Reinsurance

12 Months Ended

Dec. 31, 2021

Reinsurance

Reinsurance

11. Reinsurance

The Company cedes insurance to CAR and to other reinsurers. The Company has various excess of loss and quota share agreements 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,

2021, reinsurance receivables on paid and unpaid loss and LAE with a carrying value of $106,608 and ceded unearned premiums of $21,841 were associated with CAR. At December 31, 2020, reinsurance receivables on paid and unpaid loss and LAE with a carrying value of $117,681 and ceded unearned premiums of $20,589 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 $5,002, $3,480 and $3,595 for the years ended December 31, 2021, 2020 and 2019, 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,
	2021		2020		2019
Written Premiums
Direct	$	802,139	$	798,712	$	852,404
Assumed		31,359		26,316		32,391
Ceded		(68,972)		(61,491)		(90,386)
Net written premiums	$	764,526	$	763,537	$	794,409
Earned Premiums
Direct	$	811,329	$	815,981	$	845,102
Assumed		30,583		29,365		32,853
Ceded		(67,584)		(74,268)		(89,178)
Net earned premiums	$	774,328	$	771,078	$	788,777
Loss and LAE Incurred
Direct	$	473,162	$	428,018	$	562,192
Assumed		16,873		18,595		28,529
Ceded		(28,308)		(42,057)		(80,875)
Net loss and LAE	$	461,727	$	404,556	$	509,846