Reinsurance and Catastrophes

12 Months Ended

Dec. 31, 2025

In the normal course of business, the Company's insurance subsidiaries assume and cede reinsurance with other insurers. Reinsurance is ceded primarily to limit losses from large events and to permit recovery of a portion of direct losses; however, such a transfer does not relieve the originating insurance company of primary liability.

The Company is a national underwriter and therefore has exposure to catastrophic losses in certain coastal states and other regions throughout the U.S. Catastrophes can be caused by various events including hurricanes, windstorms, hail, severe winter weather, wildfires and earthquakes, and the frequency and severity of catastrophes are inherently unpredictable. The financial impact from catastrophic losses results from both the total amount of insured exposure in the area affected by the catastrophe as well as the severity of the event. The Company seeks to reduce its exposure to catastrophe losses through the geographic diversification of its insurance coverage, deductibles, maximum coverage limits and the purchase of catastrophe reinsurance.

The Company's catastrophe losses incurred were approximately $61.7 million, $94.9 million and $97.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. For 2025, catastrophe losses included winter storm, wind, hail, and tornado events.

The total amounts of reinsurance recoverable on unpaid insurance reserves classified as assets and included in the amounts being reported as Reinsurance balances receivable in the Consolidated Balance Sheets were as follows:


($ in millions)	December 31,
	2025		2024
Reinsurance recoverables on reserves and unpaid claims
Property & Casualty
Reinsurance companies	$	8.0	$	8.3
State insurance facilities	93.2		92.5
Group benefits	278.9		289.3
Life and health	14.9		14.2
Total	$	395.0	$	404.3

As of December 31, 2025, the Company had a reinsurance recoverable in the amount of $167.1 million from National Guardian Life Insurance Company (NGL) that exceeded 10.0% of consolidated shareholders' equity as of the reporting date. NGL currently has an assigned credit rating of A by A.M. Best.

The Company recognizes the cost of reinsurance premiums over the contract periods for such premiums in proportion to the insurance protection provided. Amounts recoverable from reinsurers for unpaid claims and claim settlement expenses, including estimated amounts for unsettled claims, IBNR claims and policy benefits, are estimated in a manner consistent with the insurance liability associated with the policy. The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows:


($ in millions)	Direct Amount(1)		Ceded to Other Companies		Assumed from Other Companies		Net Amount
Year Ended December 31, 2025
Net premiums written and contract deposits(2)	$	1,734.5	$	59.0	$	34.2	$	1,709.7
Net premiums and contract charges earned	1,258.7		58.3		28.0		1,228.4
Benefits, claims and settlement expenses(3)	744.1		48.1		15.5		711.5

Year Ended December 31, 2024
Net premiums written and contract deposits(2)	$	1,650.9	$	72.0	$	28.8	$	1,607.7
Net premiums and contract charges earned	1,188.8		70.9		28.1		1,146.0
Benefits, claims and settlement expenses(3)	748.3		43.0		39.7		745.0

Year Ended December 31, 2023
Net premiums written and contract deposits(2)	$	1,583.6	$	67.9	$	36.9	$	1,552.6
Net premiums and contract charges earned	1,097.7		76.3		35.7		1,057.1
Benefits, claims and settlement expenses	803.6		45.7		11.2		769.1

(1) Direct amount is net of the annuity reinsurance agreement accounted for using the deposit method that is discussed in Note 8.

(2) This measure is not based on accounting principles generally accepted in the United States of America (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the SEC.

(3) Includes assumed commercial liability exposures beginning in 2024.

There were no losses from uncollectible reinsurance recoverables in the three years ended December 31, 2025. Past due reinsurance recoverables as of December 31, 2025 were not material.

The Company maintains property and casualty catastrophe excess of loss reinsurance coverage. For 2025, the Company's catastrophe excess of loss coverage consisted of one contract in addition to a minimal amount of coverage by the Florida Hurricane Catastrophe Fund (FHCF). For 2025, the catastrophe excess of loss contract consisted of three layers of which provided for one mandatory reinstatement. The coverage provided was 95% for the layer of $25.0 million excess of $35.0 million, 95% coverage for the layer of $35.0 million excess of $60.0 million and 95% coverage for the layer of $90 million excess of $95 million. For 2026, our coverage will provide 95% coverage for the layer of $25.0 million excess of $35.0 million, 95% coverage for the layer of $35.0 million excess of $60.0 million, 95% coverage for the layer of $90.0 million excess of $95.0 million and 95% coverage for the layer of $55.0 million excess of $185 million.

For liability coverages, in 2025, the Company reinsured each loss above a retention of $5.0 million per occurrence up to $20.0 million in a clash event. A clash cover is a reinsurance casualty excess contract requiring two or more casualty coverages or policies issued by the Company to be involved in the same loss occurrence for coverage to apply.

For umbrella coverage, in 2025, we reinsured risks on a quota share basis of losses for 50%, including allocated loss adjustment expenses and premiums for all states. Policies written in 2026 will be subject to a 55% quota share.

The maximum individual life insurance risk retained by the Company is $0.5 million on any individual life. Excess amounts are reinsured. The Company also maintains a life catastrophe reinsurance program. For 2025, the Company reinsured 100% of the catastrophe risk in excess of $1.0 million up to $35.0 million per occurrence, with one reinstatement. The Company's life catastrophe risk reinsurance program covers acts of terrorism and includes nuclear, biological and chemical explosions but excludes other acts of war.

With regards to individual supplemental insurance products, the Company retains all of the risk on its supplemental health product lines, including accidental death risk embedded within certain products. However, the Company’s other accidental death and dismemberment risk issued through all other policies and riders are ceded 100%.

With regards to group benefits products, the Company has retained approximately 73.1% of gross and assumed group disability and specialty health benefits in 2025. The Company has a block of individual life and annuity benefits that is effectively 100% ceded. The Company purchases quota share reinsurance and excess reinsurance in amounts deemed appropriate by its risk committee. The Company monitors its retention amounts by product line and has the ability to adjust retention as appropriate.