• Filing Date: 2015-03-10
  • Form Type: 10-K
  • Description: Annual report
v2.4.1.9
Reinsurance
12 Months Ended
Dec. 31, 2014
Insurance [Abstract]  
Reinsurance

Note 10 — 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 its 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,  
     2014      2013      2012  

Premiums Written:

        

Direct

   $ 341,685       $ 315,695       $ 205,839   

Assumed

     65,968         39,076         73,340   
  

 

 

    

 

 

    

 

 

 

Gross written

  407,653      354,771      279,179   

Ceded

  (113,423   (102,865   (75,939
  

 

 

    

 

 

    

 

 

 

Net premiums written

$ 294,230    $ 251,906    $ 203,240   
  

 

 

    

 

 

    

 

 

 

Premiums Earned:

Direct

$ 332,175    $ 273,037    $ 168,937   

Assumed

  33,313      64,076      64,670   
  

 

 

    

 

 

    

 

 

 

Gross earned

  365,488      337,113      233,607   

Ceded

  (113,423   (102,865   (75,939
  

 

 

    

 

 

    

 

 

 

Net premiums earned

$ 252,065    $ 234,248    $ 157,668   
  

 

 

    

 

 

    

 

 

 

During the years ended December 31, 2014, 2013 and 2012, there were no recoveries pertaining to reinsurance contracts that were deducted from losses incurred. There were 28 reinsurers at December 31, 2014 and 27 reinsurers at December 31, 2013, respectively, participating in the Company’s reinsurance program. There were no amounts receivable with respect to reinsurers at December 31, 2014 and 2013. Thus, there were no concentrations of credit risk associated with reinsurance receivables and prepaid reinsurance premiums as of December 31, 2014 and 2013. The ratio of assumed premiums earned to net premiums earned for the years ended December 31, 2014, 2013 and 2012 were 13.2%, 27.4%, and 41.0%, 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. These adjustments are reflected in the statements of income as net reductions in ceded premiums of $23,543, $12,521 and $0, respectively, for the years ended December 31, 2014, 2013 and 2012. At December 31, 2014 and 2013, other assets included $28,596 and $9,009, respectively, and prepaid reinsurance premiums included $5,983 and $3,512, respectively, which are related to these adjustments.