We conduct insurance underwriting operations primarily through The American Road Insurance Company (“TARIC”). TARIC is a wholly owned subsidiary of Ford Credit operating in the United States and Canada. TARIC provides physical damage insurance coverage for Ford Credit financed vehicles at dealer locations. TARIC also provides physical damage insurance coverage for non-affiliated company financed vehicles, serviced by Ford Credit, at dealer locations. In addition, TARIC provides a variety of other insurance products and services to Ford and its affiliates, including contractual liability insurance on extended service contracts. TARIC provides commercial automobile insurance for Ford and third parties and general liability insurance and surety bonds for Ford in the United States.

Insurance premiums earned are reported net of reinsurance as Insurance premiums earned. These premiums are earned over their respective policy periods. Physical damage insurance premiums are recognized as income on a monthly basis. Premiums from extended service plan contracts and other contractual liability coverages are earned over the life of the policy based on historical loss experience. Commissions and premium taxes are deferred and amortized over the term of the related policies on the same basis on which premiums are earned.

Reserves for insurance losses and loss adjustment expenses are established based on actuarial estimates and historical loss development patterns, which represents management’s best estimate. If management believes the reserves do not reflect all losses due to changes in conditions, or other relevant factors, an adjustment is made based on management judgment.

Reinsurance activity primarily consists of ceding a majority of the contractual liability insurance business related to automotive extended service plan contracts for a ceding commission. Commissions on ceded amounts are earned on the same basis as related premiums. Reinsurance contracts do not relieve TARIC from its obligations to its policyholders. Failure of reinsurers to honor their obligations could result in losses to TARIC. Therefore, TARIC requires nearly all of its reinsurers to hold collateral and monitors the underlying business and financial performance of its reinsurers to mitigate risk.

TARIC is required by law to maintain deposits with regulatory authorities. These deposited securities totaled $11 million and $12 million at December 31, 2024 and 2025, respectively, and were included in Marketable securities.

Amounts paid to reinsurers relating to the unexpired portion of the underlying automotive service contracts, and amounts recoverable from reinsurers on unpaid losses, including incurred but not reported losses are reported in Other assets. Prepaid reinsurance premiums and other reinsurance recoverables were $876 million and $992 million at December 31, 2024 and 2025, respectively. This includes amounts ceded to Ford affiliates of $98 million at both December 31, 2024 and 2025.

Other liabilities and deferred revenue includes unearned insurance premiums and fees of $995 million and $1,134 million at December 31, 2024 and 2025, respectively. This includes amounts from Ford and its affiliates of $863 million and $978 million at December 31, 2024 and 2025, respectively.

The reserve for reported insurance losses and an estimate of unreported insurance losses, based on past experience, was $35 million and $31 million at December 31, 2024 and 2025, respectively, and was included in Other liabilities and deferred revenue.


	2023				2024				2025
	Written		Earned		Written		Earned		Written		Earned
Direct	$	394	$	359	$	472	$	415	$	556	$	432
Assumed	—		—		—		—		—		—
Ceded	(275)		(240)		(300)		(244)		(373)		(258)
Net premiums	$	119	$	119	$	172	$	171	$	183	$	174

The direct premiums earned from Ford and its affiliates were $249 million, $259 million, and $253 million for the years ended December 31, 2023, 2024, and 2025, respectively.

Insurance underwriting losses and expenses are reported as Insurance expenses. The components of insurance expenses for the years ended December 31 were as follows (in millions):


	2023		2024		2025
Insurance losses	$	90	$	181	$	116
Loss adjustment expenses	4		5		9
Reinsurance income and other expenses, net	(41)		(40)		(39)
Insurance expenses	$	53	$	146	$	86

Insurance expenses with Ford and its affiliates were $161 million, $224 million, and $199 million for the years ended December 31, 2023, 2024, and 2025, respectively.

Insurance expenses were reduced by ceded insurance expenses of $198 million, $233 million, and $258 million for the years ended December 31, 2023, 2024, and 2025, respectively.