The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its LTC line of business and also as a provider of reinsurance for the LTC and MYGA lines of business. The Company participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth.

Under the terms of the reinsurance agreements, the reinsurer agrees to reimburse the Company for the ceded amount in the event a claim is paid. Cessions under reinsurance agreements do not discharge the Company’s obligation as

the primary insurer. In the event that reinsurers do not meet their obligations under the terms of the reinsurance agreements, Reinsurance recoverable balances could become uncollectible.

Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks.

The Company reinsures its business through two reinsurers. The Company monitors ratings and evaluates the financial strength of its reinsurers by analyzing their financial statements. In addition, the reinsurance recoverable balance due from each reinsurer is evaluated as part of the overall monitoring process. Recoverability of reinsurance recoverable balances is evaluated based on these analyses. The Company uses collateral for its reinsurance recoverable with funds withheld accounts. These reinsurance recoverable balances are stated net of allowance for expected credit loss of $1.1 million as of June 30, 2026 and December 31, 2025. The Company had $446.2 million and $456.7 million of net ceded reinsurance recoverable as of June 30, 2026 and December 31, 2025, respectively. The Company had $38.8 million and $41.3 million of unsecured Reinsurance recoverable balances as of June 30, 2026 and December 31, 2025, respectively.

The amounts in the Condensed Consolidated Statements of Financial Position include the impact of reinsurance. Information regarding the significant effects of reinsurance was as follows at:


Long-term care	June 30, 2026		December 31, 2025
Reinsurance recoverable
Medico Insurance Company	$	2,231	$	4,466
Front Street Re	269,487		273,981
Nichol International Reinsurance (S.A.C), Ltd	174,521		178,273
Nichol Modco Funds Withheld	(175,118)		(183,802)
Total reinsurance recoverable	$	271,121	$	272,918

Future policy benefits
Direct	$	652,869	$	673,636
Reinsurance assumed	103,430		108,245
Total future policy benefits	$	756,299	$	781,881


Long-term care
Three months ended June 30,	2026		2025
Net premiums
Direct premiums	$	9,086	$	10,142
Reinsurance assumed	968		988
Reinsurance ceded	(14,528)		(15,368)
Total net premiums	$	(4,474)	$	(4,238)

Net policy benefit and claims (remeasurement gain on policy liabilities of $6,064 and $2,945, for the three months ended June 30, 2026 and 2025, respectively)
Direct	$	12,084	$	20,370
Reinsurance assumed	412		2,056
Reinsurance ceded, net of provision for credit losses ¹	(16,777)		(23,490)
Total net policyholder benefits and claims	$	(4,281)	$	(1,064)


Long-term care
Six months ended June 30,	2026		2025
Net premiums
Direct premiums	$	19,044	$	21,109
Reinsurance assumed	1,921		2,078
Reinsurance ceded	(29,683)		(31,438)
Total net premiums	$	(8,718)	$	(8,251)

Net policy benefit and claims (remeasurement gain on policy liabilities of $10,523 and $3,025, for the six months ended June 30, 2026 and 2025, respectively)
Direct	$	26,057	$	35,590
Reinsurance assumed	1,626		7,677
Reinsurance ceded, net of provision for credit losses ¹	(34,599)		(42,538)
Total net policyholder benefits and claims	$	(6,916)	$	729

(1)The provision for credit losses for reinsurance recoverables for the three and six months ended June 30, 2026 was less than $(0.1) million. It was $0.1 million and $0.2 million for the three and six months ended June 30, 2025, respectively.