Note 7 - Reinsurance

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Reinsurance [Text Block]

7. Reinsurance

Certain premiums and benefits at NCTIC are ceded to other insurance companies under various reinsurance agreements. The reinsurance agreements provide NCTIC with increased capacity to write more risk and maintain its exposure to loss within its capital resources. For the three month periods ended March 31, 2024 and 2023, NCTIC's reinsurance program consisted of excess of loss reinsurance treaties. The following is a summary of the reinsurance coverage:

Effective January 1, 2024, NCTIC entered into a per risk excess of loss reinsurance agreement that provides coverage of $4,000,000 in excess of $1,000,000 on each and every risk. The contract allows for one full reinstatement without additional premium. This per risk agreement is shared with other non-affiliated companies. Each company pays its share of the reinsurance cost based on separate company earned premiums. The agreement expires December 31, 2024.

Effective January 1, 2023, NCTIC entered into a per risk excess of loss reinsurance agreement that provided coverage of $4,000,000 in excess of $1,000,000 on each and every risk. The contract allowed for one full reinstatement without additional premium. This per risk agreement was shared with other non-affiliated companies. Each company paid its share of the reinsurance cost based on separate company earned premiums. The agreement expired  December 31, 2023.

NCTIC’s reinsured risks are treated, to the extent of reinsurance, as though they are risks for which the Company is not liable. However, NCTIC remains contingently liable in the event its reinsurers do not meet their obligations under these reinsurance contracts. NCTIC uses a broker to place its reinsurance through Lloyd’s syndicates, a group of underwriters who work together to provide insurance coverage for a variety of risks. Chaucer Syndicates Ltd. (“Chaucer Syndicates”) and Beazley Syndicate (“Beazley”) are each 50% participants in the Lloyd’s syndicate. As such, NCTIC has a concentration of reinsurance risk with these third-party reinsurers that could have a material impact on NCTIC’s financial position in the event that either of these reinsurers fail to perform their obligations under the reinsurance treaty. As of March 31, 2024, Chaucer Syndicates was rated A (excellent) by A.M. Best, A+ (strong) by S&P and AA- (very strong) by Fitch. Beazley was rated A (excellent) by A.M. Best, AA- (very strong) by S&P and AA- (very strong) by Fitch. The Company monitors the financial condition of individual reinsurers, risk concentration arising from similar activities as well as economic characteristics of reinsurers to attempt to reduce the risk of default by such reinsurers. Given the quality of the reinsurers, management believes this possibility to be remote. At March 31, 2024, there were no reinsurance recoverables on paid claims or unpaid reserves.

The effects of reinsurance on premiums written and earned by NCTIC for the three month periods ended March 31, 2024 and 2023 are as follows (in thousands):

	Three Months
	Ended
	March 31,			March 31,
	2024			2023
Direct title premiums	$	1,249		$	844
Ceded title premiums		(10	)		(14	)
Net title premiums written	$	1,239		$	830

The Company did not have any written reinsurance contracts in-force during the three month period ended March 31, 2024. The Company may actively look to provide reinsurance coverage to other carriers as future opportunities arise.