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Reinsurance

12 Months Ended

Dec. 31, 2020

Note 7 - Reinsurance

Through June 30, 2019, the Company’s quota share reinsurance treaties were on a July 1 through June 30 fiscal year basis. The Company’s quota share reinsurance treaties in effect during the year ended December 31, 2019 for its personal lines business were covered through June 30, 2019 under a treaty covering a two-year period from July 1, 2017 through June 30, 2019 (“2017/2019 Treaty”). The treaty in effect during the year ended December 31, 2019 was covered through June 30, 2019 under the July 1, 2018 through June 30, 2019 treaty year (“2018/2019 Treaty Year”). Effective July 1, 2019, the 2017/2019 Treaty and the commercial umbrella treaty expired on a run-off basis; these treaties were not renewed. Effective December 15, 2019, the Company entered into a quota share reinsurance treaty for its personal lines business, which primarily consists of homeowners’ policies, covering the period from December 15, 2019 through December 30, 2020 (“2019/2020 Treaty”). Effective December 31, 2020 the 2019/2020 Treaty expired on a cut off basis; this treaty was not renewed. The Company entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2020. Material terms for reinsurance treaties in effect for the treaty years shown below are as follows:

	Treaty Year
	December 15, 2019			July 1, 2019	July 1, 2018
	to			to	to
Line of Business	December 30, 2020			December 14, 2019	June 30, 2019

Personal Lines:
Homeowners, dwelling fire and
and canine legal liability
Quota share treaty:
Percent ceded		25	%	None		10	%

	Treaty Year
	July 1, 2020			July 1, 2019			July 1, 2018
	to			to			to
Line of Business	June 30, 2021			June 30, 2020			June 30, 2019

Personal Lines:

Personal Umbrella
Quota share treaty:
Percent ceded - first $1,000,000 of coverage		90	%		90	%		90	%
Percent ceded - excess of $1,000,000 of coverage		95	%		100	%		100	%
Risk retained	$	300,000		$	100,000		$	100,000
Total reinsurance coverage per occurrence	$	4,700,000		$	4,900,000		$	4,900,000
Losses per occurrence subject to quota share reinsurance coverage	$	5,000,000		$	5,000,000		$	5,000,000
Expiration date	June 30, 2021			June 30, 2020			June 30, 2019

Commercial Lines:
General liability commercial policies
Quota share treaty	None			None			None
Risk retained	$	750,000		$	750,000		$	750,000
Excess of loss coverage above risk retained	$	3,750,000		$	3,750,000		$	3,750,000
	in excess of			in excess of			in excess of
	$	750,000		$	750,000		$	750,000
Total reinsurance coverage per occurrence	$	3,750,000		$	3,750,000		$	3,750,000
Losses per occurrence subject to reinsurance coverage	$	4,500,000		$	4,500,000		$	4,500,000

Commercial Umbrella
Quota share treaty:	None			None
Percent ceded - first $1,000,000 of coverage								90	%
Percent ceded - excess of $1,000,000 of coverage								100	%
Risk retained							$	100,000
Total reinsurance coverage per occurrence							$	4,900,000
Losses per occurrence subject to quota share reinsurance coverage							$	5,000,000
Expiration date							June 30, 2019

Approximate reinsurance recoverables on unpaid and paid losses by reinsurer at December 31, 2020 and 2019 are as follows:

	Unpaid		Paid
($ in thousands)	Losses		Losses		Total		Security
December 31, 2020
Cavello Bay Reinsurance Limited (1)	$	2,850	$	3,405	$	6,255	$	10,086	(2)
Swiss Reinsurance America Corporation		7,778		5,840		13,618		-
Hanover Rueck SE		4,909		2,897		7,806		-
Allied World Assurance Company		2,019		1,761		3,780		-
Others		2,598		884		3,482		732	(3)
Total	$	20,154	$	14,787	$	34,941	$	10,818

December 31, 2019
Cavello Bay Reinsurance Limited (1)	$	4,036	$	2,427	$	6,463	$	5,995	(2)
Swiss Reinsurance America Corporation		4,418		1,336		5,754		-
Hanover Rueck SE		3,156		522		3,678		-
SCOR Reinsurance Company		394		458		852		-
Allied World Assurance Company		760		170		930		-
Others		2,964		471		3,435		-
Total	$	15,728	$	5,385	$	21,112	$	5,995

The Company’s estimated ultimate treaty year loss ratios (the “Loss Ratio(s)”) for treaties in effect during the year ended December 31, 2020 are attributable to contracts under the 2019/2020 Treaty. The Loss Ratios for treaties in effect for the year ended December 31, 2019 are attributable to contracts under the 2019/2020 Treaty and 2017/2019 Treaty for the 2018/2019 Treaty Year, which expired on June 30, 2019 and was not renewed.

Under the 2019/2020 Treaty and the 2017/2019 Treaty for the 2018/2019 Treaty Year, the Company received an upfront fixed provisional ceding commission rate that is not subject to a sliding scale contingent adjustment. In addition to the treaties that were in effect during the years ended December 31, 2020 and 2019, the Loss Ratios from prior years’ treaties are subject to change as incurred losses from those periods increase or decrease, resulting in an increase or decrease in the commission rate and contingent ceding commissions earned.

Ceding commission revenue consists of the following:

	Years ended
	December 31,
	2020		2019

Provisional ceding commissions earned	$	14,119,180	$	5,446,370
Contingent ceding commissions earned		83,173		(795,519	)
	$	14,202,353	$	4,650,851