• Filing Date: 2013-03-14
  • Form Type: 10-K
  • Description: Annual report
v2.4.0.6
Reinsurance
12 Months Ended
Dec. 31, 2012
Reinsurance [Abstract]  
Reinsurance

Note 7 — Reinsurance

The Company cedes a portion of its homeowners insurance exposure to other entities under reinsurance agreements called catastrophe excess of loss reinsurance treaties. The Company remains liable with respect to claims payments in the event that any of the reinsurers are unable to meet their obligations under the reinsurance agreements. 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 well-known and rated reinsurers to secure its annual reinsurance coverage, which becomes effective June 1 st each year. We purchase reinsurance each year taking into consideration maximum projected losses and reinsurance market conditions.

The impact of the catastrophe excess of loss reinsurance treaties on premiums written and earned is as follows (in thousands):

 

                         
    Years Ended December 31,  
    2012     2011     2010  

Premiums Written:

                       

Direct

  $ 205,839       125,145       114,599  

Assumed

    73,340       62,104       1,683  
   

 

 

   

 

 

   

 

 

 

Gross written

    279,179       187,249       116,282  

Ceded

    (75,939     (55,525     (57,322
   

 

 

   

 

 

   

 

 

 

Net premiums written

  $ 203,240       131,724       58,960  
   

 

 

   

 

 

   

 

 

 
       

Premiums Earned:

                       

Direct

  $ 168,937       119,756       104,621  

Assumed

    64,670       23,850       15,136  
   

 

 

   

 

 

   

 

 

 

Gross earned

    233,607       143,606       119,757  

Ceded

    (75,939     (55,525     (57,322
   

 

 

   

 

 

   

 

 

 

Net premiums earned

  $ 157,668       88,081       62,435  
   

 

 

   

 

 

   

 

 

 

During the years ended December 31, 2012, 2011 and 2010, there were no recoveries pertaining to reinsurance contracts that were deducted from losses incurred. Prepaid reinsurance premiums related to 31 reinsurers at December 31, 2012 and 18 reinsurers at December 31, 2011, respectively. There were no amounts receivable with respect to reinsurers at December 31, 2012 and 2011. Thus, there were no concentrations of credit risk associated with reinsurance receivables and prepaid reinsurance premiums as of December 31, 2012 and 2011. The percentages of assumed premiums earned to net premiums earned for the years ended December 31, 2012, 2011 and 2010 were 41.0%, 27.1% and 24.2%, respectively.