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Reinsurance (Tables) | 12 Months Ended
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Dec. 31, 2021
Reinsurance Disclosures [Abstract] |
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 | NA |  | NA
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 |

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