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Reinsurance (Tables) | 3 Months Ended
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Mar. 31, 2023
Reinsurance Disclosures [Abstract] |
Schedule of Effects of Reinsurance | The effect of reinsurance on net premiums written and earned is as follows:
|  |  |  | Three Months Ended March 31,
(In thousands) |  |  |  |  |  | 2023 |  | 2022
Net premiums written: |  |  |  |  |  |  |  |
Direct |  |  |  |  |  | $ | 239,491 |  |  | $ | 220,254 |
Ceded (1) |  |  |  |  |  | (33,591) |  |  | (20,523) |
Net premiums written |  |  |  |  |  | $ | 205,900 |  |  | $ | 199,731 |
Net premiums earned: |  |  |  |  |  |  |  |
Direct |  |  |  |  |  | $ | 244,849 |  |  | $ | 235,853 |
Ceded (1) |  |  |  |  |  | (33,591) |  |  | (20,523) |
Net premiums earned |  |  |  |  |  | $ | 211,258 |  |  | $ | 215,330 |
(1)Net of profit commission. The following tables summarizes Essent Guaranty's quota share reinsurance agreements as of March 31, 2023:
QSR Agreement |  | Coverage Period |  | Ceding Percentage |  | Ceding Commission |  | Profit Commission
QSR-2019 |  | September 1, 2019-December 31, 2020 |  | (1) |  | 20% |  | 63% | (2)
QSR-2022 |  | January 1, 2022-December 31, 2022 |  | 20% |  | 20% |  | 62% |
QSR-2023 |  | January 1, 2023-December 31, 2023 |  | 17.5% |  | 20% |  | 58% |
_______________________________________________________________________________ (1)Under QSR-2019, Essent Guaranty cedes 40% of premiums on singles policies and 20% on all other policies. (2)The original profit commission on QSR-2019 was up to 60%; however because Essent Guaranty did not exercise its option to terminate the QSR Agreement on December 31, 2021, the maximum profit commission that Essent Guaranty could earn increased to 63% in 2022 and thereafter.
Schedule of Coverages and Retentions | The following table summarizes Essent Guaranty's excess of loss reinsurance agreements as of March 31, 2023:
Vintage Year |  | Reinsurer |  | Effective Date |  | Optional Termination Date
2017 |  | Panel of Reinsurers |  | November 1, 2018 |  | October 1, 2023 | (1)
2018 |  | Radnor Re 2019-1 Ltd. |  | February 28, 2019 |  | February 25, 2026 |
2018 |  | Panel of Reinsurers |  | February 28, 2019 |  | February 25, 2026 |
2019 |  | Radnor Re 2020-1 Ltd. |  | January 30, 2020 |  | January 25, 2027 |
2019 |  | Panel of Reinsurers |  | January 30, 2020 |  | January 25, 2027 |
2020 & 2021 |  | Radnor Re 2021-1 Ltd. |  | June 23, 2021 |  | June 26, 2028 |
2021 |  | Radnor Re 2021-2 Ltd. |  | November 10, 2021 |  | November 25, 2027 |
2021 & 2022 |  | Panel of Reinsurers |  | June 1, 2022 |  | January 1, 2030 |
2021 & 2022 |  | Radnor Re 2022-1 Ltd. |  | September 21, 2022 |  | September 25, 2028 |
(1) If the reinsurance agreement is not terminated at the optional termination date, the reinsurance premium increases by 50%. The following table summarizes Essent Guaranty's excess of loss reinsurance coverages and retentions as of March 31, 2023:
(In thousands) |  |  |  |  |  | Remaining Reinsurance in Force |  |  |
Vintage Year |  | Remaining Insurance in Force |  | Remaining Risk in Force |  | ILN |  | Other Reinsurance |  |  | Total |  | Remaining First Layer Retention |
2017 |  | 5,511,131 |  |  | 1,450,432 |  |  | — |  |  | 70,895 |  | (7) |  | 70,895 |  |  | 421,003 |  | (10)
2018 |  | 6,349,474 |  |  | 1,644,287 |  |  | 325,537 |  |  | 76,144 |  | (8) |  | 401,681 |  |  | 248,221 |  |
2019 (2) |  | 7,859,217 |  |  | 2,029,598 |  |  | 395,889 |  |  | 43,991 |  | (9) |  | 439,880 |  |  | 214,485 |  |
2020 & 2021 (3) |  | 38,168,321 |  |  | 9,652,777 |  |  | 414,005 |  |  | — |  |  |  | 414,005 |  |  | 278,909 |  |
2021 (4) |  | 40,543,749 |  |  | 10,825,130 |  |  | 399,786 |  |  | — |  |  |  | 399,786 |  |  | 279,400 |  |
