Reinsurance

12 Months Ended

Dec. 31, 2019

Reinsurance

Reinsurance

10. Reinsurance

The Company cedes insurance to CAR and to other reinsurers. The Company has a property catastrophe excess of loss agreement and a casualty excess of loss agreement that qualify as reinsurance treaties and are designed to protect against large or unusual loss and LAE activity. Reinsurance contracts do not relieve the Company from its obligations to policyholders. 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 economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies.

The Company is subject to concentration of credit risk with respect to reinsurance ceded. At December 31, 2019, reinsurance receivables on paid and unpaid loss and LAE with a carrying value of $130,005 and ceded unearned premiums of $33,587 were associated with CAR. At December 31, 2018, reinsurance receivables on paid and unpaid loss and LAE with a carrying value of $113,544 and ceded unearned premiums of $32,447 were associated with CAR. The Company assumes a proportionate share of the obligations from CAR. The Company makes an estimate of its share of assumed activity from the most recent quarter reported by CAR and records adjustments to the reported activity to reflect its anticipated final assumed obligations. The Company’s participation in CAR resulted in assumed net losses of $3,595, $5,362 and $5,444 for the years ended December 31, 2019, 2018 and 2017, respectively.

CAR has been, with few exceptions, required by law to issue a policy to any applicant who seeks it. As a servicing carrier of CAR, this requirement has applied to the Company.

The effect of assumed and ceded premiums on net written and earned premiums and losses and LAE incurred is as follows.

	Years Ended December 31,
	2019		2018		2017
Written Premiums
Direct	$	852,404	$	843,675	$	827,316
Assumed		32,391		32,403		34,214
Ceded		(90,386)		(89,166)		(80,476)
Net written premiums	$	794,409	$	786,912	$	781,054
Earned Premiums
Direct	$	845,102	$	836,759	$	818,804
Assumed		32,853		32,196		32,502
Ceded		(89,178)		(87,368)		(76,886)
Net earned premiums	$	788,777	$	781,587	$	774,420

Loss and LAE
Direct	$	562,192	$	538,569	$	517,146
Assumed		28,529		28,815		28,003
Ceded		(80,875)		(81,871)		(41,262)
Net loss and LAE	$	509,846	$	485,513	$	503,887