Reinsurance

12 Months Ended

Dec. 31, 2023

10 - Reinsurance

Unaffiliated Reinsurers

Our insurance subsidiaries and Donegal Mutual participate in a consolidated third-party reinsurance program, for which the coverage and parameters are common to all of our insurance subsidiaries and Donegal Mutual. The program utilizes several different reinsurers, all of which have an A.M. Best rating of A- (Excellent) or better or, with respect to foreign reinsurers, have a financial condition that, in the opinion of our management, is equivalent to a company with at least an A- rating from A.M. Best. The following information describes the external reinsurance Donegal Mutual and our insurance subsidiaries had in place for 2023:

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excess of loss reinsurance, under which Donegal Mutual and our insurance subsidiaries recovered losses over a set retention of $3.0 million for all losses other than workers’ compensation and a retention of $2.0 million for workers’ compensation losses; and

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catastrophe reinsurance, under which Donegal Mutual and our insurance subsidiaries recovered 100% of an accumulation of many losses resulting from a single event, including natural disasters, over a set retention of $25.0 million up to aggregate losses of $175.0 million per occurrence.

As many as 24 reinsurers provided coverage for 2023 on any one treaty with no reinsurer taking more than 17.5% of any one treaty. The amount of coverage provided under each of these types of reinsurance depended upon the amount, nature, size and location of the risks being reinsured.

In order to write automobile insurance in the State of Michigan, MICO is required to be a member of the Michigan Catastrophic Claims Association (“MCCA”). The MCCA provides reinsurance to MICO for personal automobile and commercial automobile personal injury claims in the state of Michigan over a set retention.

In addition to the pooling agreement and third-party reinsurance, our insurance subsidiaries had a catastrophe reinsurance agreement with Donegal Mutual, under which each of our insurance subsidiaries recovered 100% of an accumulation of multiple losses resulting from a single event, including natural disasters, over a set retention of $3.0 million up to aggregate losses of $22.0 million per occurrence. The agreement also provided additional coverage for an accumulation of losses from a single event including a combination of our insurance subsidiaries over a combined retention of $6.0 million.

Our insurance subsidiaries and Donegal Mutual also purchased facultative reinsurance to cover certain exposures, including property exposures in excess of the covered limits of their respective treaty reinsurance.

The following amounts represent ceded reinsurance transactions with unaffiliated reinsurers during 2023, 2022 and 2021:

	2023		2022		2021
Premiums written	$	43,030,879	$	37,002,702	$	38,173,733
Premiums earned		42,416,710		36,947,675		37,984,833
Losses and loss expenses		16,318,760		31,096,016		29,999,528
Prepaid reinsurance premiums		6,732,955		6,118,784		6,063,759
Liability for losses and loss expenses		116,717,187		149,628,406		138,909,584

Total Reinsurance

The following amounts represent total ceded reinsurance transactions with both affiliated and unaffiliated reinsurers during 2023, 2022 and 2021:

	2023		2022		2021
Premiums earned	$	388,073,427	$	383,059,075	$	399,284,886
Losses and loss expenses		275,171,587		249,037,288		282,083,985
Prepaid reinsurance premiums		168,724,466		160,591,399		176,935,842
Liability for losses and loss expenses		437,013,974		451,184,222		451,261,306

The following amounts represent the effect of reinsurance on premiums written for 2023, 2022 and 2021:

	2023			2022			2021
Direct	$	702,227,408		$	641,971,207		$	609,204,706
Assumed		589,675,724			568,272,026			601,864,198
Ceded		(396,206,492	)		(366,714,634	)		(406,802,395	)
Net premiums written	$	895,696,640		$	843,528,599		$	804,266,509

The following amounts represent the effect of reinsurance on premiums earned for 2023, 2022 and 2021:

	2023			2022			2021
Direct	$	686,584,907		$	627,331,528		$	601,408,581
Assumed		583,559,906			578,216,997			573,891,506
Ceded		(388,073,427	)		(383,059,075	)		(399,284,886	)
Net premiums earned	$	882,071,386		$	822,489,450		$	776,015,201
Percentage of assumed premiums earned to net premiums earned		66.2	%		70.3	%		74.0	%