2021 & 2022 (5) |  | 74,276,338 |  |  | 19,998,840 |  |  | — |  |  | 141,992 |  |  |  | 141,992 |  |  | 507,114 |  |
2021 & 2022 (6) |  | 33,357,208 |  |  | 8,966,697 |  |  | 237,868 |  |  | — |  |  |  | 237,868 |  |  | 303,761 |  |
Total |  | $ | 206,065,438 |  |  | $ | 54,567,761 |  |  | $ | 1,773,085 |  |  | $ | 333,022 |  |  |  | $ | 2,106,107 |  |  | $ | 2,025,706 |  | (11)
(2) Reinsurance coverage on new insurance written from January 1, 2019 through August 31, 2019. (3) Reinsurance coverage on new insurance written from August 1, 2020 through March 31, 2021. (4) Reinsurance coverage on new insurance written from April 1, 2021 through September 30, 2021. (5) Reinsurance coverage on new insurance written from October 1, 2021 through December 31, 2022. (6) Reinsurance coverage on new insurance written from October 1, 2021 through July 31, 2022. (7) Coverage provided immediately above the coverage provided by Radnor Re 2018-1 Ltd. (8) Coverage provided pari-passu to the coverage provided by Radnor Re 2019-1 Ltd. (9) Coverage provided pari-passu to the coverage provided by Radnor Re 2020-1 Ltd. (10) The original and remaining first layer retention is associated with reinsurance provided by a panel of reinsurers. Amounts reported in prior periods reflected the retention associated with an ILN that is no longer outstanding as of March 31, 2023. (11) The total remaining first layer retention differs from the sum of the individual reinsurance transactions as a result of overlapping coverage between certain transactions.
Schedule of VIE Assets and Total Maximum Exposure to Loss | The following table presents total assets of each Radnor Re special purpose insurer as well as our maximum exposure to loss associated with each Radnor Re entity, representing the fair value of the embedded derivatives, using observable inputs in active markets (Level 2), included in other assets (other accrued liabilities) on our condensed consolidated balance sheet and the estimated net present value of investment earnings on the assets in the reinsurance trusts, each as of March 31, 2023:
|  |  |  | Maximum Exposure to Loss
(In thousands) |  | Total VIE Assets |  | On - Balance Sheet |  | Off - Balance Sheet |  | Total
Radnor Re 2019-1 Ltd. |  | 325,537 |  |  | (2,218) |  |  | 90 |  |  | (2,128) |
Radnor Re 2020-1 Ltd. |  | 395,889 |  |  | (1,286) |  |  | 158 |  |  | (1,128) |
Radnor Re 2021-1 Ltd. |  | 414,005 |  |  | (4,657) |  |  | 98 |  |  | (4,559) |
Radnor Re 2021-2 Ltd. |  | $ | 399,786 |  |  | $ | (3,849) |  |  | $ | 95 |  |  | $ | (3,754) |
Radnor Re 2022-1 Ltd. |  | $ | 237,868 |  |  | $ | 695 |  |  | $ | 78 |  |  | $ | 773 |
Total |  | $ | 1,773,085 |  |  | $ | (11,315) |  |  | $ | 519 |  |  | $ | (10,796) |

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- Definition Tabular disclosure of the effects of reinsurance, for example, but not limited to, disclosure of direct, assumed, and ceded insurance. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 605 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6486672&loc=d3e27261-158547 + Details
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- 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 50 -Paragraph 5A -URI https://asc.fasb.org/extlink&oid=123419778&loc=SL6759159-111685 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 50 -Paragraph 6 -URI https://asc.fasb.org/extlink&oid=123419778&loc=d3e5747-111685 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 50 -Paragraph 9 -URI https://asc.fasb.org/extlink&oid=123419778&loc=SL6228884-111685 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 50 -Paragraph 3 -URI https://asc.fasb.org/extlink&oid=123419778&loc=d3e5710-111685 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 50 -Paragraph 4 -URI https://asc.fasb.org/extlink&oid=123419778&loc=d3e5728-111685 + Details
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