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Reinsurance (Tables)

12 Months Ended

Dec. 31, 2019

Effect of reinsurance agreements on premiums earned and losses incurred

Table 9.1 below shows the effect of all reinsurance agreements on premiums earned and losses incurred as reflected in the consolidated statements of operations.



Reinsurance
Table	9.1
		Years ended December 31,
(In thousands)		2019			2018			2017
Premiums earned:
Direct		$	1,155,240		$	1,084,748		$	1,059,973
Assumed		5,085			1,805			509
Ceded		(129,337		)	(111,391		)	(125,735		)
Net premiums earned		$	1,030,988		$	975,162		$	934,747

Losses incurred:
Direct		$	130,100		$	43,060		$	74,727
Assumed		(125		)	331			183
Ceded		(11,400		)	(6,829		)	(21,201		)
Net losses incurred		$	118,575		$	36,562		$	53,709

Quota share reinsurance, excluding captive agreements

Table 9.2 provides a summary of our quota share reinsurance agreements, excluding captive agreements, for 2019, 2018 and 2017.



Quota share reinsurance
Table	9.2
		Years ended December 31,
(In thousands)		2019		2018		2017
Ceded premiums written and earned, net of profit commission ⁽¹⁾		$	111,550	$	108,337	$	120,974
Ceded losses incurred		11,395		6,543		22,336
Ceding commissions ⁽²⁾		48,793		51,201		49,321
Profit commission		139,179		147,667		125,629


⁽¹⁾	Under our QSR Transactions, premiums are ceded on an earned and received basis as defined in our agreements.


⁽²⁾	Ceding commissions are reported within Other underwriting and operating expenses, net on the consolidated statements of operations.

Reinsurance retention policy

Table 9.3 provides a summary of our excess of loss reinsurance agreements as of December 31, 2019 and December 31, 2018.



Excess of Loss Reinsurance
Table 9.3
(In thousands)			As of December 31, 2019				As of December 31, 2018
Home Re Entity (Issue Date)	Policy Inforce Dates	Termination Option Date (1)	Remaining First Layer Retention		Remaining Excess of Loss Reinsurance Coverages		Remaining First Layer Retention		Remaining Excess of Loss Reinsurance Coverages
Home Re 2018-1 Ltd. (Oct. - 2018)	July 1, 2016 - December 31, 2017	October 25, 2025	$	167,779	$	260,957	$	168,691	$	318,636
Home Re 2019-1 Ltd. (May - 2019)	January 1, 2018 - March 31, 2019	May 25, 2026	185,636		271,021		—		—
Total			$	353,415	$	531,978	$	168,691	$	318,636

⁽¹⁾

We have the right to terminate the excess-of-loss reinsurance agreements under certain circumstances and on any payment date on or after the respective termination option date.

Schedule of total assets of Home Re Entities

Table 9.4 presents the total assets of Home Re Entities as of December 31, 2019 and December 31, 2018.



Home Re Entities total assets
Table	9.4

(In thousands)
Home Re Entity		Total VIE Assets
December 31, 2019
Home Re 2018-01 Ltd.		$	269,451
Home Re 2019-01 Ltd.		$	283,150
December 31, 2018
Home Re 2018-1 Ltd.		$	318,636

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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