025/2026 Treaty from January 1, 2025 through April 30, 2025, $3,900,000 from October 15, 2025 through January 1, 2026, the expiration date of the 2025/2026 Treaty, and $5,000,000 under the 2026/2027 Treaty through April 30, 2026,


	Treaty Year
Line of Business	July 1, 2025 to June 30, 2026			July 1, 2024 to June 30, 2025			July 1, 2023 to June 30, 2024

Personal Lines:
Personal Umbrella
Quota share treaty:
Percent ceded - first $1,000,000 of coverage	90		%	90		%	90		%
Percent ceded - excess of $1,000,000 dollars of coverage	95		%	95		%	95		%
Risk retained	$	300,000		$	300,000		$	300,000
Total reinsurance coverage per occurrence	$	4,700,000		$	4,700,000		$	4,700,000
Losses per occurrence subject to quota share reinsurance coverage	$	5,000,000		$	5,000,000		$	5,000,000
Expiration date	June 30, 2026			June 30, 2025			June 30, 2024

Commercial Lines (1)

(1)Coverage on all commercial lines policies expired in September 2020; reinsurance coverage is based on treaties in effect on the date of loss.

The Company’s reinsurance program has been structured to enable the Company to grow its premium volume while maintaining regulatory capital and other financial ratios generally within or below the expected ranges used for regulatory oversight purposes. The reinsurance program also provides income as a result of ceding commissions earned pursuant to the quota share reinsurance contracts. The Company’s participation in reinsurance arrangements does not relieve the Company of its obligations to policyholders.

Approximate reinsurance recoverables on unpaid and paid losses by reinsurer at December 31, 2025 and 2024 are as follows:


($ in thousands)	Unpaid Losses		Paid Losses		Total		Security
December 31, 2025
Swiss Reinsurance America Corporation	8,965		693		9,658		—
Hannover Rueck SE	12,497		(124)		12,373		—
Lancashire Insurance Company Limited	5,798		1,242		7,040		—
Others	5,972		1,017		6,989		384		(1)
Total	$	33,232	$	2,828	$	36,060	$	384

December 31, 2024
Swiss Reinsurance America Corporation	13,565		1,346		14,911		—
Hannover Rueck SE	7,195		559		7,754		—
Lancashire Insurance Company Limited	4,893		1,288		6,181		—
Others	6,670		2,061		8,731		393		(1)
Total	$	32,323	$	5,254	$	37,577	$	393

(1)As of December 31, 2025 and December 31, 2024, represents$384,000 and $393,000, respectively, guaranteed by irrevocable letters of credit.

In addition to reinsurance recoverables on unpaid and paid losses, reinsurance receivables in the accompanying consolidated balance sheets as of December 31, 2025 and 2024 include unearned ceded premiums of approximately $22,937,000 and $31,745,000, respectively.

Ceding Commission Revenue

The Company earned ceding commission revenue under the 2025/2026 Treaty for the year ended December 31, 2025 based on: (i) a fixed provisional commission rate at which provisional ceding commissions were earned, and (ii) a sliding scale ("Sliding Scale") of commission rates and ultimate treaty year loss ratio on the policies reinsured under this agreement based upon which contingent ceding commissions are earned. The Sliding Scale includes minimum and maximum commission rates in relation to specified ultimate loss ratios. The commission rate and contingent ceding commissions earned increase when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decrease when the estimated ultimate loss ratio increases.

The Company earned ceding commission revenue under the 2024/2025 Treaty for the year ended December 31, 2024, based on a fixed provisional commission rate at which provisional ceding commissions were earned.

Ceding commission revenue consists of the following:


	Year ended December 31,
	2025		2024

Provisional ceding commissions earned	$	13,926,916	$	18,829,278
Contingent ceding commissions earned	1,748,055		8,668
	$	15,674,971	$	18,837,946

Provisional ceding commissions are settled monthly. Balances due to or from reinsurers for contingent ceding commissions on the 2025/2026 Treaty will be settled annually based on the Loss Ratio of the treaty year that ends on January 1. Balances due to or from reinsurers for contingent ceding commissions on quota share treaties are settled periodically based on the Loss Ratio of each treaty year that ends on June 30 for the expired treaties (which had June 30 expiration dates) that were subject to contingent commissions. As discussed above, the Loss Ratios from prior years’ treaties are subject to change as incurred losses from those periods develop, resulting in an increase or decrease in the commission rate and contingent ceding commissions earned. As of December 31, 2025, contingent ceding commissions receivable from reinsurers under the 2025/2026 Treaty was approximately $1,754,000, which is recorded in other assets on the accompanying consolidated balance sheets. As of December 31, 2025 and December 31, 2024, net contingent ceding commissions payable to reinsurers under all other treaties was approximately $732,000 and $727,000, respectively, which is recorded in reinsurance balances payable on the accompanying consolidated balance sheets.

Expected Credit Losses – Uncollectible Reinsurance

The Company reviews reinsurance receivables which relate to both amounts already billed on ceded paid losses as well as ceded reserves that will be billed when losses are paid in the future. The Company has not recorded an allowance for uncollectible reinsurance as there is no perceived credit risk. The principal credit quality indicator used in the valuation of the allowance on reinsurance receivables is the financial strength rating of the reinsurer sourced from major rating agencies. Changes in the allowance are presented as a component of other underwriting expenses on the consolidated statements of income and comprehensive income.