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Reinsurance | 3 Months Ended
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Mar. 31, 2025
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract] |
Reinsurance | Reinsurance We reinsure a portion of our policy risks to third parties in order to reduce our ultimate losses, diversify our exposures and comply with regulatory requirements. We also assume certain policy risks written by other companies. Reinsurance does not relieve us from our obligations to policyholders. In the event that the reinsurers are unable to meet their obligations, we remain liable for the reinsured claims. We monitor both the financial condition of individual reinsurers and risk concentrations arising from similar geographic regions, activities and economic characteristics of reinsurers to lessen the risk of default by such reinsurers. The following table sets forth the effects of reinsurance on premiums written and earned for the periods indicated:
| Three months ended March 31, |  |
(Amounts in thousands) | 2025 |  | 2024 |  |  |  |
Net premiums written: |  |  |  |  |  |  |
Direct | $ | 263,081 |  |  | $ | 255,160 |  |  |  |  |
Assumed | 7,305 |  |  | 1,571 |  |  |  |  |
Ceded | (32,761) |  |  | (26,428) |  |  |  |  |
Net premiums written | $ | 237,625 |  |  | $ | 230,303 |  |  |  |  |
Net premiums earned: |  |  |  |  |  |  |
Direct | $ | 270,242 |  |  | $ | 265,604 |  |  |  |  |
Assumed | 7,305 |  |  | 1,571 |  |  |  |  |
Ceded | (32,761) |  |  | (26,428) |  |  |  |  |
Net premiums earned | $ | 244,786 |  |  | $ | 240,747 |  |  |  |  |
The difference between written premiums of $237.6 million and earned premiums of $244.8 million represents the decrease in unearned premiums for the three months ended March 31, 2025. The decrease in unearned premiums was primarily the result of premiums earned over time coupled with low originations of our single premium mortgage insurance product. Excess-of-loss reinsurance We engage in excess-of-loss (“XOL”) insurance transactions either through a panel of traditional reinsurance providers or through collateralized reinsurance with unaffiliated special purpose insurers (“Triangle Re Entities”). During the respective coverage periods of these agreements, EMICO retains the first layer of aggregate loss exposure on covered policies while the reinsurer provides the second layer of coverage, up to the defined reinsurance coverage amount. EMICO retains losses in excess of the respective reinsurance coverage amount. The Triangle Re Entities fully collateralize their coverage by issuing insurance-linked notes (“ILNs”) to eligible capital market investors in unregistered private offerings. Traditional reinsurance providers collateralize a portion of their coverage by holding funds in trust. We believe that the risk transfer requirements for reinsurance accounting were met as these XOL insurance transactions assume significant insurance risk and a reasonable possibility of significant loss. EMICO has rights to terminate the ILNs or traditional XOL reinsurance agreements upon the occurrence of certain events. The following table presents the issue date, policy dates, initial and current first layer retained aggregate loss and initial and current reinsurance coverage amount under each reinsurance transaction. Current amounts are presented as of March 31, 2025:
Mortgage insurance-linked notes
(Amounts in millions) |  | Issue date |  | Policy dates |  | Initial first layer retained loss |  | Current first layer retained loss |  | Initial reinsurance coverage |  | Current reinsurance coverage
Triangle Re 2021-2 Ltd. |  | 4/16/2021 |  | 9/01/2020 - 12/31/2020 |  | $189 |  | $187 |  | $303 |  | $107
Triangle Re 2021-3 Ltd. |  | 9/02/2021 |  | 1/01/2021 - 6/30/2021 |  | $304 |  | $300 |  | $372 |  | $161
Triangle Re 2023-1 Ltd. |  | 11/15/2023 |  | 7/01/2022 - 6/30/2023 |  | $244 |  | $243 |  | $248 |  | $220
Total |  |  |  |  |  |  |  |  |  |  |  | $488
Traditional excess-of-loss reinsurance
(Amounts in millions) |  | Issue date |  | Policy dates |  | Initial first layer retained loss |  | Current first layer retained loss |  | Initial reinsurance coverage |  | Current reinsurance coverage
2021 XOL |  | 2/04/2021 |  | 1/01/2021 - 12/31/2021 |  | $671 |  | $663 |  | $206 |  | $82
2022-1 XOL |  | 1/27/2022 |  | 1/01/2022 - 12/31/2022 |  | $462 |  | $451 |  | $196 |  | $160
2022-2 XOL |  | 1/27/2022 |  | 1/01/2022 - 12/31/2022 |  | $385 |  | $374 |  | $25 |  | $25
2022-3 XOL |  | 3/24/2022 |  | 7/01/2021 - 12/31/2021 |  | $317 |  | $312 |  | $289 |  | $154
2022-4 XOL |  | 3/24/2022 |  | 7/01/2021 - 12/31/2021 |  | $264 |  | $260 |  | $36 |  | $36
2022-5 XOL |  | 9/15/2022 |  | 1/01/2022 - 6/30/2022 |  | $256 |  | $249 |  | $201 |  | $157
2023-1 XOL |  | 3/08/2023 |  | 1/01/2023 - 12/31/2023 |  | $360 |  | $358 |  | $180 |  | $180
2024-1 XOL |  | 1/30/2024 |  | 1/01/2024 - 12/31/2024 |  | $362 |  | $362 |  | $270 |  | $270
2024-2 XOL |  | 6/25/2024 |  | 7/01/2023 - 12/31/2023 |  | $134 |  | $134 |  | $90 |  | $90
2025-1 XOL |  | 1/27/2025 |  | 1/01/2025 - 12/31/2025 |  | $68 |  | $68 |  | $32 |  | $32
2025-2 XOL |  | 1/27/2025 |  | 1/01/2025 - 12/31/2025 |  | $57 |  | $57 |  | $5 |  | $5
Total |  |  |  |  |  |  |  |  |  |  |  | $1,191
On January 27, 2025, we entered into an excess-of-loss reinsurance transaction that covers a portion of expected new insurance written from January 1, 2026, through December 31, 2026, and provides reinsurance coverage of approximately $260 million. Quota Share Reinsurance EMICO engages in quota share reinsurance agreements with a panel of third-party reinsurers. Under the agreements, we cede a percentage of premiums earned, claims and claims expenses on eligible policies. The agreements also include a specific ceding commission and profit commission determined based on ceded claims. EMICO has rights to terminate the reinsurance agreements upon the occurrence of certain events. Reinsurance recoverables are recorded in Other assets on the consolidated balance sheets.
Agreement |  | Issue date |  | Policy dates |  | Ceding percentage |  | Ceding commission |  | Profit commission
QS 2023-1 |  | 6/30/2023 |  | 1/01/2023 - 12/31/2023 |  | 16.125% |  | 20% |  | up to 55%
QS 2024-1 |  | 1/03/2024 |  | 1/01/2024 - 12/31/2024 |  | 21.225% |  | 20% |  | up to 55%
QS 2025-1 |  | 11/26/2024 |  | 1/01/2025 - 12/31/2025 |  | 27.150% |  | 20% |  | up to 62%
QS 2026-1 |  | 11/26/2024 |  | 1/01/2026 - 12/31/2026 |  | 27.000% |  | 20% |  | up to 61%

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