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Property and Casualty Insurance Activity | 9 Months Ended
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Sep. 30, 2025
Property and Casualty Insurance Activity |
Property and Casualty Insurance Activity | Property and Casualty Insurance Activity Premiums Earned Premiums written, ceded and earned are as follows:
| Direct |  | Assumed |  | Ceded |  | Net
Nine months ended September 30, 2025 |  |  |  |  |  |  |
Premiums written | $ | 195,047,268 |  |  | $ | - |  |  | $ | (50,178,287) |  |  | $ | 144,868,981 |
Change in unearned premiums | (5,339,407) |  |  | - |  |  | (1,866,198) |  |  | (7,205,605) |
Premiums earned | $ | 189,707,861 |  |  | $ | - |  |  | $ | (52,044,485) |  |  | $ | 137,663,376 |
Nine months ended September 30, 2024 |  |  |  |  |  |  |
Premiums written | $ | 169,446,603 |  |  | $ | - |  |  | $ | (69,381,336) |  |  | $ | 100,065,267 |
Change in unearned premiums | (14,353,242) |  |  | - |  |  | 6,818,683 |  |  | (7,534,559) |
Premiums earned | $ | 155,093,361 |  |  | $ | - |  |  | $ | (62,562,653) |  |  | $ | 92,530,708 |
Three months ended September 30, 2025 |  |  |  |  |  |  |
Premiums written | $ | 75,809,863 |  |  | $ | - |  |  | $ | (44,160,963) |  |  | $ | 31,648,900 |
Change in unearned premiums | (9,778,044) |  |  | - |  |  | 26,054,197 |  |  | 16,276,153 |
Premiums earned | $ | 66,031,819 |  |  | $ | - |  |  | $ | (18,106,766) |  |  | $ | 47,925,053 |
Three months ended September 30, 2024 |  |  |  |  |  |  |
Premiums written | $ | 66,626,664 |  |  | $ | - |  |  | $ | (46,081,473) |  |  | $ | 20,545,191 |
Change in unearned premiums | (12,540,101) |  |  | - |  |  | 25,402,104 |  |  | 12,862,003 |
Premiums earned | $ | 54,086,563 |  |  | $ | - |  |  | $ | (20,679,369) |  |  | $ | 33,407,194 |
Premium receipts in advance of the policy effective date are recorded as advance premiums. The balance of advance premiums as of September 30, 2025 and December 31, 2024 was $7,711,957 and $3,503,063, respectively. Loss and Loss Adjustment Expense Reserves The following table provides a reconciliation of the beginning and ending balances for unpaid loss and LAE reserves:
| Nine months ended September 30, |  | Year ended December 31,
| 2025 |  | 2024
Balance at beginning of period | $ | 126,210,428 |  |  | $ | 121,817,862 |
Less reinsurance recoverables | (32,322,637) |  |  | (33,288,650) |
Net balance, beginning of period | 93,887,791 |  |  | 88,529,212 |
Incurred related to: |  |  |
Current year | 67,156,741 |  |  | 64,414,543 |
Prior years | (822,177) |  |  | (1,779,827) |
Total incurred | 66,334,564 |  |  | 62,634,716 |
Paid related to: |  |  |
Current year | 29,492,987 |  |  | 32,956,899 |
Prior years | 24,351,681 |  |  | 24,319,238 |
Total paid | 53,844,668 |  |  | 57,276,137 |
Net balance at end of period | 106,377,687 |  |  | 93,887,791 |
Add reinsurance recoverables | 34,816,559 |  |  | 32,322,637 |
Balance at end of period | $ | 141,194,246 |  |  | $ | 126,210,428 |
Incurred losses and LAE are presented net of reinsurance recoveries under reinsurance contracts of $16,313,217 and $13,744,230 for the nine months ended September 30, 2025 and 2024, respectively. Prior year incurred loss and LAE development is based upon estimates by line of business and accident year. Prior year loss and LAE development incurred during the nine months ended September 30, 2025 and 2024 was $822,177 favorable and $1,637,038 favorable, respectively. Management, on a quarterly basis, performs a review of open liability claims to assess carried case and incurred but not reported (“IBNR”) reserve levels, giving consideration to both Company and industry trends. Loss and LAE Reserves The reserving process for loss and LAE reserves provides for the Company’s best estimate at a particular point in time of the ultimate unpaid cost of all losses and LAE incurred, including settlement and administration of losses, and is based on facts and circumstances then known including losses that have occurred but that have not yet been reported. The process relies on standard actuarial reserving methodologies, judgments relative to estimates of ultimate claim severity and frequency, the length of time before losses will develop to their ultimate level (‘tail’ factors), and the likelihood