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Reinsurance
12 Months Ended
Dec. 31, 2022
Reinsurance [Abstract]  
Reinsurance Reinsurance
The Company purchases reinsurance from third parties in the normal course of its business in order to manage its exposures. The Company's reinsurance coverage is provided on both a quota share and excess of loss basis.
The effects of reinsurance on the Company's written and earned premiums and on its losses and LAE incurred were as follows:
Years Ended December 31,
202220212020
WrittenEarnedWrittenEarnedWrittenEarned
(in millions)
Direct premiums$705.3 $673.2 $582.6 $574.0 $570.8 $611.0 
Assumed premiums8.9 9.0 7.1 7.0 9.3 9.5 
Gross premiums714.2 682.2 589.7 581.0 580.1 620.5 
Ceded premiums(7.0)(7.0)(6.6)(6.6)(5.2)(5.2)
Net premiums$707.2 $675.2 $583.1 $574.4 $574.9 $615.3 
Ceded losses and LAE incurred$3.5 $16.8 $5.9 
Ceded losses and LAE incurred includes the amortization of the Deferred Gain, LPT Reserve Adjustments, and LPT Contingent Commission Adjustments.
Excess of Loss Reinsurance
The Company has consistently maintained excess of loss reinsurance coverage to protect it against the impact of large and/or catastrophic losses in its workers' compensation business. The Company currently maintains reinsurance for losses from a single occurrence or catastrophic event in excess of $10.0 million and up to $200.0 million, subject to certain exclusions. This current reinsurance program is effective July 1, 2022 through June 30, 2023. The coverage under the Company's annual reinsurance program that ended each of July 1, 2021 and 2020 was $190.0 million, in excess of its $10.0 million retention on a per occurrence basis. The reinsurance coverage includes coverage for pandemics, acts of terrorism, excluding nuclear, biological, chemical, and radiological events. Any liability outside the coverage limits of the reinsurance program is retained by the Company.
LPT Agreement
Recoverables from reinsurers on unpaid losses and LAE amounted to $444.5 million and $476.3 million at December 31, 2022 and 2021, respectively. At each of December 31, 2022 and 2021, $308.6 million and $328.7 million, respectively, of those recoverables was related to the LPT Agreement that was entered into in 1999 by the Fund and assumed by EICN. Under the LPT Agreement, substantially all of the Fund's losses and LAE on claims incurred prior to July 1, 1995 have been ceded to three unaffiliated reinsurers on a 100% quota share basis. Under the LPT Agreement, initially $1.5 billion in liabilities for the incurred but unpaid losses and LAE related to claims incurred prior to July 1, 1995, were reinsured for consideration of $775.0 million. The LPT Agreement provides coverage up to $2.0 billion. Through December 31, 2022, the Company has paid losses and LAE claims totaling $858.9 million related to the LPT Agreement.
The Company amortized $8.3 million, $8.4 million, and $10.5 million of the Deferred Gain for the years ended December 31, 2022, 2021, and 2020, respectively. Additionally, the Company recognized favorable development in the estimated reserves ceded under the LPT Agreement of $4.9 million and $4.2 million that reduced the Deferred Gain by $2.6 million and $1.2 million for the years ended December 31, 2021 and 2020, respectively, due to favorable LPT Reserve Adjustments and by $0.5 million and $0.2 million for the years ended December 31, 2021 and 2020, respectively, due to favorable LPT Contingent Commission Adjustments (Note 2 –Reinsurance).