| Effect of reinsurance transactions |
The effect of all of our reinsurance transactions on our consolidated statement of operations is shown in table 7.1 below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Reinsurance | | | | | | Table | 7.1 | | | | | | | | | | | | | Three Months Ended June 30, | | Six Months Ended June 30, | | (In thousands) | | 2026 | | 2025 | | 2026 | | 2025 | | Premiums earned: | | | | | | | | | | Direct | | $ | 287,520 | | | $ | 284,123 | | | $ | 574,447 | | | $ | 568,944 | | | Assumed | | 2,499 | | | 3,738 | | | 6,479 | | | 7,299 | | Ceded: | | | | | | | | | Ceded - quota share reinsurance (1) | | (35,590) | | | (28,101) | | | (73,359) | | | (58,044) | | | Ceded - excess-of-loss reinsurance | | (16,372) | | | (15,438) | | | (34,147) | | | (30,158) | | | Total ceded | | (51,962) | | | (43,539) | | | (107,506) | | | (88,202) | | | Net premiums earned | | $ | 238,057 | | | $ | 244,322 | | | $ | 473,420 | | | $ | 488,041 | | | | | | | | | | | | Losses incurred: | | | | | | | | | | Direct | | $ | 19,454 | | | $ | 1,146 | | | $ | 64,724 | | | $ | 17,163 | | | Assumed | | (71) | | | (23) | | | (73) | | | (18) | | | Ceded - quota share reinsurance | | (8,397) | | | (3,958) | | | (20,423) | | | (10,389) | | | Losses incurred, net | | $ | 10,986 | | | $ | (2,835) | | | $ | 44,228 | | | $ | 6,756 | | | | | | | | | | | | | Other Reinsurance Impacts: | | | | | | | | | Profit commission on quota share reinsurance (1) | | $ | 35,081 | | | $ | 32,299 | | | $ | 64,184 | | | $ | 60,994 | | | Ceding commission on quota share reinsurance | | 14,135 | | | 12,081 | | | 27,509 | | | 23,808 | | | | | | | | | | | |
(1)Ceded premiums earned are shown net of profit commission.
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| Schedule of quota share reinsurance transactions |
Table 7.2 below provides additional detail regarding our QSR Transactions in effect as of June 30, 2026.
| | | | | | | | | | | | | | | | | | | Quota Share Reinsurance | | Table | 7.2 | | | | | | | | Quota Share Contract | Covered Policy Years | Quota Share % | Annual Loss Ratio to Exhaust Profit Commission (1) | Contractual Termination Date | 2020 QSR and 2021 QSR | 2021 | 14.8 | % | 69.0 | % | December 31, 2036 | | 2021 QSR and 2022 QSR | 2021 | 11.1 | % | 69.0 | % | December 31, 2036 | | 2021 QSR and 2022 QSR | 2022 | 13.8 | % | 67.5 | % | December 31, 2037 | | 2022 QSR and 2023 QSR | 2022 | 14.5 | % | 67.5 | % | December 31, 2037 | | 2022 QSR and 2023 QSR | 2023 | 15.0 | % | 62.0 | % | December 31, 2034 | | 2023 QSR | 2023 | 10.0 | % | 58.5 | % | December 31, 2034 | 2024 QSR | 2024 | 30.0 | % | 56.0 | % | 'December 31, 2035 | 2025 QSR | 2025 | 40.0 | % | 63.0 | % | 'December 31, 2036 | 2026 QSR | 2026 | 40.0 | % | 62.0 | % | December 31, 2037 | | Credit Union QSR | 2020-2025 | 65.0 | % | 50.0 | % | December 31, 2039 | 2026-2030 (2) | 65.0 | % | 60.0 | % | December 31, 2044 |
(1)We will receive a profit commission provided the annual loss ratio on policies covered under the transaction remains below this ratio. (2)We can elect early termination of the QSR Transaction beginning on December 31, 2028, and quarterly thereafter.
Table 7.3 provides additional detail regarding optional termination dates and optional reductions to our quota share percentage which can, in each case, be elected by us for a fee. Under the optional reduction to the quota share percentage, we may reduce our quota share percentage from the original percentage shown in table 7.2 to the percentage shown in table 7.3. | | | | | | | | | | | | | | | | Quota Share Reinsurance | | Table | 7.3 | | | | | Quota Share Contract | Covered Policy Years | Optional Termination Date (1) | Optional Quota Share % Reduction Date (2) | Optional Reduced Quota Share % | 2020 QSR and 2021 QSR | 2021 | December 31, 2027 | January 1, 2028 | 12.3% or 10% | 2021 QSR and 2022 QSR | 2021 | December 31, 2027 | January 1, 2028 | 9.4% or 7% | | 2021 QSR and 2022 QSR | 2022 | June 30, 2028 | July 1, 2028 | 11.5% or 9.2% | | 2022 QSR and 2023 QSR | 2022 | June 30, 2028 | July 1, 2028 | 12.1% or 9.7% | | 2022 QSR and 2023 QSR | 2023 | December 31, 2026 | July 1, 2026 | 12.5% or 10% | | 2023 QSR | 2023 | December 31, 2026 | July 1, 2026 | 8% or 7% | 2024 QSR | 2024 | December 31, 2027 | December 31, 2027 | 23% or 15% | 2025 QSR | 2025 | December 31, 2027 | December 31, 2027 | 30% or 20% | 2026 QSR | 2026 | December 31, 2028 | December 31, 2028 | 30% or 20% |
(1)We can elect early termination of the QSR Transaction beginning on this date, and semi-annually thereafter. (2)We can elect to reduce the quota share percentage beginning on this date, and semi-annually thereafter.
