Reinsurance

3 Months Ended

Mar. 31, 2012

Reinsurance Disclosures [Abstract]

Reinsurance

REINSURANCE

We follow industry practice of reinsuring a portion of our risks. Reinsurance involves transferring, or “ceding”, all or a portion of the risk exposure on policies we write to another insurer, known as a reinsurer. To the extent that our reinsurers are unable to meet the obligations they assume under our reinsurance agreements, we remain liable for the entire insured loss.

Our catastrophe reinsurance agreements provide us coverage against severe weather events. We entered into excess-of-loss agreements with several private reinsurers and with the Florida Hurricane Catastrophe Fund. The private agreements provide coverage against severe weather events such as hurricanes, tropical storms and tornadoes. The agreement with the FHCF only provides coverage against storms that the National Hurricane Center designates as a hurricane at landfall.

We made no changes to the terms of our current agreements as we disclosed those terms in our 2011 Form 10-K.

We write flood insurance under an agreement with the National Flood Insurance Program. We cede 100% of the premiums written and the related risk of loss. We earn commissions for the issuance of flood policies based upon a fixed percentage of net written premiums and the processing of flood claims based upon a fixed percentage of incurred losses, and we can earn additional commissions by meeting certain growth targets for the number of in-force policies. We recognized commission revenue from our flood program of $97 and $81, for the three-month periods ended March 31, 2012 and 2011, respectively.

We amortize our prepaid reinsurance premiums over the annual agreement period, and we record that amortization in ceded premiums earned on our unaudited Consolidated Statements of Income. The table below summarizes the amounts of our ceded premiums written under the various types of agreements, as well as the amortization of prepaid reinsurance premiums:

	Three Months Ended March 31,
	2012			2011
Excess-of-loss	$	859		$	953
Quota share	(286		)	(112		)
Flood	(2,222		)	(2,079		)
Ceded premiums written	$	(1,649	)	$	(1,238	)
Decrease in ceded unearned premiums	(21,237		)	(20,020		)
Ceded premiums earned	$	(22,886	)	$	(21,258	)

During the three-month periods ended March 31, 2012 and 2011, we recovered $725 and $1,172, respectively, under our reinsurance agreements.