Reinsurance

12 Months Ended

Dec. 31, 2021

REINSURANCE

The Company seeks to reduce its risk of loss by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers, generally as of the beginning of the hurricane season on June 1st of each year. The Company’s current reinsurance programs consist principally of catastrophe excess of loss reinsurance, subject to the terms and conditions of the applicable agreements. Notwithstanding the purchase of such reinsurance, the Company is responsible for certain retained loss amounts before reinsurance attaches and for insured losses related to catastrophes and other events that exceed coverage provided by the reinsurance programs. The Company remains responsible for the settlement of insured losses irrespective of whether any of the reinsurers fail to make payments otherwise due.

To reduce credit risk for amounts due from reinsurers, the Insurance Entities seek to do business with financially sound reinsurance companies and regularly evaluate the financial strength of all reinsurers used.

The following table presents ratings from rating agencies and the unsecured amounts due from the reinsurers whose aggregate balance exceeded 3% of the Company’s stockholders’ equity as of the dates presented (in thousands):


	Ratings as of December 31, 2021
		Standard
	AM Best	and Poor’s Rating	Moody’s Investors	Due from as of December 31,
Reinsurer	Company	Services, Inc.	Service, Inc.	2021		2020
Florida Hurricane Catastrophe Fund “FHCF” (1)	n/a	n/a	n/a	$	136,298	$	121,298
Allianz Risk Transfer (Bermuda) Ltd.	A+	AA	Aa3	44,618		96,652
Allianz Risk Transfer	—	—	—	—		21,087
Renaissance Reinsurance Ltd.	A+	A+	A1	20,051		18,285

Total (2)				$	200,967	$	257,322

(1)No rating is available, because the fund is not rated.

(2)Amounts represent prepaid reinsurance premiums and net recoverables for paid and unpaid losses, including incurred but not reported reserves, and loss adjustment expenses.

The Company’s reinsurance arrangements had the following effect on certain items in the Consolidated Statements of Income for the periods presented (in thousands):


	For the Year Ended December 31, 2021
	Premiums Written		Premiums Earned		Losses and Loss Adjustment Expenses
Direct	$	1,671,252	$	1,596,618	$	1,189,444
Ceded	(586,425)		(561,155)		(410,239)
Net	$	1,084,827	$	1,035,463	$	779,205


	For the Year Ended December 31, 2020
	Premiums Written		Premiums Earned		Losses and Loss Adjustment Expenses
Direct	$	1,517,479	$	1,395,623	$	1,080,058
Ceded	(512,576)		(472,060)		(321,248)
Net	$	1,004,903	$	923,563	$	758,810


	For the Year Ended December 31, 2019
	Premiums Written		Premiums Earned		Losses and Loss Adjustment Expenses
Direct	$	1,292,721	$	1,233,121	$	1,084,604
Ceded	(423,076)		(390,619)		(481,198)
Net	$	869,645	$	842,502	$	603,406

The following prepaid reinsurance premiums and reinsurance recoverable are reflected in the Consolidated Balance Sheets as of the dates presented (in thousands):


	As of December 31,
	2021		2020
Prepaid reinsurance premiums	$	240,993	$	215,723
Reinsurance recoverable on paid losses and LAE	$	69,729	$	40,895
Reinsurance recoverable on unpaid losses and LAE	115,860		119,522
Reinsurance recoverable	$	185,589	$	160,417