The Company cedes a portion of its homeowners’ insurance exposure to other entities under catastrophe excess of loss reinsurance contracts and a portion of its flood insurance exposure under one quota share reinsurance agreement. Ceded premiums under most catastrophe excess of loss reinsurance contracts are subject to revision resulting from subsequent adjustments in total insured value. Under the terms of the quota share reinsurance agreement, the Company is entitled to a 30% ceding commission on ceded premiums written and a profit commission equal to 10% of net profit.

The Company remains liable for claims payments in the event that any reinsurer is unable to meet its obligations under the reinsurance agreements. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. The Company contracts with a number of reinsurers to secure its annual reinsurance coverage, which generally becomes effective June 1st of each year. The Company purchases reinsurance each year taking into consideration probable maximum losses and reinsurance market conditions.

The impact of the reinsurance contracts on premiums written and earned is as follows:


	Three Months Ended
	March 31,
	2025			2024
Premiums Written:
Direct	$	268,456		$	211,895
Assumed		20,790			43,091
Gross written		289,246			254,986
Ceded		(99,635	)		(68,106	)
Net premiums written	$	189,611		$	186,880
Premiums Earned:
Direct	$	249,402		$	189,675
Assumed		50,981			66,969
Gross earned		300,383			256,644
Ceded		(99,635	)		(68,106	)
Net premiums earned	$	200,748		$	188,538

During the three months ended March 31, 2025, the Company derecognized $6 of ceded losses, thereby increasing losses and loss adjustment expenses. There were no ceded losses recognized during the three months ended March 31, 2024. At March 31, 2025 and December 31, 2024, there were 44 reinsurers, participating in the Company’s reinsurance program. Total net amounts recoverable and receivable from reinsurers at March 31, 2025 and December 31, 2024 were $527,769 and $558,441, respectively. Approximately 74.6% of the paid reinsurance recoverable balance at March 31, 2025 was receivable from four reinsurers, one of which was the Florida Hurricane Catastrophe Fund, a tax-exempt state trust fund. Based on all available information considered in the rating-based method, the Company recognized decreases in credit loss expense of $35 and $49 for the three months ended March 31, 2025 and 2024, respectively. Allowances for credit losses related to the reinsurance recoverable balance were $151 and $186 at March 31, 2025 and December 31, 2024, respectively.

One of the existing reinsurance contracts includes retrospective provisions that adjust premiums in the event losses are minimal or zero. Due to the losses from Hurricane Helene and Hurricane Milton during the third and fourth quarters of 2024, these retrospective provisions were fully exhausted and as such, no benefits were accrued during the three months ended March 31, 2025. In contrast, for the three months ended March 31, 2024, the Company recognized reductions in premiums ceded of $6,993 related to these adjustments in the consolidated statement of income.

There were no benefits accrued under the multi-year reinsurance contract with retrospective provisions at March 31, 2025 and December 31, 2024.

The Company formerly provided quota share reinsurance to United Property & Casualty Insurance Company (“United”) on its policies in the northeast and southeast regions of the United States. United was placed into receivership by the State of Florida due to its financial insolvency and, as a result, the Company ceased

providing quota share reinsurance on United policies. At March 31, 2025 and December 31, 2024, the Company had a net balance of $831 due to United related to the northeast region, representing ceding commission payable.

At March 31, 2025 and December 31, 2024, the Company had a net balance of $1,438 due to United related to the southeast region, consisting of premiums payable of $1,712, offset by ceding commission receivable of $274.

At March 31, 2025, the Company had a net amount due to United of $2,269 and funds withheld for assumed business in trust accounts totaling $8,451 for the benefit of policies assumed from United. The Company cannot predict the actions a receiver might take, which may include restrictions on, or use of, funds held in trust. Any such actions could have a material adverse effect on the Company’s financial position and results of operations.

At March 31, 2025 and December 31, 2024, the balance of funds withheld for assumed business related to the Company’s quota share reinsurance agreements with United was $8,451 and $11,690, respectively.

Assumed premiums written related to Citizens policies were approximately $20,790 and $43,091 for the three months ended March 31, 2025 and 2024, respectively.