The National Flood Insurance Program (“NFIP”) is a program administered by the Federal Emergency Management Agency (“FEMA”) whereby the Company sells and services NFIP flood insurance policies on behalf of FEMA and receives fees for its services. Congressional authorization for the NFIP is periodically evaluated and may be subject to potential government shutdowns. The Company sells excess flood policies which are 100% ceded to a highly rated reinsurance carrier. The Company also operates two Captives for the purpose of facilitating additional underwriting capacity and to participate in a portion of the underwriting results. One Captive participates on a quota share basis for policies placed by certain of our MGA businesses that are currently focused on property insurance for earthquake and wind exposed properties with a portion of premiums ceded to reinsurance companies, limiting, but not fully eliminating the Company's exposure to underwriting losses. The other Captive participates through excess of loss reinsurance layers associated with one of our MGA businesses focused on placements of personal property, excluding flood, primarily in the southeastern United States with one layer of per risk excess reinsurance and three layers of catastrophe ("CAT") per occurrence reinsurance. All four layers have limited reinstatements and therefore have capped, maximum aggregate limits. The effects of reinsurance on premiums written and earned are as follows:


	Nine months ended September 30, 2023
(in millions)	Written			Earned
Direct premiums - WNFIC	$	681.8		$	588.2
Ceded premiums - WNFIC		(681.8	)		(588.2	)
Net premiums - WNFIC		—			—
Assumed premiums - Quota share captive and excess of loss layer captive		86.2			63.3
Ceded premiums - Quota share captive		(46.3	)		(29.6	)
Net premiums - Quota share captive and excess of loss layer captive		39.9			33.7
Net premiums - Total	$	39.9		$	33.7

All premiums written by the Company under the National Flood Insurance Program (“NFIP”) are 100% ceded to the Federal Emergency Management Agency, or FEMA, for which WNFIC received a 29.7% gross expense allowance from January 1, 2023 through September 30, 2023. For the period from January 1, 2023 through September 30, 2023, the Company ceded $679.3 million of written premiums to FEMA, with $2.5 million ceded to highly rated carriers for excess flood policies which are not within the NFIP.

As of September 30, 2023 the Condensed Consolidated Balance Sheet contained reinsurance recoverable of $217.5 million and prepaid reinsurance premiums of $475.4 million which are related to the WNFIC business. For flood policies, there was no change in the balance in the reserve for losses and loss adjustment expense net of reinsurance recoverable during the period January 1, 2023 through September 30, 2023, as the Company's direct premiums written were 100% ceded to two reinsurers. The balance of the reserve for losses and loss adjustment expense for the Company, excluding related reinsurance recoverable, as of September 30, 2023 was $217.5 million.

WNFIC maintains capital in excess of the minimum statutory amount of $7.5 million as required by regulatory authorities. The unaudited statutory capital and surplus of WNFIC was $39.0 million at September 30, 2023 and $31.8 million as of December 31, 2022. For the period from January 1, 2023 through September 30, 2023, WNFIC generated statutory net income of $8.1 million. For the period from January 1, 2022 through December 31, 2022, WNFIC generated statutory net income of $1.3 million. The maximum amount of ordinary dividends that WNFIC can pay to the shareholders in a rolling 12-month period is limited to the greater of 10% of statutory adjusted capital and surplus or 100% of adjusted net income. On April 28, 2023, WNFIC paid an ordinary dividend of $3.1 million. The dividend was declared and approved by the WNFIC Board of Directors by consent on March 17, 2023. There was no dividend payout in 2022. The maximum dividend payout that may be made in 2023 without prior approval is $3.2 million.

In December 2021, the initial funding to capitalize the quota share Captive was $5.9 million. This capital in addition to current earnings of $16.1 million through September 30, 2023, is considered at risk for loss. Assumed net written and net earned premiums for the quota share Captive for the nine months ended September 30, 2023, were $37.4 million and $31.2 million, respectively. For nine months ended September 30, 2023 the ultimate loss expense inclusive of incurred but not reported ("IBNR") claims was $9.8 million, of which $7.6 million is related to the estimated insured losses with Hurricane Ian. In connection with the estimated IBNR from Hurricane Ian claims, $2.6 million was recorded as estimated reinsurance recoverable for a net expected loss of $4.8 million. As of September 30, 2023, reported insured losses associated with Hurricane Ian were $1.9 million. As of September 30, 2023 the Condensed Consolidated Balance Sheet contained prepaid reinsurance premiums of $27.4 million related to the Captive of deferred acquisitions costs of $29.7 million, reinsurance payable for $9.0 million, and the reserve for losses and loss adjustment expense, excluding related reinsurance recoverable, was $8.2 million. The first collateral release is expected in 2024 and is based on an IBNR factor times earned premium compared to the current collateral balance.

The excess of loss layer Captive was renewed in June 2023 with underlying reinsurance treaties effective from June 1 through May 31, 2024. This Captive’s maximum underwriting exposure is $3.0 million. Assumed net earned premiums for the Captive for the nine months ended September 30, 2023, were $2.5 million. As of September 30, 2023 the Condensed Consolidated Balance Sheet contained the reserve for losses and loss adjustment expense of $6.0 million of which $5.4 million is related to Hurricane Ian.