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Reinsurance (Tables)

12 Months Ended

Dec. 31, 2023

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)		2023		2022		2021
Premiums earned:
Direct		$	1,142,412	$	1,154,728	$	1,167,592
Assumed		12,960		8,778		9,858
Ceded - quota share reinsurance (1)		(123,955)		(86,435)		(118,537)
Ceded - excess-of-loss reinsurance		(78,866)		(69,938)		(44,494)
Total ceded		(202,821)		(156,373)		(163,031)
Net premiums earned		$	952,551	$	1,007,133	$	1,014,419

Losses incurred:
Direct		$	(5,200)	$	(274,072)	$	74,496
Assumed		(33)		(330)		(57)
Ceded - quota share reinsurance		(15,623)		19,837		(9,862)
Losses incurred, net		$	(20,856)	$	(254,565)	$	64,577

Other Reinsurance Impacts:
Profit commission on quota share reinsurance (1)		$	133,145	$	176,084	$	153,759
Ceding commission on quota share reinsurance		50,397		52,071		53,460

(1)Ceded premiums earned are shown net of profit commission.

Schedule of Quota Share Reinsurance Agreements

Table 9.2 below provides additional detail regarding our QSR transactions in effect during 2023.


Reinsurance
Table	9.2

Quota Share Contract		Covered Policy Years	Quota Share %		Annual Loss Ratio to Exhaust Profit Commission (1)		Contractual Termination Date
2020 QSR		2020	12.5	%	62.0	%	(2)
2020 QSR and 2021 QSR		2020	17.5	%	62.0	%	(2)
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
2023 QSR		2023	10.0	%	58.5	%	December 31, 2034
Credit Union QSR		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)2020 QSR Transactions covering 2020 policy year were terminated effective December 31, 2023.

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. Under the optional reduction to the quota share percentage, we may reduce our quota share percentage from the original percentage 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 and 2021 QSR

2021

June 30, 2024

January 1, 2024

14.5% or 12%

2021 QSR and 2022 QSR

2021

June 30, 2024

January 1, 2024

10.5% or 8%

2021 QSR and 2022 QSR

2022

December 31, 2024

January 1, 2024

12.5% or 10%

2022 QSR and 2023 QSR

2022

December 31, 2024

January 1, 2024

12.5% or 10%

2022 QSR and 2023 QSR

2023

December 31, 2025

July 1, 2024

12.5% or 10%

2023 QSR

2023

December 31, 2025

July 1, 2024

8% or 7%

(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 , 9.4b, and 9.4c provide a summary of our XOL Transactions as of December 31, 2023, December 31, 2022 and December 31, 2021.

Excess of Loss Reinsurance

9.4a

($ in thousands)

Issue Date

Policy In force Dates

Optional Call/ Termination Date (1)

Legal Maturity

2023 Traditional XOL

April 1, 2023

January 1, 2023 - December 29, 2023

January 1, 2031

10 years

2022 Traditional XOL

April 1, 2022

January 1, 2022 - December 30, 2022

January 1, 2030

10 years

Home Re 2023-1, Ltd.

October 23, 2023

June 1, 2022 - August 31, 2023

October 25, 2028

10 years

Home Re 2022-1, Ltd.

April 26, 2022

May 29, 2021 - December 31, 2021

April 25, 2028

12.5 years

Home Re 2021-2, Ltd.

August 3, 2021

January 1, 2021 - May 28, 2021

July 25, 2028

12.5 years

Home Re 2021-1, Ltd.

February 2, 2021

August 1, 2020 - December 31, 2020

January 25, 2028

12.5 years

Home Re 2020-1, Ltd.

October 29, 2020

January 1, 2020 - July 31, 2020

October 25, 2027

10 years

Home Re 2019-1, Ltd.

May 25, 2019

January 1, 2018 - March 31, 2019

May 25, 2026

10 years

Home Re 2018-1, Ltd.

October 30, 2018

July 1, 2016 - December 31, 2017

October 25, 2025

10 years

(1)We have the right to terminate the Home Re Transactions under certain circumstances, including an optional call feature that provides us the right to terminate if the outstanding principal balance of the related insurance-linked notes falls below 10% of the initial principal balance of the related insurance-linked notes, and on any payment date on or after the respective Optional Call Date. We can elect early termination of the Traditional XOL Transactions beginning on this date, and quarterly thereafter.


Excess of Loss Reinsurance
9.4b		Remaining First Layer Retention
($ in thousands)	Initial First Layer Retention	December 31, 2023		December 31, 2022	December 31, 2021
2023 Traditional XOL	$70,578	$	70,578	$	$
2022 Traditional XOL	82,523	82,346		82,517
Home Re 2023-1, Ltd.	272,961	272,961
Home Re 2022-1, Ltd.	325,589	325,001		325,576
Home Re 2021-2, Ltd.	190,159	189,403		190,097	190,159
Home Re 2021-1, Ltd.	211,159	210,831		211,102	211,142
Home Re 2020-1, Ltd.	275,283	261,280		275,051	275,204
Home Re 2019-1, Ltd.	185,730	182,722		183,540	183,917
Home Re 2018-1, Ltd.	168,691	164,335		164,849	165,365


9.4c							Remaining Excess of Loss Reinsurance Coverage (1)
($ in thousands)	Initial Excess of Loss Reinsurance Coverage (1)		Initial Funding Percentage (2)		Funding Percentage at 12/31/2023 (2)		December 31, 2023		December 31, 2022	December 31, 2021
2023 Traditional XOL	$	96,942	N/A		N/A		$	96,942	$	$
2022 Traditional XOL	142,642		N/A		N/A		142,642		142,642
Home Re 2023-1, Ltd.	330,277		97	%	97	%	330,277
Home Re 2022-1, Ltd.	473,575		100	%	100	%	420,731		473,575
Home Re 2021-2, Ltd. (3)	398,429		100	%	68	%	173,960		352,084	398,429
Home Re 2021-1, Ltd. (3)	398,848		100	%	65	%	117,982		277,053	387,830
Home Re 2020-1, Ltd.	412,917		100	%	100	%	41,846		113,247	234,312
Home Re 2019-1, Ltd. (3)	315,739		100	%	10	%	21,039		208,146	208,146
Home Re 2018-1, Ltd.	318,636		100	%	100	%	69,762		140,993	218,343

(1)The initial and remaining excess of loss reinsurance coverage is reduced by the applicable funding percentage.

(2)The funding percentage represents the aggregate outstanding note balances divided by the aggregate ending coverage amounts.

(3)The funding percentage on the 2021-1, 2021-2, and 2019-1 were reduced from 100% after the tender offers were conducted in the fourth quarter of 2023.

Schedule of Total Assets of Home Re Entities

Table 9.5 presents the total assets of the Home Re Entities as of December 31, 2023 , December 31, 2022 and December 31, 2021.


Home Re Entities total assets
Table	9.5

(In thousands)
Home Re Entity		Total VIE Assets
		December 31, 2023		December 31, 2022		December 31, 2021
Home Re 2023-1 Ltd.		$	330,277	$	—	$	—
Home Re 2022-2 Ltd.		427,279		473,575		—
Home Re 2021-2 Ltd.		174,431		357,340		398,429
Home Re 2021-1 Ltd.		118,043		285,039		398,848
Home Re 2020-1 Ltd.		41,846		119,159		251,387
Home Re 2019-1 Ltd.		21,039		208,146		208,146
Home Re 2018-1 Ltd.		73,872		146,822		218,343

- 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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