Reinsurance (Tables)

12 Months Ended

Dec. 31, 2021

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)		2021		2020		2019
Premiums earned:
Direct		$	1,167,592	$	1,199,824	$	1,155,240
Assumed		9,858		10,848		5,085
Ceded		(163,031)		(188,729)		(129,337)
Net premiums earned		1,014,419		1,021,943		1,030,988

Losses incurred:
Direct		74,496		442,194		130,100
Assumed		(57)		555		(125)
Ceded		(9,862)		(77,975)		(11,400)
Net losses incurred		$	64,577	$	364,774	$	118,575

Schedule of Quota Share Reinsurance Agreements

Table 9.2 below provides additional detail regarding our QSR transactions in effect during 2021.


Reinsurance
Table	9.2

Quota Share Contract		Policy Year	Quota Share %	Annual Loss Ratio to Exhaust Profit Commission (1)	Contractual Termination Date
2015 QSR		Prior to 2017	15.0%	68.0%	December 31, 2031
2017 QSR (2)		2017	30.0%	60.0%	December 31, 2028
2018 QSR (2)		2018	30.0%	62.0%	December 31, 2029
2019 QSR		2019	30.0%	62.0%	December 31, 2030
2020 QSR		2020	12.5%	62.0%	December 31, 2031
2020 QSR and 2021 QSR		2020 - 2021	17.5%	62.0%	December 31, 2032
2021 QSR		2021	12.5%	57.5%	December 31, 2032
2022 QSR		2022	15.0%	57.5%	December 31, 2033
Credit Union QSR (3)		2020-2025	65.0%	50.0%	December 31, 2039

(1) We will receive a profit commission provided the annual loss ratio on policies covered under the transaction remains below this ratio.

(2) 2017 and 2018 QSR Transactions were terminated effective December 31, 2021.

(3) Eligible credit union business written before April 1, 2020 was covered by our 2019 and prior QSR Transactions.

Table 9.3 provides additional detail regarding optional termination dates and optional reductions to our quota share percentage which can, in each case be elected by us for a fee. The optional reduction to the quota share percentage would give us an option to reduce our quota share percentage from the original percentage as shown in table 9.2 to the percentage showed in 9.3.

Reinsurance

Table

9.3

Quota Share Contract

Optional Termination Date (1)

Optional Quota Share % Reduction Date (2)

Quota Share % Reduction

2015 QSR

June 30, 2021

2019 QSR

December 31, 2021

July 1, 2020

25% or 20%

2020 QSR

December 31, 2022

July 1, 2021

10.5% or 8%

2020 QSR and 2021 QSR, 2020 Policy year

December 31, 2022

July 1, 2021

14.5% or 12%

2020 QSR and 2021 QSR, 2021 Policy year

December 31, 2023

July 1, 2022

14.5% or 12%

2021 QSR

December 31, 2023

July 1, 2022

10.5% or 8%

2022 QSR

December 31, 2024

July 1, 2023

12.5% or 10%

(1) We can elect early termination of the QSR transaction beginning on this date, and bi-annually thereafter.

(2) We can elect to reduce the quota share percentage beginning on this date, and bi-annually thereafter.

Quota share reinsurance agreements on premiums earned and losses incurred

Table 9.4 provides a summary of our QSR Transactions, excluding captive agreements, for 2021, 2020, and 2019.


Quota share reinsurance
Table	9.4
		Years ended December 31,
(In thousands)		2021		2020		2019
Ceded premiums written and earned, net of profit commission		$	118,537	$	167,930	$	111,550
Ceded losses incurred		9,862		78,012		11,395
Ceding commissions (1)		53,460		48,077		48,793
Profit commission		153,759		72,452		139,179

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

Reinsurance retention policy

Table 9.5 provides a summary of our Home Re Transactions as of December 31, 2021, December 31, 2020 and December 31, 2019.


Excess of Loss Reinsurance
Table 9.5
($ in thousands)	Home Re 2021-2, Ltd.	Home Re 2021-1, Ltd.	Home Re 2020-1, Ltd.	Home Re 2019-1, Ltd.	Home Re 2018-1, Ltd.
Issue Date	August 3, 2021	February 2, 2021	October 29, 2020	May 25, 2019	October 30, 2018
Policy Inforce Dates	January 1, 2021 - May 28, 2021	August 1, 2020 - December 31, 2020	January 1, 2020 - July 31, 2020	January 1, 2018 - March 31, 2019	July 1, 2016 - December 31, 2017
Optional Call Date (1)	July 25, 2028	January 25, 2028	October 25, 2027	May 25, 2026	October 25, 2025
Legal Maturity	12.5 years	12.5 years	10 years	10 years	10 years
Initial First Layer Retention	190,159	211,159	275,283	185,730	168,691
Initial Excess of Loss Reinsurance Coverage	398,429	398,848	412,917	315,739	318,636
2021
Remaining First Layer Retention	190,159	211,142	275,204	183,917	165,365
Remaining Excess of Loss Reinsurance Coverage	398,429	387,830	234,312	208,146	218,343
2020
Remaining First Layer Retention	—	—	275,283	184,514	166,005
Remaining Excess of Loss Reinsurance Coverage	—	—	412,917	208,146	218,343
2019
Remaining First Layer Retention	—	—	—	185,636	167,779
Remaining Excess of Loss Reinsurance Coverage	—	—	—	271,021	260,957

(1)We have the right to terminate the Home Re Transactions under certain circumstances and on any payment date on or after the respective Optional Call date.

Schedule of total assets of Home Re Entities

Table 9.6 presents the total assets of the Home Re Entities as of December 31, 2021 , December 31, 2020 and December 31, 2019.


Home Re Entities total assets
Table	9.6

(In thousands)
Home Re Entity		Total VIE Assets
December 31, 2021
Home Re 2018-1 Ltd.		$	218,343
Home Re 2019-1 Ltd.		208,146
Home Re 2020-1 Ltd.		251,387
Home Re 2021-1 Ltd.		398,848
Home Re 2021-2 Ltd.		398,429

December 31, 2020
Home Re 2018-01 Ltd.		$	218,343
Home Re 2019-01 Ltd.		208,146
Home Re 2020-01 Ltd.		412,917

December 31, 2019
Home Re 2018-01 Ltd.		$	269,451
Home Re 2019-01 Ltd.		283,150

- 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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