of changes in the law or other external factors that are beyond the Company’s control. Several actuarial reserving methodologies are used to estimate required loss reserves. The process produces carried reserves set by management based upon the actuaries’ best estimate and is the cumulative combination of the best estimates made by line of business, accident year, and loss and LAE. The amount of loss and LAE reserves for individual reported claims (the “case reserve”) is determined by the claims department and changes over time as new information is gathered. Such information is critical to the review of appropriate IBNR reserves and includes a review of coverage applicability, comparative liability on the part of the insured, injury severity, property damage, replacement cost estimates, and any other information considered pertinent to estimating the exposure presented by the claim. The amounts of loss and LAE reserves for unreported claims and development on known claims (IBNR reserves) are determined using historical information aggregated by line of business as adjusted to current conditions. Since this process produces loss reserves set by management based upon the actuaries’ best estimate, there is no explicit or implicit provision for uncertainty in the carried loss reserves. Due to the inherent uncertainty associated with the reserving process, the ultimate liability may differ, perhaps substantially, from the original estimate. Such estimates are regularly reviewed and updated and any resulting adjustments are included in the current period’s results. Reserves are closely monitored and are recomputed periodically using the most recent information on reported claims and a variety of statistical techniques. On at least a quarterly basis, the Company reviews by line of business existing reserves, new claims, changes to existing case reserves, and paid losses with respect to the current and prior periods. Several methods are used, varying by line of business and accident year, in order to select the estimated period-end loss reserves. These methods include the following: Paid Loss Development – historical patterns of paid loss development are used to project future paid loss emergence in order to estimate required reserves. Incurred Loss Development – historical patterns of incurred loss development, reflecting both paid losses and changes in case reserves, are used to project future incurred loss emergence in order to estimate required reserves. Paid Bornhuetter-Ferguson (“BF”) – an estimated loss ratio for a particular accident year is determined, and is weighted against the portion of the accident year claims that have been paid, based on historical paid loss development patterns. The estimate of required reserves assumes that the remaining unpaid portion of a particular accident year will pay out at a rate consistent with the estimated loss ratio for that year. This method can be useful for situations where an unusually high or low amount of paid losses exists at the early stages of the claims development process. Incurred Bornhuetter-Ferguson (“BF”) - an estimated loss ratio for a particular accident year is determined, and is weighted against the portion of the accident year claims that have been reported, based on historical incurred loss development patterns. The estimate of required reserves assumes that the remaining unreported portion of a particular accident year will pay out at a rate consistent with the estimated loss ratio for that year. This method can be useful for situations where an unusually high or low amount of reported losses exists at the early stages of the claims development process. Incremental Claim-Based Methods – historical patterns of incremental incurred losses and paid LAE during various stages of development are reviewed and assumptions are made regarding average loss and LAE development applied to remaining claims inventory. Such methods more properly reflect changes in the speed of claims closure and the relative adequacy of case reserve levels at various stages of development. These methods may provide a more accurate estimate of IBNR for lines of business with relatively few remaining open claims but for which significant recent settlement activity has occurred. Frequency / Severity Based Methods – historical measurements of claim frequency and average paid claim size (severity) are reviewed for more mature accident years where a majority of claims have been reported and/or closed. These historical averages are trended forward to more recent periods in order to estimate ultimate losses for newer accident years that are not yet fully developed. These methods are useful for lines of business with slow and/or volatile loss development patterns, such as liability lines where information pertaining to individual cases may not be completely known for many years. The claim frequency and severity information for older periods can then be used as reasonable measures for developing a range of estimates for more recent immature periods. Management’s best estimate of required reserves is generally based on an average of the methods above, with appropriate weighting of methods based on the line of business and accident year being projected. In some cases, additional methods or historical data from industry sources are employed to supplement the projections derived from the methods listed above. Three key assumptions that materially affect the estimate of loss reserves are the loss ratio estimate for the current accident year used in the BF methods, the loss development factor selections used in the loss development methods, and the loss severity assumptions used in the frequency / severity method described above. The loss ratio estimates used in the BF methods are selected after reviewing historical accident year loss ratios adjusted for rate changes, trend, and mix of business. The severity assumptions used in the frequency / severity method are determined by reviewing historical average claim severity for older more mature accident periods, trended forward to less mature accident periods. The Company reviews the carried reserves levels on a regular basis as additional information becomes available and makes adjustments in the periods in which such adjustments are determined to be necessary. The Company is not aware of any claim trends that have emerged or that would cause future adverse development that have not already been contemplated in setting current carried reserves levels. In New York State, lawsuits for negligence are subject to certain limitations and must be commenced within three years from the date of the accident or are otherwise barred. Accordingly, the Company’s exposure to unreported claims (“pure” IBNR) for accident dates of September 30, 2022 and prior is limited, although there remains the possibility of adverse development on reported claims (“case development” IBNR). In certain rare circumstances states have retroactively revised a statute of limitations. The Company is not aware of any such effort that would have a material impact on the Company’s results. The following is information about incurred and paid claims development as of September 30, 2025, net of reinsurance, as well as the cumulative reported claims by accident year and total IBNR reserves as of September 30, 2025 included in the net incurred loss and allocated expense amounts. The historical information regarding incurred and paid claims development for the years ended December 31, 2016 to December 31, 2024 is presented as supplementary unaudited information. All Lines of Business (in thousands, except reported claims data)
|  | Incurred Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance |  | As of September 30, 2025
Accident Year |  | For the Years Ended December 31, |  | Nine Months Ended September 30, 2025 |  | IBNR |  | Cumulative Number of Reported Claims by Accident Year
| 2016 |  | 2017 |  | 2018 |  | 2019 |  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024 |  |  |
|  | (Unaudited 2016 - 2024) |  | (Unaudited) |  |  |  |
2016 |  | $ | 26,062 |  |  | $ | 24,941 |  |  | $ | 24,789 |  |  | $ | 27,887 |  |  | $ | 27,966 |  |  | $ | 27,417 |  |  | $ | 27,352 |  |  | $ | 27,271 |  |  | $ | 27,247 |  |  | $ | 27,201 |  |  | $ | 61 |  |  | 2,884
2017 |  |  |  | 31,605 |  |  | 32,169 |  |  | 35,304 |  |  | 36,160 |  |  | 36,532 |  |  | 36,502 |  |  | 36,819 |  |  | 37,268 |  |  | 37,267 |  |  | 57 |  |  | 3,401
2018 |  |  |  |  |  | 54,455 |  |  | 56,351 |  |  | 58,441 |  |  | 59,404 |  |  | 61,237 |  |  | 61,145 |  |  | 61,686 |  |  | 61,150 |  |  | 891 |  |  | 4,238
