• Filing Date: 2014-03-12
  • Form Type: 10-K
  • Description: Annual report
12 Months Ended
Dec. 31, 2013
Insurance [Abstract]  

Note 11 — Reinsurance

The Company cedes a portion of its homeowners insurance exposure to other entities under 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. 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 each year. The Company purchases 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:


     Years Ended December 31,  
     2013     2012     2011  

Premiums Written:



   $ 315,695      $ 205,839      $ 125,145   


     39,076        73,340        62,104   










Gross written

     354,771        279,179        187,249   


     (102,865     (75,939     (55,525










Net premiums written

   $ 251,906      $ 203,240      $ 131,724   










Premiums Earned:



   $ 273,037      $ 168,937      $ 119,756   


     64,076        64,670        23,850   










Gross earned

     337,113        233,607        143,606   


     (102,865     (75,939     (55,525










Net premiums earned

   $ 234,248      $ 157,668      $ 88,081   










During the years ended December 31, 2013, 2012 and 2011, there were no recoveries pertaining to reinsurance contracts that were deducted from losses incurred. Prepaid reinsurance premiums related to 27 reinsurers at December 31, 2013 and 31 reinsurers at December 31, 2012, respectively. There were no amounts receivable with respect to reinsurers at December 31, 2013 and 2012. Thus, there were no concentrations of credit risk associated with reinsurance receivables and prepaid reinsurance premiums as of December 31, 2013 and 2012. The ratio of assumed premiums earned to net premiums earned for the years ended December 31, 2013, 2012 and 2011 were 27.4%, 41.0%, and 27.1%, respectively.


Certain of the reinsurance contracts include retrospective provisions that adjust premiums, increase the amount of future coverage, or result in profit commissions in the event losses are minimal or zero. As a result, the Company’s reported revenue for the year ended December 31, 2013 includes a net reduction in ceded premiums of $12,521 comprised of various components of these adjustments, with $9,009 and $3,512 included in other assets and prepaid reinsurance premiums, respectively. See “Reinsurance” under Note 2 — “Summary of Significant Accounting Policies.”