Reinsurance

12 Months Ended

Dec. 31, 2023

The Company cedes certain premiums and losses to various reinsurers under excess-of-loss treaties. These reinsurance arrangements provide for greater diversification of business, allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. Ceded reinsurance contracts do not relieve the Company from its obligations to policyholders. The Company remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet the obligations assumed under the reinsurance agreements. To minimize its exposure to significant losses from reinsurer insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers on a continual basis. The effect of reinsurance on premiums written and earned in 2023, 2022 and 2021 was as follows:


	2023 Premiums						2022 Premiums						2021 Premiums
	Written			Earned			Written			Earned			Written			Earned
	(in thousands)
Gross	$	285,355		$	283,746		$	276,110		$	282,225		$	278,294		$	286,462
Ceded		(16,621	)		(16,621	)		(10,527	)		(10,527	)		(10,469	)		(10,469	)
Net premiums	$	268,734		$	267,125		$	265,583		$	271,698		$	267,825		$	275,993

The amounts recoverable from reinsurers consist of the following:


	December 31,
	2023			2022
	(in thousands)
Unpaid losses recoverable:
Case basis	$	80,211		$	81,273
Incurred but not reported		39,535			31,282
Paid losses recoverable		7,796			12,440
Experience-rated commissions recoverable		2,781			1,054
Allowance for credit losses		(360	)		(372	)
Total	$	129,963		$	125,677

Amounts recoverable from reinsurers consists of ceded case reserves, ceded incurred but not reported (IBNR) reserves, and paid losses recoverable. Ceded case and ceded IBNR reserves represent the portion of gross loss and loss adjustment expense liabilities that are recoverable under reinsurance agreements, but are not yet due from reinsurers. Paid losses recoverable are receivables currently due from reinsurers for ceded paid losses. The Company considers paid losses recoverable outstanding for more than 90 days to be past due. At December 31, 2023, there were immaterial paid losses recoverable past due.

The Company received reinsurance recoveries of $16.0 million in 2023, $1.4 million in 2022 and $5.8 million in 2021.

The Company generally secures large reinsurance recoverable balances with various forms of collateral, including funds withheld accounts, irrevocable letters of credit and secured trusts. At December 31, 2023, reinsurance recoverables from reinsurers that exceeded 1.5% of statutory surplus of the Company’s insurance subsidiaries are shown below.


Reinsurer		A.M. Best Rating	Amounts Recoverable as of December 31, 2023
			(in thousands)
Hannover Reinsurance Ireland Limited	(1)	A+	$	65,045
Arch Reinsurance Company	(1)	A+		19,694
Allianz Risk Transfer AG (Bermuda)		A+		9,084
Minnesota Workers' Compensation Reinsurance Association	(1)	NR		8,950
Munich Reinsurance America, Inc	(1)	A+		5,542
Odyssey America Reinsurance Corporation		A+		4,961
Other reinsurers				17,047
Total amounts recoverable from reinsurers				130,323
Allowance for credit losses				(360	)
Total amounts recoverable from reinsurers net of allowance for credit losses				129,963
Funds withheld and letters of credit related to the above recoverables				(81,520	)
Total unsecured amounts recoverable from reinsurers			$	48,443

(1)

Current participant in our 2024 reinsurance program.

The table below presents the change in the allowance for credit losses on amounts recoverable from reinsurers for the years ended December 31, 2023 and 2022.


	Year Ended
	December 31,
	2023			2022
	(in thousands)
Balance, beginning of period	$	372		$	440
Provision for credit loss expense (benefit)		(12	)		(68	)
Balance, end of period	$	360		$	372