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| Schedule of coverages and retention |
The following table provides a summary of our XOL Transactions that were in effect as of June 30, 2026.
| | | | | | | | | | | | | | | Excess of Loss Reinsurance | | Table 7.4a | | | | | | Issue Date | Policy In Force Dates | Optional Call Date (1) | Legal Maturity | 2026 Traditional XOL | January 1, 2026 | January 1, 2026 - December 31, 2026 | January 1, 2032 | 10 years | 2025 Traditional XOL | June 1, 2025 | January 1, 2025 - December 31, 2025 | January 1, 2031 | 10 years | 2024 Traditional XOL | April 1, 2024 | January 1, 2024 - December 31, 2024 | January 1, 2030 | 10 years | | 2023 Traditional XOL | April 1, 2023 | January 1, 2023 - December 29, 2023 | January 1, 2031 | 10 years | | 2022 Traditional XOL | April 1, 2022 | January 1, 2022 - December 30, 2022 | January 1, 2030 | 10 years | 2021 Traditional XOL | December 1, 2025 | January 1, 2021 - December 31, 2021 | January 1, 2031 | 10 years | 2020 Traditional XOL | March 1, 2025 | January 1, 2020 - December 31, 2020 | April 1, 2030 | 10 years | Home Re 2026-1, Ltd. | January 29, 2026 | January 1, 2022 - March 31, 2025 | January 25, 2031 | 10 years | | Home Re 2023-1, Ltd. | October 23, 2023 | June 1, 2022 - August 31, 2023 | October 25, 2028 | 10 years | | Home Re 2022-1, Ltd. | April 26, 2022 | May 29, 2021 - December 31, 2021 | April 25, 2028 | 12.5 years | | Home Re 2021-2, Ltd. | August 3, 2021 | January 1, 2021 - May 28, 2021 | July 25, 2028 | 12.5 years |
(1)We have the right to terminate the Home Re Transactions under certain circumstances, including an optional call feature that provides us the right to terminate if the outstanding principal balance of the related insurance-linked notes falls below 10% of the initial principal balance of the related insurance-linked notes, and on any payment date on or after the respective Optional Call Date. We can elect early termination of the Traditional XOL Transactions beginning on this date, and quarterly thereafter. Tables 7.4b and 7.4c provide additional information about our XOL Transactions in effect as of the dates indicated. | | | | | | | | | | | | | | Table 7.4b | | Remaining First Layer Retention | | ($ in thousands) | Initial First Layer Retention | June 30, 2026 | December 31, 2025 | 2025 Traditional XOL | $ | 95,966 | | $ | 95,912 | | $ | 95,966 | | | 2024 Traditional XOL | 125,016 | | 122,496 | | 124,458 | | | 2023 Traditional XOL | 70,578 | | 67,476 | | 69,060 | | | 2022 Traditional XOL | 82,523 | | 75,399 | | 78,023 | | 2021 Traditional XOL | 142,291 | | 142,195 | | 142,291 | | 2020 Traditional XOL | 68,343 | | 68,287 | | 68,288 | | Home Re 2026-1, Ltd. | 231,769 | | 231,638 | | N/A | Home Re 2023-1, Ltd. | 272,961 | | 260,580 | | 266,371 | | | Home Re 2022-1, Ltd. | 325,589 | | 316,119 | | 318,906 | | | Home Re 2021-2, Ltd. | 190,159 | | 185,979 | | 187,030 | |
| | | | | | | | | | | | | | | | | | Table 7.4c | | | | Remaining Excess of Loss Reinsurance Coverage (1) | | ($ in thousands) | Initial Excess of Loss Reinsurance Coverage (1) | Initial Funding Percentage (2) | Funding Percentage at 6/30/2026 (2) | June 30, 2026 | December 31, 2025 | 2025 Traditional XOL | $ | 151,851 | | N/A | N/A | $ | 151,851 | | $ | 151,851 | | | 2024 Traditional XOL | 187,220 | | N/A | N/A | 164,204 | | 187,220 | | | 2023 Traditional XOL | 96,942 | | N/A | N/A | 53,215 | | 64,217 | | | 2022 Traditional XOL | 142,642 | | N/A | N/A | 91,397 | | 100,274 | | 2021 Traditional XOL | 250,000 | | N/A | N/A | 250,000 | | 250,000 | | 2020 Traditional XOL | 250,592 | | N/A | N/A | 250,592 | | 250,592 | | Home Re 2026-1, Ltd. | 323,504 | | 100 | % | 100 | % | 298,264 | | N/A | | Home Re 2023-1, Ltd. | 330,277 | | 97 | % | 95 | % | 195,606 | | 231,708 | | | Home Re 2022-1, Ltd. | 473,575 | | 100 | % | 100 | % | 167,497 | | 207,641 | | Home Re 2021-2, Ltd. | 398,429 | | 100 | % | 100 | % | 51,101 | | 84,376 | |
(1)The initial and remaining excess of loss reinsurance coverage is reduced by the applicable funding percentage. (2)The funding percentage represents the aggregate outstanding note balances divided by the aggregate ending coverage amounts.
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