The Company operates a write-your-own flood insurance carrier, Wright National Flood Insurance Company. WNFIC’s underwriting business consists of policies written pursuant to the NFIP, the program administered by FEMA to which premiums and underwriting exposure are ceded, and excess flood policies, which are fully reinsured in the private market. 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 operates and/or participates in various ancillary insurance operations, including (1) reinsurance companies and stand-alone captives that assume underwriting risk; (2) series captive insurance companies (SCICs); (3) protected cell companies; (4) segregated account companies; (5) a quota share captive and (6) an excess of loss layer captive. These ancillary insurance operations facilitate additional underwriting capacity, generate incremental revenues and/or enable the Company to participate in certain underwriting results. The Company acquired certain of the insurance operations through the acquisition of Accession. Several of the newly acquired entities were consolidated after determining that they qualify as Variable Interest Entities ("VIEs"), and the Company is the primary beneficiary. These entities are required to follow the regulatory requirements of their respective domiciliary governments. Total assets and liabilities of the Company's consolidated VIE insurance operations included on the consolidated balance sheets were $1,153 million and $1,151 million, respectively, as of December 31, 2025. The assets of the consolidated VIE insurance operations can only be used to settle the obligations of the consolidated VIE insurance operations and the creditors and beneficiaries of the liabilities of the consolidated VIE insurance operations do not have recourse to the Company.

The Company purchases reinsurance from other insurance companies to limit total exposure. In addition, the Company cedes insurance risk to other insurance companies and the U.S. government as permitted by the NFIP. The Company’s SCICs are created for customers to insure their risks and manage the costs of their insurance programs. In these arrangements, the Company acts as a fronting insurer and enters into reinsurance treaties, under which the Company has ceded all of the liabilities to customer-owned captive cells through cross collateralization between the cells. The premiums and underwriting exposure related to the Company’s SCIC insurance operations are fully ceded to the customer-owned captive cells such that the Company’s SCIC operations have minimal underwriting risk on a net written basis.

The quota share captive participates in risk sharing on policies placed by certain of our MGU businesses that currently underwrite property insurance for earthquake and wind exposed properties. A portion of written premiums are ceded to reinsurance companies, limiting, but not fully eliminating the Company's exposure to underwriting losses.

The excess of loss layer captive participates in risk sharing on policies placed by one of our MGU businesses that underwrites risks associated with 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, the layers have capped, maximum aggregate limits.

The effects of reinsurance on premiums written and earned are as follows:


	2025						2024
(in millions)	Written			Earned			Written			Earned
WNFIC
Direct	$	1,078		$	1,044		$	1,005		$	946
Ceded		(1,078	)		(1,044	)		(1,005	)		(946	)
Net premiums - WNFIC		—			—			—			—
Captives:
Direct		656			1,023			—			—
Assumed		180			120			153			151
Ceded		(751	)		(1,060	)		(74	)		(74	)
Net premiums - Captives		85			83			79			77
Net premiums - Total	$	85		$	83		$	79		$	77

All premiums written by the Company under the NFIP are 100.0% ceded to FEMA, for which WNFIC received a 29.1% gross expense allowance from January 1, 2025 through September 30, 2025 and a 28.4% gross expense allowance from October 1, 2025 through December 31, 2025. For the years ended, December 31, 2025 and 2024, the Company ceded $1,075 million and $1,001 million, respectively, of written premiums to FEMA for NFIP policies of $3 million and $4 million, respectively, to highly rated carriers, for excess flood policies.

As of December 31, 2025, the Consolidated Balance Sheets contained Reinsurance recoverable of $167 million and Prepaid reinsurance premiums of $553 million which are related to the WNFIC business. As of December 31, 2024, the Consolidated Balance Sheets contained reinsurance recoverable of $1,525 million and prepaid reinsurance premiums of $520 million. For flood policies, there was no change in the balance in the reserve for losses and loss adjustment expense net of reinsurance recoverable for the years ended December 31, 2025 and 2024, as the Company's direct premiums written were 100.0% ceded to two reinsurers. The gross balance of the reserve for losses and loss adjustment expense for the WNFIC, excluding related reinsurance recoverable, was $167 million as of December 31, 2025 and $1,525 million as of December 31, 2024.

As of December 31, 2025, the Consolidated Balance Sheet contained the following balances related to the Captives: deferred acquisition costs of $12 million, prepaid reinsurance premiums of $426 million, reinsurance payable of $301 million, the reserve for losses and loss adjustment expense, excluding related reinsurance recoverable, of $501 million and unearned premiums of $499 million. As of December 31, 2024, the Consolidated Balance Sheet contained the following balances related to the Captives: deferred acquisition costs of $12 million, reinsurance payable of $5 million, the reserve for losses and loss adjustment expense, excluding related reinsurance recoverable, of $14 million and unearned premiums of $57 million.