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 property risks in excess of $300,000 in both 2019 and 2018 and primarily ceded all specific liability risks in excess of $400,000 in 2019, and $500,000 in 2018. 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.

The following table presents the effects of such reinsurance and assumption transactions on premiums and losses and LAE (dollars in thousands). The three and nine months ended September 30, 2019 written and earned premiums amounts includes $90,000 and $433,000 of reinsurance reinstatement costs relating to Hurricane Irma, respectively.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Written premiums:
Direct	$	16,973		$	16,814		$	50,390		$	53,237
Assumed	10,104			9,815			26,072			23,691
Ceded	(3,271		)	(3,783		)	(10,900		)	(11,642		)
Net written premiums	$	23,806		$	22,846		$	65,562		$	65,286

Earned premiums:
Direct	$	17,606		$	19,955		$	52,864		$	61,739
Assumed	8,356			7,363			23,730			21,160
Ceded	(3,187		)	(3,868		)	(10,783		)	(11,711		)
Net earned premiums	$	22,775		$	23,450		$	65,811		$	71,188

Losses and LAE:
Direct	$	13,232		$	19,324		$	47,464		$	46,714
Assumed	5,667			5,027			15,922			11,996
Ceded	(4,042		)	(7,797		)	(19,691		)	(13,760		)
Net Losses and LAE	$	14,857		$	16,554		$	43,695		$	44,950