The National Flood Insurance Program is a program administered by FEMA whereby the Company sells and services NFIP flood insurance policies on behalf of FEMA and receives fees for its services. Congressional authorization for the NFIP is periodically evaluated and may be subject to potential government shutdowns. The Company sells excess flood policies which are 100% ceded to a highly rated reinsurance carrier. The Company also operates two Captives for the purpose of facilitating additional underwriting capacity and to participate in a portion of the underwriting results. One Captive participates on a quota share basis for policies placed by certain of our MGU businesses that are currently focused on property insurance for earthquake and wind exposed properties with a portion of premiums ceded to reinsurance companies, limiting, but not fully eliminating the Company's exposure to underwriting losses. The other Captive participates through excess of loss reinsurance layers associated with one of our MGU businesses focused on placements of personal property, excluding flood, primarily in the southeastern United States with one layer of per risk excess reinsurance and three layers of catastrophe per occurrence reinsurance. All four layers have limited reinstatements and therefore have capped, maximum aggregate limits. The effects of reinsurance on premiums written and earned are as follows:


	Six months ended June 30, 2025
(in millions)	Written			Earned
Direct premiums - WNFIC	$	516		$	507
Ceded premiums - WNFIC		(516	)		(507	)
Net premiums - WNFIC		—			—
Assumed premiums - Quota share captive and excess of loss layer captive		114			70
Ceded premiums - Quota share captive		(34	)		(34	)
Net premiums - Quota share captive and excess of loss layer captive		80			36
Net premiums - Total	$	80		$	36

All premiums written by the Company under NFIP are 100% ceded to FEMA, for which WNFIC received a 29.1% gross expense allowance from January 1, 2025 through June 30, 2025. For the same period, the Company ceded $514 million of written premiums to FEMA for NFIP policies and $2 million to highly rated carriers for excess flood policies.

As of June 30, 2025 the Condensed Consolidated Balance Sheets contained reinsurance recoverable of $383 million and prepaid reinsurance premiums of $529 million, which are related to the WNFIC business. For flood policies, there was no change in the balance in the reserve for losses and loss adjustment expense net of reinsurance recoverable during the period January 1, 2025 through June 30, 2025, as the Company's direct premiums written were 100% ceded to two reinsurers. The balance of the reserve for losses and loss adjustment expense for the WNFIC, excluding related reinsurance recoverable, as of June 30, 2025 was $383 million. These balances primarily relate to claims activity from hurricane activity in 2024.

WNFIC maintains capital in excess of the minimum statutory amount of $8 million as required by regulatory authorities. The statutory capital and surplus of WNFIC was $36 million at June 30, 2025 and $44 million as of December 31, 2024. For the period from January 1, 2025 through June 30, 2025, WNFIC generated minimal statutory net income. For the period from January 1, 2024 through December 31, 2024, WNFIC generated statutory net income of $9 million. The maximum amount of ordinary dividends that WNFIC can pay in a rolling twelve month period is limited to the greater of 10% of statutory adjusted capital and surplus or 100% of adjusted net income. On June 27, 2025, WNFIC paid an ordinary dividend of $9 million. The dividend was declared and approved by the WNFIC Board of Directors on May 30, 2025. The maximum dividend payout that may be made in 2025 without prior approval is $9 million.

In December 2021, the initial funding to capitalize the quota share Captive was $6 million. This capital in addition to earnings of $31 million through June 30, 2025 is considered at risk for loss. Assumed net written and net earned premiums for the quota share Captive for the six months ended June 30, 2025, were $79 million and $36 million, respectively. For the six months ended June 30, 2025, the ultimate loss expense inclusive of incurred but not reported ("IBNR") claims was $24 million. As of June 30, 2025, the Condensed Consolidated Balance Sheet contained deferred acquisitions costs of $78 million, reinsurance payable for $5 million, and the reserve for losses and loss adjustment expense, excluding related reinsurance recoverable, was $14 million. The first collateral release was received in March 2024 and is based on an IBNR factor times earned premium compared to the current collateral balance.

The excess of loss layer Captive was renewed in June 2025 with underlying reinsurance treaties effective from June 1, 2025 through May 31, 2026. This Captive’s maximum aggregate annual underwriting exposure is $2 million per occurrence, up to $4 million.