The Company utilizes reinsurance in order to limit its exposure to losses and enable it to underwrite policies with sufficient limits to meet policyholder needs. The Company primarily utilizes excess of loss (XOL) and quota share reinsurance to protect against catastrophe and attritional losses. The Company also writes premiums under fronting agreements, whereby the majority of premium and risk is ceded to reinsurers and the Company receives a fronting fee.

In an XOL treaty, the Company retains losses for any occurrence up to a specified amount (its “retention”) and reinsurers assume any losses above that amount. As of December 31, 2025, the Company’s catastrophe event retention is $20.0 million for earthquake events and $11.0 million for hurricane events and all other perils. Laulima maintains Hawaii hurricane reinsurance coverage through a standalone XOL treaty, which provides per-occurrence coverage up to $735.0 million with a retention of $1.5 million. Our reinsurance coverage exhausts at $3.1 billion for earthquake events and $100.0 million for continental U.S. hurricane events.

In a quota share agreement, the Company transfers, or cedes, a portion of its premiums to reinsurers and, in return, the reinsurer must share an agreed upon portion of losses and pay a ceding commission to the Company. In a fronting agreement, the Company writes premium and then cedes the majority of the premium and risk in exchange for a fronting fee, which is the primary source of profit in the arrangement.

The following table shows ceded written premiums under fronting and quota share arrangements by line of business for the years ended December 31, 2025, 2024, and 2023:


	Year Ended December 31,
	2025		2024		2023
	($ in thousands)
Casualty	$	235,119	$	86,120	$	36,677
Fronting		203,813		312,173		339,376
Crop		176,200		109,975		12,110
Inland Marine and Other Property		145,223		103,863		108,409
Earthquake		43,891		42,466		29,708
Total	$	804,246	$	654,597	$	526,280

The Company recognizes ceded unearned premiums related to quota share agreements as an asset on its consolidated balance sheets. As of December 31, 2025 and 2024, ceded unearned premiums totaled $355.9 million and $276.2 million, respectively. The increase was driven primarily by premium growth in lines subject to fronting agreements or quota shares.

In addition to reinsurance purchased from traditional reinsurers, the Company utilizes collateralized protection from the insurance-linked securities market through catastrophe bonds issued via Torrey Pines Re Ltd., a Bermuda-domiciled special purpose insurer. The Company closed a $525 million catastrophe bond in the second quarter of 2025, effective June 1, 2025 through June 1, 2028; a $420 million catastrophe bond in the second quarter of 2024, effective June 1, 2024 through June 1, 2027; a $200 million catastrophe bond in the second quarter of 2023, effective June 1, 2023 through June 1, 2026; and a $275 million 144A catastrophe bond in the second quarter of 2022, effective June 1, 2022 through June 1, 2025. These catastrophe bonds provide indemnity-based reinsurance coverage for earthquake events.

Written premiums ceded under these catastrophe bond agreements were $64.9 million, $55.3 million and $42.7 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The effect of reinsurance on premiums written and earned and on losses and LAE incurred for the years ended December 31, 2025, 2024 and 2023, is as follows:


	2025						2024						2023
	Written			Earned			Written			Earned			Written			Earned
	($ in thousands)
Premiums Written and Earned:
Direct	$	1,792,609		$	1,600,618		$	1,403,383		$	1,301,901		$	1,083,804		$	959,614
Assumed		235,643			186,566			138,578			95,468			57,754			56,107
Ceded		(1,064,230	)		(984,549	)		(897,111	)		(886,682	)		(731,531	)		(669,808	)
Net	$	964,022		$	802,635		$	644,850		$	510,687		$	410,027		$	345,913


	2025
	Losses			LAE			Total
	($ in thousands)
Losses and LAE Incurred:
Direct	$	381,708		$	140,505		$	522,213
Assumed		74,188			4,837			79,025
Ceded		(291,428	)		(81,216	)		(372,644	)
Net	$	164,468		$	64,126		$	228,594


	2024
	Losses			LAE			Total
	($ in thousands)
Losses and LAE Incurred:
Direct	$	367,276		$	75,301		$	442,577
Assumed		46,866			4,930			51,796
Ceded		(305,336	)		(54,278	)		(359,614	)
Net	$	108,806		$	25,953		$	134,759


	2023
	Losses			LAE			Total
	($ in thousands)
Losses and LAE Incurred:
Direct	$	228,441		$	60,834		$	289,275
Assumed		19,799			1,789			21,588
Ceded		(186,706	)		(51,565	)		(238,271	)
Net	$	61,534		$	11,058		$	72,592

The ceding of insurance does not legally discharge the Company from its primary liability for the full amount of the policy coverage, and therefore the Company will be required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance agreement. To minimize exposure to significant losses from reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk.

To reduce credit exposure to reinsurance recoverable balances, the Company obtains acceptable forms of collateral from certain reinsurers that are not authorized as reinsurers under U.S. state insurance regulations. In addition, under the terms of its reinsurance contracts, the Company may retain funds due from reinsurers as security for those recoverable balances. As of December 31, 2025 and 2024, the Company had retained $44.9 million and $27.9 million in funds from reinsurers, respectively. The Company is able to use the funds in the ordinary course of its business. The funds are held in cash and cash equivalents and investments with an offsetting liability on the accompanying consolidated balance sheets.

For the year ended December 31, 2025, reinsurance premiums ceded to the Company’s three largest reinsurers totaled $66.4 million, $64.9 million and $63.1 million, representing 18.6% of the total balance. For the year ended December 31, 2024, reinsurance premiums ceded to the Company’s three largest reinsurers totaled $125.9 million, $67.9 million and $61.7 million, representing 28.5% of the total balance. For the year ended December 31, 2023, reinsurance premiums ceded to the Company’s three largest reinsurers totaled $152.4 million, $65.9 million and $47.4 million, representing 36.3% of the total balance.

At December 31, 2025 reinsurance recoverable on unpaid losses by the Company’s three largest reinsurers were $96.5 million, $51.2 million and $32.8 million representing 21.9% of the total balance. At December 31, 2024 reinsurance recoverable on unpaid losses by the Company’s three largest reinsurers were $137.0 million, $26.9 million and $24.4 million representing 47.7% of the total balance. The Company seeks reinsurers that have an A.M. best rating of A− (excellent) or better or requires them to post collateral.