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.

On January 12, 2023, HCPCI and TypTap received approval from the FLOIR to discontinue flood insurance policies written in Florida. Since the approval, the Company has cancelled or not renewed the majority of its flood insurance policies. However, the Company is required to continue providing flood insurance coverage to policyholders with open claims until criteria set by the FLOIR for cancellation and non-renewal are met. The reason for discontinuation is primarily attributable to the increased costs and reduced availability of flood reinsurance. The discontinuation does not have a material impact to the Company’s results of operations.

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:


	Years Ended December 31,
	2023			2022			2021
Premiums Written:
Direct	$	762,806		$	713,103		$	545,441
Assumed		135,816			12,916			128,948
Gross written		898,622			726,019			674,389
Ceded		(269,627	)		(261,144	)		(199,741	)
Net premiums written	$	628,995		$	464,875		$	474,648
Premiums Earned:
Direct	$	734,891		$	651,455		$	478,546
Assumed		30,621			73,261			98,498
Gross earned		765,512			724,716			577,044
Ceded		(269,627	)		(261,144	)		(199,741	)
Net premiums earned	$	495,885		$	463,572		$	377,303

During the year ended December 31, 2023, the Company derecognized ceded losses of $94,863. During the years ended December 31, 2022, and 2021, ceded losses of $812,623, and $40,432, respectively, were recognized as reductions in losses and loss adjustment expenses. Due to a reduction in gross estimated losses and LAE related to Hurricane Ian, $104,614 of ceded losses was derecognized in 2023. Ceded losses related to Hurricane Sally, Tropical Storm Eta, and other catastrophe and non-catastrophe claims were $5,416, $4,301, and $34, respectively, for 2023. For 2022, ceded losses related to Hurricane Ian, Hurricane Irma, Hurricane Sally, and other non-catastrophe claims were $782,071, $20,000, $10,483, and $69, respectively. Ceded losses related to Hurricane Irma, Hurricane Michael, Hurricane Sally, and other non-catastrophe claims were $32,144, $4,434, and $3,854, respectively, for 2021. At December 31, 2023 and 2022, there were 33 and 45 reinsurers, respectively, participating in the Company’s reinsurance program. Total net amounts recoverable and receivable from reinsurers at December 31, 2023 and 2022 were $350,294 and $688,359, respectively. Approximately 67.1% of the reinsurance recoverable balance at December 31, 2023 was receivable from five reinsurers. Based on all available information considered in the rating-based method described in Note 2 -- “Summary of Significant Accounting Policies,” the Company recognized a decrease in credit loss expense of $336 for the year ended December 31, 2023 as opposed to increases in credit loss expense of $364 and $0 for the years ended December 31, 2022 and 2021, respectively. Allowances for credit losses related to the reinsurance recoverable balance were $118 and $454 at December 31, 2023 and 2022, respectively.

Due to Hurricane Ian in 2022, the Company’s first event reinsurance coverage for flood losses was exhausted, and accordingly, the Company could no longer cede additional flood losses from Hurricane Ian to reinsurers. As a result, the Company elected to pay reinstatement premiums of $6,684 to the reinsurers to restore the full amount of coverage. The unamortized first event reinsurance premiums of $3,306 were expensed and charged to premiums ceded during the fourth quarter of 2022. See Note 15 -- “Losses and Loss Adjustment Expenses” for more information about the flood losses attributable to Hurricane Ian.

One of the existing reinsurance contracts includes retrospective provisions that adjust premiums in the event losses are minimal or zero. Prior to June 1, 2022, there were two reinsurance contracts with retrospective provisions. As a result of Hurricane Ian, the balance of previously accrued benefits under the multi-year reinsurance contract with retrospective provisions was decreased by $12,600 in September 2022. For the years ended December 31, 2023, 2022 and 2021, the Company recognized reductions in premiums ceded of $27,972, $18,710 and $10,864, respectively. See Note 25 -- “Commitments and Contingencies” for additional information.

