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Reinsurance
 12 Months Ended
Dec. 31, 2023
Reinsurance Disclosures [Abstract]  
Reinsurance Reinsurance
Our Financial Statements reflect the effects of assumed and ceded reinsurance transactions. Assumed reinsurance refers to the acceptance of certain insurance risks that other insurance entities have underwritten. Ceded reinsurance involves transferring certain insurance risks (along with the related written and earned premiums) that we have underwritten to other insurance companies that agree to share these risks. The primary purpose of ceded reinsurance is to protect the Insurance Subsidiaries from potential losses in excess of the amount that we are willing to accept. Our major treaties covering property, property catastrophe, and casualty business are excess of loss contracts. We also entered into a catastrophe bond transaction to protect against certain named loss events, and use an intercompany quota share (proportional) pooling arrangement and other minor reinsurance treaties.

Effective December 8, 2023, we secured property catastrophe protection through a per occurrence excess of loss indemnity reinsurance agreement with High Point Re Ltd. ("High Point Re"), an independent Bermuda special purpose insurer. The reinsurance agreement meets the requirements to be accounted for as reinsurance in accordance with the guidance for reinsurance contracts. In connection with the reinsurance agreement, High Point Re issued Series 2023-1, Class A Principal-at-Risk Variable Rates Notes (“catastrophe bonds”) to unrelated investors totaling $325 million, consistent with the amount of coverage provided under the reinsurance agreement. Under the terms of the reinsurance agreement, we pay annual reinsurance premiums to High Point Re for the reinsurance coverage, which are included in our ceded premiums. The principal amount of the catastrophe bonds will be reduced by any amounts paid to us under the reinsurance agreement.

As a Standard Commercial Lines and E&S Lines writer, we are subject to the Terrorism Risk Insurance Program Reauthorization Act ("TRIPRA"), which was extended by Congress to December 31, 2027. TRIPRA requires private insurers and the U. S. government to share the risk of loss on future acts of terrorism certified by the U.S. Secretary of the Treasury. Under TRIPRA, each participating insurer is responsible for paying a deductible of specified losses before federal assistance is available. This deductible is based on a percentage of the prior year’s applicable Standard Commercial Lines and E&S Lines premiums. In 2024, our deductible, before tax, is approximately $543 million. For losses above the deductible, the federal government will pay 80% of losses to an industry limit of $100 billion, and the insurer retains 20%.

The Insurance Subsidiaries remain liable to policyholders to the extent that any reinsurer becomes unable to meet their contractual obligations. In addition to this direct counterparty credit risk, we have indirect counterparty credit risk as our reinsurers often enter into their own reinsurance programs, or retrocessions, as part of managing their exposure to large losses and improving their financial strength ratings. The credit quality of our reinsurers is also impacted by other factors, such as their reserve adequacy, investment portfolio, regulatory capital position, catastrophe aggregations, and risk management expertise. We evaluate and monitor the financial condition of our reinsurers under voluntary reinsurance arrangements to minimize our exposure to significant losses from reinsurer insolvencies.
The following tables provide (i) a disaggregation of our reinsurance recoverable balance by financial strength rating, and (ii) an aging analysis of our past due reinsurance recoverable balances as of December 31, 2023, and 2022:

December 31, 2023
($ in thousands)CurrentPast DueTotal Reinsurance Recoverables
Financial strength rating of rated reinsurers
A++$82,466 $21 $82,487 
A+371,132 2,887 374,019 
A111,883 1,380 113,263 
A-3,596 89 3,685 
Total rated reinsurers$569,077 $4,377 $573,454 
Non-rated reinsurers
Federal and state pools$80,506 $— $80,506 
Other than federal and state pools4,488 77 4,565 
Total non-rated reinsurers$84,994 $77 $85,071 
Total reinsurance recoverable, gross$654,071 $4,454 $658,525 
Less: ACL(1,700)
Total reinsurance recoverable, net$656,825 

December 31, 2022
($ in thousands)CurrentPast DueTotal Reinsurance Recoverables
Financial strength rating of rated reinsurers
A++$46,282 $1 $46,283 
A+425,395 3,191 428,586 
A106,102 1,315 107,417 
A-7,148 89 7,237 
Total rated reinsurers$584,927 $4,596 $589,523 
Non-rated reinsurers
Federal and state pools$180,794 $— $180,794 
Other than federal and state pools13,678 415 14,093 
Total non-rated reinsurers$194,472 $415 $194,887 
Total reinsurance recoverable, gross$779,399 $5,011 $784,410 
Less: ACL(1,600)
Total reinsurance recoverable, net$782,810 

The $100.3 million decrease in "Federal and state pools" as of December 31, 2023, compared to December 31, 2022, was primarily due to a decrease in the NFIP reserves recorded as of December 31, 2022, for flood losses in Florida and surrounding states as a result of Hurricane Ian, which are 100% ceded to the NFIP and continue to be paid as the associated claims are settled.