2019 |  |  |  |  |  |  |  | 75,092 |  |  | 72,368 |  |  | 71,544 |  |  | 71,964 |  |  | 73,310 |  |  | 74,363 |  |  | 74,937 |  |  | 1,445 |  |  | 4,508
2020 |  |  |  |  |  |  |  |  |  | 63,083 |  |  | 62,833 |  |  | 63,217 |  |  | 63,562 |  |  | 64,400 |  |  | 65,655 |  |  | 878 |  |  | 5,896
2021 |  |  |  |  |  |  |  |  |  |  |  | 96,425 |  |  | 96,673 |  |  | 96,134 |  |  | 96,771 |  |  | 97,737 |  |  | 1,810 |  |  | 5,835
2022 |  |  |  |  |  |  |  |  |  |  |  |  |  | 79,835 |  |  | 78,759 |  |  | 78,078 |  |  | 77,307 |  |  | 2,875 |  |  | 4,719
2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 78,978 |  |  | 72,025 |  |  | 70,965 |  |  | 6,776 |  |  | 4,097
2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 57,860 |  |  | 56,848 |  |  | 9,194 |  |  | 3,133
2025 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 60,990 |  |  | 18,455 |  |  | 1,713
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 630,055 |  |  |  |  |
All Lines of Business (in thousands)
|  | Cumulative Paid Loss and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year |  | For the Years Ended December 31, |  | Nine Months Ended September 30, 2025
| 2016 |  | 2017 |  | 2018 |  | 2019 |  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024 |
|  | (Unaudited 2016 - 2024) |  | (Unaudited)
2016 |  | $ | 15,364 |  |  | $ | 19,001 |  |  | $ | 21,106 |  |  | $ | 23,974 |  |  | $ | 25,234 |  |  | $ | 25,750 |  |  | $ | 26,382 |  |  | $ | 26,854 |  |  | $ | 26,808 |  |  | $ | 26,876 |
2017 |  |  |  | 16,704 |  |  | 24,820 |  |  | 28,693 |  |  | 31,393 |  |  | 32,529 |  |  | 33,522 |  |  | 34,683 |  |  | 35,046 |  |  | 35,312 |
2018 |  |  |  |  |  | 32,383 |  |  | 44,516 |  |  | 50,553 |  |  | 52,025 |  |  | 54,424 |  |  | 56,199 |  |  | 57,185 |  |  | 57,762 |
2019 |  |  |  |  |  |  |  | 40,933 |  |  | 54,897 |  |  | 58,055 |  |  | 60,374 |  |  | 63,932 |  |  | 66,109 |  |  | 68,418 |
2020 |  |  |  |  |  |  |  |  |  | 39,045 |  |  | 50,719 |  |  | 53,432 |  |  | 56,523 |  |  | 59,220 |  |  | 60,618 |
2021 |  |  |  |  |  |  |  |  |  |  |  | 56,282 |  |  | 77,756 |  |  | 82,317 |  |  | 85,314 |  |  | 89,642 |
2022 |  |  |  |  |  |  |  |  |  |  |  |  |  | 45,856 |  |  | 65,732 |  |  | 68,170 |  |  | 69,314 |
2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 46,280 |  |  | 56,952 |  |  | 58,585 |
2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 29,013 |  |  | 39,171 |
2025 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 26,364 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 532,062 |
Net liability for unpaid loss and allocated loss adjustment expenses for the accident years presented |  | $ | 97,994 |
All outstanding liabilities before 2016, net of reinsurance |  | 1,539 |
Liabilities for loss and allocated loss adjustment expenses, net of reinsurance |  | $ | 99,533 |
(Components may not sum to totals due to rounding) Reported claim counts are measured on an occurrence or per event basis. A single claim occurrence could result in more than one loss type or claimant; however, the Company counts claims at the occurrence level as a single claim regardless of the number of claimants or claim features involved. The reconciliation of the net incurred and paid loss development tables to the loss and LAE reserves in the condensed consolidated balance sheet is as follows: Reconciliation of the Disclosure of Incurred and Paid Loss Development to the Liability for Loss and LAE Reserves
(in thousands) | As of September 30, 2025
Liabilities for allocated loss and loss adjustment expenses, net of reinsurance | $ | 99,533 |
Total reinsurance recoverable on unpaid losses | 34,817 |
Unallocated loss adjustment expenses | 6,845 |
Total gross liability for loss and LAE reserves | $ | 141,194 |
