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Reinsurance (Tables)

12 Months Ended

Dec. 31, 2022

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)		2022		2021		2020
Premiums earned:
Direct		$	1,154,728	$	1,167,592	$	1,199,824
Assumed		8,778		9,858		10,848
Ceded - quota share reinsurance (1)		(86,435)		(118,537)		(167,930)
Ceded - excess-of-loss reinsurance		(69,938)		(44,494)		(20,799)
Total ceded		(156,373)		(163,031)		(188,729)
Net premiums earned		$	1,007,133	$	1,014,419	$	1,021,943

Losses incurred:
Direct		$	(274,072)	$	74,496	$	442,194
Assumed		(330)		(57)		555
Ceded - quota share reinsurance		19,837		(9,862)		(77,975)
Losses incurred, net		$	(254,565)	$	64,577	$	364,774

Other Reinsurance Impacts:
Profit commission on quota share reinsurance (1)		$	176,084	$	153,759	$	72,425
Ceding commission on quota share reinsurance		52,071		53,460		48,077

Schedule of Quota Share Reinsurance Agreements

Table 9.2 below provides additional detail regarding our QSR transactions in effect during 2022.


Reinsurance
Table	9.2

Quota Share Contract		Covered Policy Years	Quota Share %		Annual Loss Ratio to Exhaust Profit Commission (1)		Contractual Termination Date
2015 QSR (2)		Prior to 2017	15.0	%	68.0	%	December 31, 2031
2019 QSR (2)		2019	30.0	%	62.0	%	December 31, 2030
2020 QSR		2020	12.5	%	62.0	%	December 31, 2031
2020 QSR and 2021 QSR		2020	17.5	%	62.0	%	December 31, 2032
2020 QSR and 2021 QSR		2021	17.5	%	61.9	%	December 31, 2032
2021 QSR and 2022 QSR		2021	12.5	%	57.5	%	December 31, 2032
2021 QSR and 2022 QSR		2022	15.0	%	57.5	%	December 31, 2033
2022 QSR and 2023 QSR		2022	15.0	%	62.0	%	December 31, 2033
2022 QSR and 2023 QSR		2023	15.0	%	62.0	%	December 31, 2034
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)2015 and 2019 QSR Transactions were terminated effective December 31, 2022.

(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

Covered Policy Years

Optional Termination Date (1)

Optional Quota Share % Reduction Date (2)

Optional Reduced Quota Share %

2020 QSR

2020

June 30, 2023

January 1, 2023

10.5% or 8%

2020 QSR and 2021 QSR

2020

June 30, 2023

January 1, 2023

14.5% or 12%

2020 QSR and 2021 QSR

2021

December 31, 2023

January 1, 2023

14.5% or 12%

2021 QSR and 2022 QSR

2021

December 31, 2023

January 1, 2023

10.5% or 8%

2021 QSR and 2022 QSR

2022

December 31, 2024

July 1, 2023

12.5% or 10%

2022 QSR and 2023 QSR

2022

December 31, 2024

July 1, 2023

12.5% or 10%

2022 QSR and 2023 QSR

2023

December 31, 2025

July 1, 2024

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.

Reinsurance Retention Policy

Table 9.4a and 9.4b provides a summary of our XOL Transactions as of December 31, 2022, December 31, 2021 and December 31, 2020.

Excess of Loss Reinsurance

9.4a

($ in thousands)

Issue Date

Policy In force Dates

Optional Call/ Termination Date (1)

Legal Maturity

Initial First Layer Retention

Initial Excess of Loss Reinsurance Coverage

Home Re 2022-1, Ltd.

April 26, 2022

May 29, 2021 - December 31, 2021

April 25, 2028

12.5 years

$325,589

$473,575

Home Re 2021-2, Ltd.

August 3, 2021

January 1, 2021 - May 28, 2021

July 25, 2028

12.5 years

190,159

398,429

Home Re 2021-1, Ltd.

February 2, 2021

August 1, 2020 - December 31, 2020

January 25, 2028

12.5 years

211,159

398,848

Home Re 2020-1, Ltd.

October 29, 2020

January 1, 2020 - July 31, 2020

October 25, 2027

10 years

275,283

412,917

Home Re 2019-1, Ltd.

May 25, 2019

January 1, 2018 - March 31, 2019

May 25, 2026

10 years

185,730

315,739

Home Re 2018-1, Ltd.

October 30, 2018

July 1, 2016 - December 31, 2017

October 25, 2025

10 years

168,691

318,636

2022 Traditional XOL

April 1, 2022

January 1, 2022 - December 30, 2022

January 1, 2030

10 years

82,523

142,642

(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. We can elect early termination of the Traditional XOL Transaction beginning on this date, and quarterly thereafter.



9.4b	Remaining First Layer Retention						Remaining Excess of Loss Reinsurance Coverage
($ in thousands)	December 31, 2022		December 31, 2021		December 31, 2020		December 31, 2022		December 31, 2021		December 31, 2020
Home Re 2022-1, Ltd.	$	325,576	$	—	$	—	$	473,575	$	—	$	—
Home Re 2021-2, Ltd.	190,097		190,159		—		352,084		398,429		—
Home Re 2021-1, Ltd.	211,102		211,142		—		277,053		387,830		—
Home Re 2020-1, Ltd.	274,871		275,204		275,283		113,247		234,312		412,917
Home Re 2019-1, Ltd.	183,540		183,917		184,514		208,146		208,146		208,146
Home Re 2018-1, Ltd.	164,849		165,365		166,005		140,993		218,343		218,343
2022 Traditional XOL	82,517		—		—		142,642		—		—

Schedule of Total Assets of Home Re Entities

Table 9.5 presents the total assets of the Home Re Entities as of December 31, 2022 , December 31, 2021 and December 31, 2020.


Home Re Entities total assets
Table	9.5

(In thousands)
Home Re Entity		Total VIE Assets
December 31, 2022
Home Re 2018-1 Ltd.		$	146,822
Home Re 2019-1 Ltd.		208,146
Home Re 2020-1 Ltd.		119,159
Home Re 2021-1 Ltd.		285,039
Home Re 2021-2 Ltd.		357,340
Home Re 2022-1 Ltd.		473,575

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 2018-1 Ltd.		$	218,343
Home Re 2019-1 Ltd.		208,146
Home Re 2020-1 Ltd.		412,917

- 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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