The following table provides a roll forward of the allowance for credit losses on our reinsurance recoverable balance for the indicated periods:

($ in thousands)December 31, 2023December 31, 2022
Balance at beginning of year$1,600 $1,600 
Current period change for expected credit losses100 — 
Write-offs charged against the allowance for credit losses— — 
Recoveries— — 
ACL, end of year$1,700 $1,600 

For a discussion of the methodology used to evaluate our estimate of expected credit losses on our reinsurance recoverable balance, refer to Note 2. "Summary of Significant Accounting Policies."
The following table represents our total reinsurance balances segregated by reinsurer to illustrate our concentration of risk throughout our reinsurance portfolio:
 December 31, 2023As of December 31, 2022
($ in thousands)Reinsurance Balances% of Reinsurance BalanceReinsurance Balances% of Reinsurance Balance
Total reinsurance recoverables, net of allowance for credit losses$656,825  $782,810  
Total prepaid reinsurance premiums203,320  172,371  
Total reinsurance balance860,145  955,181  
Federal and state pools1:
    
NFIP203,273 24 %276,541 29 %
New Jersey Unsatisfied Claim Judgment Fund46,715 5 45,496 5 
Other1,779 — 3,488 — 
Total federal and state pools251,767 29 325,525 34 
Remaining reinsurance balance$608,378 71 $629,656 66 
Hannover Ruckversicherungs AG (AM Best rated "A+")
$135,564 16 $124,706 13 
Munich Re Group (AM Best rated "A+")
132,831 15 127,106 13 
AXIS Reinsurance Company (AM Best rated "A")76,286 9 70,957 8 
Swiss Re Group (AM Best rated "A+")30,222 4 36,525 4 
Transatlantic Reinsurance Company (AM Best rated “A++”)
27,475 3 32,730 3 
All other reinsurers207,700 24 239,232 25 
   Total reinsurers610,078 71 %631,256 66 %
Less: ACL(1,700)(1,600)
Reinsurers, net of ACL608,378 629,656 
Less: collateral2
(126,418)(126,167)
   Reinsurers, net of collateral$481,960 $503,489 
 1Considered to have minimal risk of default.
2Includes letters of credit, trust funds, and funds held against reinsurance recoverables.

Under our reinsurance arrangements, which are prospective in nature, reinsurance premiums ceded are recorded as prepaid reinsurance and amortized over the remaining contract period in proportion to the reinsurance protection provided, or recorded periodically, as per the terms of the contract, in a direct relationship to the gross premium recording. Reinsurance recoveries are recognized as gross losses as incurred.
 
The following table lists direct, assumed, and ceded reinsurance amounts for premiums written, premiums earned, and loss and loss expense incurred for the indicated periods:

($ in thousands)202320222021
Premiums written:   
Direct$4,725,459 4,068,518 3,656,537 
Assumed23,999 32,320 22,664 
Ceded(614,926)(527,248)(489,488)
Net$4,134,532 3,573,590 3,189,713 
Premiums earned:   
Direct$4,386,556 3,880,522 3,472,715 
Assumed25,027 30,742 21,550 
Ceded(583,977)(537,884)(477,012)
Net$3,827,606 3,373,380 3,017,253 
Loss and loss expense incurred:   
Direct$2,738,301 2,537,638 2,096,512 
Assumed19,581 23,160 13,813 
Ceded(273,597)(449,020)(296,341)
Net$2,484,285 2,111,778 1,813,984 
Ceded premiums written, ceded premiums earned, and ceded loss and loss expense incurred related to our participation in the NFIP, to which we cede 100% of our NFIP flood premiums, losses, and loss expenses, were as follows:

Ceded to NFIP ($ in thousands)202320222021
Ceded premiums written$(305,609)(259,246)(284,311)
Ceded premiums earned(279,087)(274,100)(274,384)
Ceded loss and loss expense incurred(75,549)(200,467)(215,224)