Reinsurance On January 1, 2024, the Company entered into a 27% quota share reinsurance treaty for its personal lines business, which primarily consisted of homeowners’ and dwelling fire policies covering the period from January 1, 2024 through January 1, 2025 (“2024/2025 Treaty”). Upon the expiration of the 2024/2025 Treaty on January 1, 2025, the Company entered into a new 16% quota share reinsurance treaty for its personal lines business, covering the period from January 1, 2025 through January 1, 2026 (“2025/2026 Treaty”). The Company’s excess of loss and catastrophe reinsurance treaties expired on June 30, 2025 and the Company entered into new excess of loss and catastrophe reinsurance treaties effective July 1, 2025. The new catastrophe reinsurance treaties include the issuance of a $125,000,000 catastrophe bond ("Series 2025-1 Notes"). The Series 2025-1 Notes were priced at 4.5% and issued through a Bermuda-registered special purpose insurer, 1886 Re Ltd., providing KICO with $125,000,000 of collateralized reinsurance protection. The Series 2025-1 Notes offer multi-year protection against named storm events across New York, New Jersey, Connecticut, Massachusetts and Rhode Island on an indemnity trigger and per-occurrence basis. The Series 2025-1 Notes, which were structured and placed by AON Securities LLC, cover four annual risk periods from July 1, 2025, through June 30, 2029. Effective January 1, 2024, the Company renewed an underlying excess of loss reinsurance treaty (“Underlying XOL Treaty”) covering the period from January 1, 2024 through January 1, 2025. The treaty provided 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms are excluded from the treaty. Effective January 1, 2025, the Underlying XOL Treaty was renewed covering the period from January 1, 2025 through June 30, 2025. Effective July 1, 2025, the Underlying XOL Treaty was renewed along with the Company's excess of loss reinsurance treaty covering the period from July 1, 2025 through June 30, 2026. Combined, the renewed treaties provide 50% reinsurance coverage for losses of $250,000 in excess of $750,000, and 100% reinsurance coverage for losses in excess of $1,000,000 up to $9,000,000 together with facultative coverage. For the period October 1, 2024 through April 30, 2025, the Company purchased catastrophe reinsurance which provides coverage for winter storm losses to the extent of 71% of $4,500,000 in excess of $5,500,000. For the period October 15, 2025 through April 30, 2026, the Company purchased catastrophe reinsurance which provides coverage for winter storm losses to the extent of 90% of $5,000,000 in excess of $5,000,000. Material terms for reinsurance treaties in effect for the treaty years shown below are as follows:
|  | Treaty Period |
|  |  |  | 2025/2026 Treaty |  | 2024/2025 Treaty |
Line of Business |  | January 2, 2026 to June 30, 2026 |  | July 1, 2025 to January 1, 2026 |  | January 2, 2025 to June 30, 2025 |  | July 1, 2024 to January 1, 2025 |  | January 1, 2024 to June 30, 2024 |
Personal Lines: |  |  |  |  |  |  |  |  |  |  |
Homeowners, dwelling fire and canine legal liability |  |  |  |  |  |  |  |  |  |  |
Quota share treaty: |  |  |  |  |  |  |  |  |  |  |
Percent ceded (6) |  | (5) |  |  | 16 | % |  | 16 | % |  | 27 | % |  | 27 | % |
Risk retained on initial |  |  |  |  |  |  |  |  |  |  |
$1,000,000 of losses (4) (5) (6) |  | (5) |  |  | $ | 840,000 |  |  | $ | 840,000 |  |  | $ | 730,000 |  |  | $ | 730,000 |  |
Losses per occurrence |  |  |  |  |  |  |  |  |  |  |
subject to quota share |  |  |  |  |  |  |  |  |  |  |
reinsurance coverage |  | (5) |  |  | $ | 1,000,000 |  |  | $ | 1,000,000 |  |  | $ | 1,000,000 |  |  | $ | 1,000,000 |  |
Expiration date |  | (5) |  |  | January 1, 2026 |  | January 1, 2026 |  | January 1, 2025 |  | January 1, 2025 |
Excess of loss coverage and |  |  |  |  |  |  |  |  |  |  |
facultative facility |  |  |  |  |  |  |  |  |  |  |
coverage (1) (4) (5) |  | $ | 8,250,000 |  |  | $ | 8,250,000 |  |  | $ | 8,400,000 |  |  | $ | 8,400,000 |  |  | $ | 8,400,000 |  |
|  | in excess of |  | in excess of |  | in excess of |  | in excess of |  | in excess of |
|  | $ | 750,000 |  |  | $ | 750,000 |  |  | $ | 600,000 |  |  | $ | 600,000 |  |  | $ | 600,000 |  |
Total reinsurance coverage |  |  |  |  |  |  |  |  |  |  |
per occurrence (4) (5) |  | $ | 8,125,000 |  |  | $ | 8,285,000 |  |  | $ | 8,360,000 |  |  | $ | 8,470,000 |  |  | $ | 8,470,000 |  |
Losses per occurrence |  |  |  |  |  |  |  |  |  |  |
subject to reinsurance |  |  |  |  |  |  |  |  |  |  |
coverage (5) |  | $ | 9,000,000 |  |  | $ | 9,000,000 |  |  | $ | 9,000,000 |  |  | $ | 9,000,000 |  |  | $ | 9,000,000 |  |
Expiration date |  | June 30, 2026 |  | June 30, 2026 |  | June 30, 2025 |  | June 30, 2025 |  | June 30, 2024 |
