Reinsurance

In the normal course of business, the Company seeks to minimize the loss that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with reinsurers. The Company participates in reinsurance agreements in order to limit its loss exposure including protecting against catastrophe losses. The Company primarily ceded all specific commercial risks in excess of $500,000 in both 2016 and 2015. Reinsurance does not discharge the direct insurer from liability to its 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 the concentration of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. To date, the Company has not experienced any significant difficulties in collecting reinsurance recoverables.

The Company assumes written premiums under a few fronting arrangements, most of which are net of other reinsurance arrangements. The fronting arrangements are with unaffiliated insurers who write on behalf of the Company in markets that require a higher A.M. Best rating than the Company’s current rating, where the policies are written in a state where the Company is not licensed or for other strategic reasons. Assumed premiums is comprised entirely of these arrangements other than where there are premiums assumed from Citizens Property and Casualty Corporation (“Citizens”).

The following table presents the effects of such reinsurance and assumption transactions on premiums and losses and LAE (dollars in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Written premiums:
Direct	$	22,340		$	22,438		$	66,473		$	65,067
Assumed	6,157			1,804			17,143			3,438
Ceded	(3,863		)	4,357			(10,755		)	(10,298		)
Net written premiums	$	24,634		$	28,599		$	72,861		$	58,207

Earned premiums:
Direct	$	23,057		$	21,136		$	67,871		$	60,487
Assumed	4,196			1,906			8,186			5,716
Ceded	(3,873		)	(5,159		)	(10,893		)	(18,712		)
Net earned premiums	$	23,380		$	17,883		$	65,164		$	47,491

Losses and LAE:
Direct	$	13,616		$	10,605		$	41,460		$	31,149
Assumed	1,750			1,082			4,106			1,887
Ceded	(784		)	(1,874		)	(4,744		)	(5,677		)
Net Losses and LAE	$	14,582		$	9,813		$	40,822		$	27,359