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REINSURANCE
 12 Months Ended
Dec. 31, 2011
REINSURANCE [Abstract]  
REINSURANCE [Text Block]

9.       REINSURANCE

We purchase treaty and facultative reinsurance to reduce exposure to significant losses. Facultative reinsurance provides coverage for all or a portion of the losses incurred for a single policy and we separately negotiate each facultative contract. Treaty reinsurance provides coverage for a specified type or category of risks. Our treaty reinsurance agreements provide this coverage on either an excess of loss or a proportional basis. Excess of loss covers provide a contractually set amount of coverage after a specified loss amount has been reached. This specified loss amount can be based on the size of an industry loss or on a Company-specific incurred loss amount. These covers can be purchased on a package policy basis, which provide us with coverage for a number of lines of business within one contract. In contrast, proportional covers provide us with a specified percentage of coverage from the first dollar of loss.

 

All of these reinsurance covers provide us the right to recover of a portion of specified losses and loss expenses from reinsurers. However, to the extent that our reinsurers do not meet their obligations under these agreements due to solvency issues, contractual disputes or other reasons, we remain liable. Under our reinsurance security policy, we predominantly cede our business to reinsurers rated A- or better by A.M. Best.

Gross and net premiums written and earned were as follows:
                     
                     
 Year ended December 31, 2011 2010 2009 
   Premiums  Premiums  Premiums   Premiums  Premiums  Premiums  
   written earned written  earned written earned 
                     
 Gross $ 4,096,153 $ 3,973,956 $ 3,750,536 $ 3,632,177 $ 3,587,295 $ 3,540,298 
 Ceded   (676,719)   (658,995)   (602,996)   (684,767)   (770,866)   (748,534) 
  Net $ 3,419,434 $ 3,314,961 $ 3,147,540 $ 2,947,410 $ 2,816,429 $ 2,791,764 
                     

During the year ended December 31, 2011, we recognized ceded losses and loss expenses of $450 million (2010: $425 million; 2009: $319 million).

 

Our provision for unrecoverable reinsurance was $18 million at December 31, 2011 (2010: $17 million). At December 31, 2011, 98.6% (2010: 97.9%) of our gross reinsurance recoverables were collectible from reinsurers rated A- or better by A.M. Best.