Reinsurance

12 Months Ended

Dec. 31, 2024

10.

Reinsurance

The Company cedes risk to unrelated reinsurers on a pro rata (“quota share”) and excess of loss basis in the ordinary course of business to limit its net loss exposure on direct business insurance contracts. Reinsurance ceded arrangements do not discharge the Company of primary liability. Moreover, reinsurers may fail to pay the Company due to a lack of reinsurer liquidity, perceived improper underwriting, and losses for risks that are excluded from reinsurance coverage and other similar factors, all of which could adversely affect the Company’s financial results.

The Company had the following reinsurance balances as of December 31, 2024 and 2023:


(Dollars in thousands)	December 31, 2024			December 31, 2023
Reinsurance receivables, net	$	66,855		$	80,439
Collateral securing reinsurance receivables		(6,461	)		(8,752	)
Reinsurance receivables, net of collateral	$	60,394		$	71,687
Allowance for expected credit losses	$	8,992		$	8,992
Prepaid reinsurance premiums		3,320			4,958

As of December 31, 2024, the Company had the following aggregated unsecured reinsurance receivables from one reinsurer that exceeded 3% of shareholders’ equity. Unsecured reinsurance receivables include amounts receivable for paid and unpaid losses and loss adjustment expenses, less amounts secured by collateral.


(Dollars in thousands)	Reinsurance Receivables		AM Best Ratings (As of December 31, 2024)
Munich Re America Corporation	$	35,826	A+

The effect of reinsurance on premiums written and earned is as follows:


(Dollars in thousands)	Written			Earned
For the year ended December 31, 2024:
Direct	$	369,818		$	354,747
Assumed		19,940			34,451
Ceded		(10,568	)		(12,206	)
Net premiums	$	379,190		$	376,992
For the year ended December 31, 2023:
Direct	$	350,748		$	376,288
Assumed		65,649			126,611
Ceded		(17,078	)		(29,542	)
Net premiums	$	399,319		$	473,357
For the year ended December 31, 2022:
Direct	$	573,412		$	589,131
Assumed		154,191			135,896
Ceded		(136,272	)		(122,556	)
Net premiums	$	591,331		$	602,471

Ceded losses and loss adjustment expenses incurred were ($6.3) million, $27.6 million, and $48.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.