Catastrophe Reinsurance: |  |  |  |  |  |  |  |  |  |  |
Initial loss subject to personal |  |  |  |  |  |  |  |  |  |  |
lines quota share treaty (5) |  | (5) |  |  | $ | 10,000,000 |  |  | $ | 10,000,000 |  |  | $ | 10,000,000 |  |  | $ | 10,000,000 |  |
Risk retained per catastrophe |  |  |  |  |  |  |  |  |  |  |
occurrence (5) (6) (7) (8) |  | $ | 6,000,000 |  |  | $ | 5,000,000 |  |  | $ | 4,250,000 |  |  | $ | 4,750,000 |  |  | $ | 9,500,000 |  |
Catastrophe loss |  |  |  |  |  |  |  |  |  |  |
coverage (2) (5) (8) |  | $ | 434,000,000 |  |  | $ | 435,000,000 |  |  | $ | 275,000,000 |  |  | $ | 275,000,000 |  |  | $ | 315,000,000 |  |
Reinstatement premium |  |  |  |  |  |  |  |  |  |  |
protection (3) |  | Yes |  | Yes |  | Yes |  | Yes |  | Yes |
(1)For personal lines, includes the addition of an automatic facultative facility allowing KICO to obtain homeowners single risk coverage up to $9,000,000 in total insured value, which covers direct losses from $3,500,000 to $9,000,000 through June 30, 2025. (2)Catastrophe coverage is limited on an annual basis to two times the per occurrence amounts, except for one occurrence on 80% of the first layer of $5,000,000 in excess of $5,000,000, and one occurrence on 52% of the top layer of $240,000,000 in excess of $200,000,000, which is covered under the catastrophe bond. Duration of 168 consecutive hours for a catastrophe occurrence from windstorm, hail, tornado, hurricane and cyclone. (3)For the period July 1, 2024 through June 30, 2025 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $50,000,000 of catastrophe coverage in excess of $10,000,000. For the period July 1, 2025 through June 30, 2026 (expiration date of the catastrophe reinsurance treaty), reinstatement premium protection for $50,000,000 of catastrophe coverage in excess of $10,000,000. (4)For the period January 1, 2024 through June 30, 2025, the Underlying XOL Treaty provides 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Excludes losses from named storms. Reduces retention to $530,000 from $730,000 under the 2024/2025 Treaty. Retention increases to $640,000 from $530,000 under the 2025/2026 Treaty. For the period July 1, 2025 through June 30, 2026, the Underlying XOL Treaty combined with the excess of loss treaty provide 50% reinsurance coverage for losses of $250,000 in excess of $750,000, and 100% reinsurance coverage for losses in excess of $1,000,000 up to $9,000,000 together with facultative coverage. Increased retention to $715,000 from $640,000 under the 2025/2026 Treaty (see note 5 below). (5)The personal lines quota share treaty (homeowners, dwelling fire and canine liability) will expire on January 1, 2026, with none of these coverages to be in effect during the period from January 2, 2026 through June 30, 2026. If and when this treaty is renewed on January 2, 2026, the personal lines quota share treaty will be as provided for therein. Reinsurance coverage in effect from January 2, 2026 through June 30, 2026 is only for excess of loss, Underlying XOL, and catastrophe reinsurance treaties. (6)For the 2024/2025 Treaty, 22% of the 27% total of losses ceded under this treaty are excluded from a named catastrophe event. For the 2025/2026 Treaty, 6% of the 16% total of losses ceded under this treaty are excluded from a named catastrophe event. (7)Plus losses in excess of catastrophe coverage. (8)Effective July 1, 2025 through June 30, 2026, catastrophe coverage is 80% of the first layer of $5,000,000 in excess of $5,000,000. The remaining coverage is at 100% of $430,000,000 in excess of $10,000,000. For the period October 1, 2024 through April 30, 2025, additional catastrophe reinsurance treaty provided coverage for winter storm losses to the extent of 71% of $4,500,000 in excess of $5,500,000. For the period October 15, 2025 through April 30, 2026, additional catastrophe reinsurance treaty will provide coverage for winter storm losses to the extent of 90% of $5,000,000 in excess of $5,000,000. Retention for winter storms under this treaty is $4,800,000 under the 2024/2025 Treaty, $5,200,000 under the 2025/2026 Treaty from January 1, 2025 through April 30, 2025, and $3,900,000 from October 15, 2025 through January 1, 2026, the expiration date of the 2025/2026 Treaty.
