Reinsurance

12 Months Ended

Dec. 31, 2022

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, 2022

Standard

AM Best

and Poor’s
Rating

Moody’s
Investors

Due from as of
December 31,

Reinsurer

Company

Services, Inc.

Service, Inc.

2022

2021

Allianz Risk Transfer

A+

AA-

Aa3

285,323

—

Florida Hurricane Catastrophe Fund “FHCF” (1)

n/a

134,411

136,298

Various Lloyd’s of London Syndicates (2)

A+

n/a

101,482

—

Chubb Tempest Reinsurance Ltd.

A++

Aa3

51,319

—

Markel Bermuda Ltd.

50,981

—

DaVinci Reinsurance Ltd.

A+

48,115

—

Renaissance Reinsurance Ltd.

A+

38,768

20,051

D E Shaw Re (Bermuda) Ltd. (3)

n/a

16,680

—

Munich Reinsurance America Inc.

A+

AA-

Aa3

14,616

—

Everest Reinsurance Co

A+

11,536

—

Upsilon RFO Re Ltd. (3)

n/a

11,201

—

Lumen Re Ltd. (4)

n/a

8,913

—

Allianz Risk Transfer (Bermuda) Ltd.

—

44,618

Total (5)

773,345

200,967

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

(2)No rating available for Moody’s Investors Service, Inc.

(3)No rating is available, because the reinsurer is fully collateralized with a trust agreement.

(4)No rating available for Standard and Poor’s Rating Service and Moody’s Investors Service, Inc.

(5)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, 2022
	Premiums Written		Premiums Earned		Losses and Loss Adjustment Expenses
Direct	$	1,845,786	$	1,759,701	$	1,972,541
Ceded	(672,508)		(631,075)		(1,034,142)
Net	$	1,173,278	$	1,128,626	$	938,399


	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

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,
	2022		2021
Prepaid reinsurance premiums	$	282,427	$	240,993
Reinsurance recoverable on paid losses and LAE	$	10,170	$	69,729
Reinsurance recoverable on unpaid losses and LAE	798,680		115,860
Reinsurance recoverable	$	808,850	$	185,589