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 MGU 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 MGU 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:


	2023						2022
(in millions)	Written			Earned			Written			Earned
Direct premiums - WNFIC	$	886.5		$	807.4		$	740.9		$	751.3
Assumed premiums - WNFIC		—			—			—			—
Ceded premiums - WNFIC		886.5			807.4			740.9			751.3
'Net premiums - WNFIC		—			—			—			—
Assumed premiums - Quota share captive and excess of loss layer captive		113.2			89.6			65.4			43.7
Ceded premiums - Quota share captive		(52.1	)		(61.9	)		(27.1	)		(17.3	)
Net premiums - Quota share captive and excess loss layer captive		61.1			27.7			38.3			26.4
Net premiums - Total	$	61.1		$	27.7		$	38.3		$	26.4

All premiums written by the Company under the NFIP are 100.0% ceded to FEMA, for which WNFIC received a 29.7% gross expense allowance from January 1, 2023 through September 30, 2023 and a 29.5% gross expense allowance from October 1, 2023 through December 31,2023. As of December 31, 2023 and 2022, the Company ceded $883.4 million and $738.0 million of written premiums to FEMA, respectively.

As of December 31, 2023, the Condensed Consolidated Balance Sheets contained Reinsurance recoverable of $125.1 million and Prepaid reinsurance premiums of $460.9 million which are related to the WNFIC business. As of December 31, 2022, the Consolidated Balance Sheets contained reinsurance recoverable of $826.2 million and prepaid reinsurance premiums of $381.8 million. There was no net activity in the reserve for losses and loss adjustment expense for the years ended December 31, 2023 and 2022, as WNFIC’s direct premiums written were 100.0% ceded to two reinsurers. The balance of the reserve for losses and loss adjustment expense for the WNFIC, excluding related reinsurance recoverable, was $125.1 million as of December 31, 2023 and $826.2 million as of December 31, 2022.

WNFIC maintains capital in excess of minimum statutory amount of $7.5 million as required by regulatory authorities. The statutory capital and surplus of WNFIC was $39.1 million as of December 31, 2023 and $31.8 million as of December 31, 2022. As of December 31, 2023 and 2022, WNFIC generated statutory net income of $7.5 million and $1.3 million, respectively. The maximum amount of ordinary dividends that WNFIC can pay to shareholders in a rolling 12 month period is limited to the greater of 10.0% of statutory adjusted capital and surplus or 100.0% 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 on March 17, 2023. There was no dividend payout in 2022. The maximum dividend payouts that may be made in 2023 and 2024 without prior approval is $3.2 million and $7.5 million, respectively.

In December 2021, the initial funding to capitalize the quota share Captive was $5.9 million. This capital in addition to current earnings of $2.5 million through December 31, 2023 is considered at risk for loss. Assumed net written and net earned premiums for the quota share Captive for the 12 months ended December 31, 2023 were $57.6 million and $24.2 million, respectively. For the 12 months ended December 31, 2023, the ultimate loss expense inclusive of incurred but not reported ("IBNR") claims was $7.2 million, of which $3.9 million is related to the estimated insured losses from Hurricane Ian. In connection with the estimated IBNR from Hurricane Ian claims, $0.1 million was recorded as estimated reinsurance recoverable for a net expected loss of $3.8 million. As of December 31, 2023, reported insured losses associated with Hurricane Ian are $1.9 million. As of December 31, 2023 the Consolidated Balance Sheets contained prepaid reinsurance premiums of $0.6 million related to the Captive and deferred acquisition costs of $31.0 million and reserve for losses and loss adjustment

expense, excluding related reinsurance recoverable was $4.0 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 year ended December 31, 2023 and December 31, 2022 were $3.5 and 5.8 million, respectively. As of December 31, 2023 and December 31, 2022, the Consolidated Balance Sheets contained the reserve for losses and loss adjustment expense of $2.3 million and $4.5 million, respectively.