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Reinsurance (Tables)

9 Months Ended

Sep. 30, 2023

The effect of reinsurance on net premiums written and earned is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022
Net premiums written:
Direct	$	270,868	$	239,773	$	759,526	$	692,687
Ceded (1)	(30,294)		(30,543)		(103,431)		(73,384)
Net premiums written	$	240,574	$	209,230	$	656,095	$	619,303

Net premiums earned:
Direct	$	277,099	$	238,477	$	774,723	$	708,659
Ceded (1)	(30,294)		(30,543)		(103,431)		(73,384)
Net premiums earned	$	246,805	$	207,934	$	671,292	$	635,275

(1)Net of profit commission.

The following tables summarizes Essent Guaranty's quota share reinsurance agreements as of September 30, 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%

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(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 coverages and retentions provided by insurance linked notes as of September 30, 2023:


(In thousands)
Deal Name	Vintage	Remaining Insurance in Force		Remaining Risk in Force		Remaining Reinsurance in Force		Remaining First Layer Retention		Optional Termination Date
Radnor Re 2019-1	Jan. 2018 - Dec. 2018	$	5,730,888	$	1,496,891	$	21,467	$	246,939	February 25, 2026
Radnor Re 2020-1	Jan. 2019 - Aug. 2019	7,185,440		1,864,143		50,596		213,798		January 25, 2027
Radnor Re 2021-1	Aug. 2020 - Mar. 2021	33,594,368		8,642,916		339,120		278,796		June 26, 2028
Radnor Re 2021-2	Apr. 2021 - Sep. 2021	37,420,329		10,079,502		361,449		279,231		November 25, 2027
Radnor Re 2022-1	Oct. 2021 - Jul. 2022	32,132,944		8,669,748		237,868		303,660		September 25, 2028
Radnor Re 2023-1	Aug. 2022 - Jun. 2023	31,014,596		8,478,658		281,462		281,462		July 25, 2028
Total		$	147,078,565	$	39,231,858	$	1,291,962	$	1,603,887

The following table summarizes Essent Guaranty's excess of loss reinsurance coverages and retentions provided by panels of reinsurers as of September 30, 2023:


(In thousands)
Deal Name	Vintage	Remaining Insurance in Force		Remaining Risk in Force		Remaining Reinsurance in Force		Remaining First Layer Retention			Optional Termination Date
XOL 2018-1	Jan. 2017 - Dec. 2017	$	4,920,622	$	1,297,126	$	57,250	$	421,003		October 1, 2023	(2)
XOL 2019-1	Jan. 2018 - Dec. 2018	5,730,888		1,496,891		76,144		246,939		(1)	February 25, 2026
XOL 2020-1	Jan. 2019 - Dec. 2019	7,185,440		1,864,143		38,579		213,798		(1)	January 25, 2027
XOL 2022-1	Oct. 2021 - Dec. 2022	71,671,369		19,351,146		141,992		506,301			January 1, 2030
Total		$	89,508,319	$	24,009,306	$	313,965	$	1,388,041

(1) First layer retentions shown are ILN retention levels as a result of overlapping coverage within the vintage.

(2) This reinsurance agreement was terminated on the optional termination date.

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 September 30, 2023:


			Maximum Exposure to Loss
(In thousands)	Total VIE Assets		On - Balance Sheet		Off - Balance Sheet		Total
Radnor Re 2019-1 Ltd.	$	21,467	$	69	$	3	$	72
Radnor Re 2020-1 Ltd.	50,596		(245)		12		(233)
Radnor Re 2021-1 Ltd.	339,120		(4,874)		60		(4,814)
Radnor Re 2021-2 Ltd.	361,449		(5,231)		92		(5,139)
Radnor Re 2022-1 Ltd.	237,868		574		72		646
Radnor Re 2023-1 Ltd.	281,462		220		87		307
Total	$	1,291,962	$	(9,487)	$	326	$	(9,161)

- 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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