|  | Treaty Year
Line of Business |  | July 1, 2025 to June 30, 2026 |  | July 1, 2024 to June 30, 2025 |  | July 1, 2023 to June 30, 2024
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 dollars of coverage |  | 95 | % |  | 95 | % |  | 95 | %
Risk retained |  | $ | 300,000 |  |  | $ | 300,000 |  |  | $ | 300,000 |
Total reinsurance coverage per occurrence |  | $ | 4,700,000 |  |  | $ | 4,700,000 |  |  | $ | 4,700,000 |
Losses per occurrence subject to quota share reinsurance coverage |  | $ | 5,000,000 |  |  | $ | 5,000,000 |  |  | $ | 5,000,000 |
Expiration date |  | June 30, 2026 |  | June 30, 2025 |  | June 30, 2024
Commercial Lines (1) |  |  |  |  |  |
(1)Coverage on all commercial lines policies expired in September 2020; reinsurance coverage is based on treaties in effect on the date of loss. The Company’s reinsurance program has been structured to enable the Company to grow its premium volume while maintaining regulatory capital and other financial ratios generally within or below the expected ranges used for regulatory oversight purposes. The reinsurance program also provides income as a result of ceding commissions earned pursuant to the quota share reinsurance contracts. The Company’s participation in reinsurance arrangements does not relieve the Company of its obligations to policyholders. Ceding Commission Revenue The Company earned ceding commission revenue under the 2025/2026 Treaty for the three and nine months ended September 30, 2025 based on: (i) a fixed provisional commission rate at which provisional ceding commissions were earned, and (ii) a sliding scale ("Sliding Scale") of commission rates and ultimate treaty year loss ratio on the policies reinsured under this agreement based upon which contingent ceding commissions are earned. The Sliding Scale includes minimum and maximum commission rates in relation to specified ultimate loss ratios. The commission rate and contingent ceding commissions earned increase when the estimated ultimate loss ratio decreases and, conversely, the commission rate and contingent ceding commissions earned decrease when the estimated ultimate loss ratio increases. The Company earned ceding commission revenue under the 2024/2025 Treaty for the three and nine months ended September 30, 2024, based on a fixed provisional commission rate at which provisional ceding commissions were earned. Ceding commission revenue consists of the following:
| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Provisional ceding commissions earned | $ | 3,555,260 |  |  | $ | 4,742,557 |  |  | $ | 10,195,169 |  |  | $ | 13,859,795 |
Contingent ceding commissions earned | 1,345,141 |  |  | (881) |  |  | 745,479 |  |  | 10,953 |
| $ | 4,900,401 |  |  | $ | 4,741,676 |  |  | $ | 10,940,648 |  |  | $ | 13,870,748 |
Provisional ceding commissions are settled monthly. Balances due to or from reinsurers for contingent ceding commissions on the 2025/2026 Treaty will be settled annually based on the Loss Ratio of the treaty year that ends on January 1. Balances due to or from reinsurers for contingent ceding commissions on quota share treaties are settled periodically based on the Loss Ratio of each treaty year that ends on June 30 for the expired treaties (which had June 30 expiration dates) that were subject to contingent commissions. As discussed above, the Loss Ratios from prior years’ treaties are subject to change as incurred losses from those periods develop, resulting in an increase or decrease in the commission rate and contingent ceding commissions earned. As of September 30, 2025, contingent ceding commissions receivable from reinsurers under the 2025/2026 Treaty was approximately $751,000, which is recorded in other assets on the accompanying condensed consolidated balance sheets. As of September 30, 2025 and December 31, 2024, net contingent ceding commissions payable to reinsurers under all other treaties was approximately $732,000 and $727,000, respectively, which is recorded in reinsurance balances payable on the accompanying condensed consolidated balance sheets. Expected Credit Losses – Uncollectible Reinsurance The Company reviews reinsurance receivables which relate to both amounts already billed on ceded paid losses as well as ceded reserves that will be billed when losses are paid in the future. The Company has not recorded an allowance for uncollectible reinsurance as there is no perceived credit risk. The principal credit quality indicator used in the valuation of the allowance for reinsurance receivables is the financial strength rating of the reinsurer sourced from major rating agencies. Changes in the allowance for credit losses are presented as a component of other underwriting expenses on the condensed consolidated statements of income and comprehensive income.

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