Reinsurance

12 Months Ended

Dec. 31, 2024

ProAssurance purchases reinsurance from third-party reinsurers and insurance enterprises in order to reduce its net exposure to losses, to provide capacity to write larger limits of liability, to provide reimbursement for losses incurred under the higher limit coverages the Company offers and as a mechanism for providing custom insurance solutions. ProAssurance also uses reinsurance arrangements as a mechanism for sharing risk with insureds or their affiliates.

The effects of reinsurance for the years ended December 31, 2024, 2023 and 2022 were as follows:


	Year Ended December 31
(In thousands)	2024		2023		2022
Direct	$	992,835	$	1,020,538	$	1,048,690
Assumed	58,032		61,741		55,304
Ceded	(97,192)		(96,285)		(89,857)
Net premiums written	$	953,675	$	985,994	$	1,014,137

Direct	$	1,009,010	$	1,008,915	$	1,058,263
Assumed	57,489		62,861		56,175
Ceded	(98,249)		(94,379)		(84,857)
Net premiums earned	$	968,250	$	977,397	$	1,029,581

Losses and loss adjustment expenses	$	795,273	$	918,695	$	839,717
Reinsurance recoveries	(55,838)		(118,201)		(62,955)
Net losses and loss adjustment expenses	$	739,435	$	800,494	$	776,762

The receivable from reinsurers on unpaid losses and LAE represents management’s estimated amount of future loss payments that will be recoverable under ProAssurance reinsurance agreements. Certain of the Company's reinsurance agreements base the amount of premium that is due to the reinsurer in part on losses reimbursed or to be reimbursed under the agreement, and terms may also include minimum and maximum amounts of ceded premium. Ceded premium amounts are estimated based on management’s expectation of ultimate losses and the portion of those losses that are allocable to reinsurers according to the terms of the agreements, including any minimums or maximums. Given the uncertainty of the ultimate amounts of losses, management’s estimates of losses and related amounts recoverable may vary significantly from the eventual outcome. Due to changes in management’s estimates of amounts due to reinsurers related to prior accident year loss recoveries, ProAssurance increased premiums ceded in its Specialty P&C segment by $1.4 million during the year ended December 31, 2024 and decreased premiums ceded in its Specialty P&C segment by $2.4 million and $2.8 million during the years ended December 31, 2023 and 2022, respectively.

Reinsurance contracts do not relieve ProAssurance from its obligations to policyholders, and ProAssurance remains liable to its policyholders whether or not reinsurers honor their contractual obligations. ProAssurance continually monitors its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies.

At December 31, 2024, the net total amounts due from reinsurers was $430.6 million (receivables related to paid and unpaid losses and LAE and prepaid reinsurance premiums, less reinsurance premiums payable). No single reinsurer had an individual balance which exceeded $55 million.

At December 31, 2024 reinsurance recoverables totaling approximately $145.5 million were collateralized by letters of credit or funds withheld. Expected credit losses associated with the Company's reinsurance receivables (related to both paid and unpaid losses) were nominal in amount as of December 31, 2024, 2023 and 2022. During the years ended December 31, 2024, 2023 or 2022, no reinsurance balances were written off for credit reasons. For further information on the Company's allowance for expected credit losses related to its receivables from reinsurers see Note 1.