Amounts receivable pursuant to retrospective provisions are reflected in other assets. At December 31, 2023 and 2022, other assets included $44,289 and $16,317, respectively. In October 2022, the Company received $5,457 of premium refund under the Company’s previous two multi-year reinsurance contracts which were commuted effective May 31, 2022. Management believes the credit risk associated with the collectability of these accrued benefits is minimal as the amount receivable is concentrated with one

reinsurer with a good credit rating and the Company monitors the creditworthiness of this reinsurer based on available information about the reinsurer’s financial condition.

For the year ended December 31, 2023, assumed premiums written related to the Northeast Region's insurance policies were $0, whereas for the year ended December 31, 2022, $27,488 of assumed premiums written related to the Northeast Region’s insurance policies were derecognized, which primarily resulted from the return of the unearned portion of assumed written premiums subsequent to the Company’s renewal and/or replacement of insurance policies in Massachusetts and New Jersey. For the year ended December 31, 2021, assumed premiums written related to the Northeast Region’s insurance policies were $93,607. At December 31, 2023, the Company had a net balance of $581 due to United related to the Northeast Region, representing ceding commission payable of $581. At December 31, 2022, the Company had a net balance of $1,581 due to United related to the Northeast Region, consisting of payable on paid losses and loss adjustment expenses of $1,000 and ceding commission payable of $581. Effective December 30, 2022, the Company’s quota share reinsurance agreement to provide 100% reinsurance on United’s policies in the Northeast Region was commuted.

Effective December 31, 2021, the Company entered into a separate agreement to provide 85% quota share reinsurance on United’s personal lines insurance policies in the states of Georgia, South Carolina and North Carolina through May 31, 2022. Effective June 1, 2022, the Company entered into a new agreement to provide 100% quota share reinsurance on United’s personal lines insurance policies in the Southeast Region. For the year ended December 31, 2023, $7,271 of assumed premiums written related to the Southeast Region’s insurance policies were derecognized, which primarily resulted from the return of the unearned portion of assumed written premiums subsequent to the Company’s renewal and/or replacement of insurance policies in the Southeast Region. For the years ended December 31, 2022 and 2021, assumed premiums written related to the Southeast Region's insurance policies were $40,404 and $35,341, respectively. At December 31, 2023, the Company had a net balance of $4,203 due to United related to the Southeast Region, consisting of premiums payable of $1,712 and payable on paid losses and loss adjustment expenses of $2,765, offset by ceding commission receivable of $274. At December 31, 2022, there was an amount of $7,521 due to United related to the Southeast Region, consisting of payable on paid losses and loss adjustment expenses of $7,606 and ceding commission payable of $16, offset by premiums receivable of $101.

On February 27, 2023, United’s Florida-domiciled residential insurance subsidiary was placed into receivership by the State of Florida due to its financial insolvency. At December 31, 2023, the Company had a net amount due to United of $4,784 and funds withheld for assumed business in trust accounts totaling $30,087 for the benefit of policies assumed from United. The Company ceased providing TPA services to United in March 2023. 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.

In connection with the Southeast Region quota share reinsurance provided to United by the Company, the receiver of United had requested a total withdrawal of $13,482 from a trust account holding funds withheld for assumed business. The withdrawal was in settlement of unearned premiums of $7,496, losses and LAE of $2,310, claims handling fees of $4,875, less ceding commission of $1,199. Of the total withdrawal, the Company received $4,875 in payment for reimbursement and fees receivable under TPA service on October 26, 2023.

At December 31, 2023 and 2022, the balance of funds withheld for assumed business related to the Company’s quota share reinsurance agreements with United was $30,087 and $48,772, respectively.

As described in Note 1 -- “Nature of Operations” with regards to the Citizens assumption, assumed premiums written related to Citizens policies were $143,087 for the year ended December 31, 2023.

The ratio of assumed premiums earned to net premiums earned for the years ended December 31, 2023, 2022 and 2021 was 6.18%, 15.80%, and 26.11%, respectively.