Reinsurance

6 Months Ended

Jun. 30, 2024

We evaluate and monitor the financial condition of our reinsurers under voluntary reinsurance arrangements to minimize our exposure to significant losses from reinsurer insolvencies. The following tables provide (i) a disaggregation of our reinsurance recoverable balance by financial strength rating, and (ii) an aging analysis of our past due reinsurance recoverable balances as of June 30, 2024, and December 31, 2023:


	June 30, 2024
($ in thousands)	Current		Past Due	Total Reinsurance Recoverables
Financial strength rating of rated reinsurers
A++	$	83,944	671	84,615
A+	392,094		566	392,660
A	116,631		1,113	117,744
A-	4,991		89	5,080


Total rated reinsurers	597,660		2,439	600,099

Non-rated reinsurers
Federal and state pools	83,241		—	83,241
Other than federal and state pools	3,785		163	3,948
Total non-rated reinsurers	87,026		163	87,189

Total reinsurance recoverable, gross	$	684,686	2,602	687,288
Less: allowance for credit losses				(1,700)
Total reinsurance recoverable, net				685,588


	December 31, 2023
($ in thousands)	Current		Past Due	Total Reinsurance Recoverables
Financial strength rating of rated reinsurers
A++	$	82,466	21	82,487
A+	371,132		2,887	374,019
A	111,883		1,380	113,263
A-	3,596		89	3,685


Total rated reinsurers	569,077		4,377	573,454

Non-rated reinsurers
Federal and state pools	80,506		—	80,506
Other than federal and state pools	4,488		77	4,565
Total non-rated reinsurers	84,994		77	85,071

Total reinsurance recoverable, gross	$	654,071	4,454	658,525
Less: allowance for credit losses				(1,700)
Total reinsurance recoverable, net				656,825

The following table provides a roll forward of the allowance for credit losses on our reinsurance recoverable balance for the periods indicated:


	Quarter ended June 30,			Six Months ended June 30,
($ in thousands)	2024		2023	2024		2023
Balance at beginning of period	$	1,700	2,300	$	1,700	1,600
Current period change for expected credit losses	—		(500)	—		200

Write-offs charged against the allowance for credit losses	—		—	—		—
Recoveries	—		—	—		—
Allowance for credit losses, end of period	$	1,700	1,800	$	1,700	1,800

For a discussion of the methodology used to evaluate our estimate of expected credit losses on our reinsurance recoverable balance, refer to Note 2. "Summary of Significant Accounting Policies" in Item 8. "Financial Statements and Supplementary Data." of our 2023 Annual Report.

The following table lists direct, assumed, and ceded reinsurance amounts for premiums written, premiums earned, and loss and loss expense incurred for the indicated periods. For more information about reinsurance, refer to Note 9. “Reinsurance” in Item 8. “Financial Statements and Supplementary Data.” of our 2023 Annual Report.


	Quarter ended June 30,			Six Months ended June 30,
($ in thousands)	2024		2023	2024		2023
Premiums written:
Direct	$	1,399,738	1,232,496	$	2,715,649	2,365,256
Assumed	6,413		5,577	12,398		10,971
Ceded	(180,050)		(153,166)	(345,325)		(291,552)
Net	1,226,101		1,084,907	2,382,722		2,084,675
Premiums earned:
Direct	1,242,696		1,073,498	2,448,064		2,105,726
Assumed	5,779		5,968	11,970		12,258
Ceded	(168,244)		(137,316)	(328,859)		(273,498)
Net	1,080,231		942,150	2,131,175		1,844,486
Loss and loss expense incurred:
Direct	1,009,819		698,994	1,763,386		1,312,223
Assumed	5,058		5,678	11,039		10,933
Ceded	(89,329)		(58,542)	(144,585)		(109,588)
Net	$	925,548	646,130	$	1,629,840	1,213,568

The increase in direct loss and loss expense incurred in Second Quarter 2024 and Six Months 2024 compared to the same prior-year periods was primarily due to (i) unfavorable prior year casualty reserve development of $176.0 million in Second Quarter 2024, compared to $3.5 million of favorable development in Second Quarter 2023, and (ii) unfavorable prior year casualty reserve development of $211.0 million in Six Months 2024, compared to $16.5 million of favorable development in Six Months 2023.