Reinsurance

6 Months Ended

Jun. 30, 2018

Reinsurance Disclosures [Abstract]

Reinsurance

8. Reinsurance

The Company will assume and cede certain premiums and losses to and from various companies and associations under various reinsurance agreements. The Company seeks to limit the maximum net loss that can arise from large risks or risks in concentrated areas of exposure through use of these agreements, either on an automatic basis under general reinsurance contracts known as treaties or by negotiation on substantial individual risks.

Reinsurance contracts do not relieve the Company from its obligation to policyholders. Additionally, failure of reinsurers to honor their obligations could result in significant losses to us. There can be no assurance that reinsurance will continue to be available to us at the same extent, and at the same cost, as it has in the past. The Company may choose in the future to reevaluate the use of reinsurance to increase or decrease the amounts of risk ceded to reinsurers.

As a group at June 30, 2018, the Company retained the first $10,000 of weather-related losses from catastrophic events and had reinsurance under various reinsurance agreements up to $74,600 in excess of its $10,000 retained risk. These reinsurance risk limits are unchanged from 2017.

The Company actively monitors and evaluates the financial condition of the reinsurers and develops estimates of the uncollectible amounts due from reinsurers. Such estimates are made based on periodic evaluation of balances due from reinsurers, judgments regarding reinsurers’ solvency, known disputes, reporting characteristics of the underlying reinsured business, historical experience, current economic conditions, and the state of reinsurer relations in general. Collection risk is mitigated from reinsurers by entering into reinsurance arrangements only with reinsurers that have strong credit ratings and statutory surplus above certain levels. The Company’s largest reinsurance recoverables on paid and unpaid losses were due from reinsurance companies with A.M. Best ratings of “A” or higher.

A reconciliation of direct to net premiums on both a written and an earned basis is as follows:

	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
	Premiums Written			Premiums Earned			Premiums Written			Premiums Earned
Direct premium	$	88,580		$	53,987		$	127,854		$	91,179
Assumed premium		3,249			3,249			4,532			4,488
Ceded premium		(6,559	)		(6,559	)		(8,878	)		(8,878	)
Net premiums	$	85,270		$	50,677		$	123,508		$	86,789
Percentage of assumed earned premium to net earned premium					6.4	%					5.2	%

	Three Months Ended June 30, 2017						Six Months Ended June 30, 2017
	Premiums Written			Premiums Earned			Premiums Written			Premiums Earned
Direct premium	$	83,671		$	48,564		$	120,051		$	82,680
Assumed premium		3,396			3,368			4,591			4,539
Ceded premium		(8,953	)		(6,279	)		(11,431	)		(8,757	)
Net premiums	$	78,114		$	45,653		$	113,211		$	78,462
Percentage of assumed earned premium to net earned premium					7.4	%					5.8	%

A reconciliation of direct to net losses and loss adjustment expenses is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Direct losses and loss adjustment expenses	$	41,121		$	36,093		$	59,758		$	55,735
Assumed losses and loss adjustment expenses		487			2,024			1,076			2,613
Ceded losses and loss adjustment expenses		(887	)		(1,887	)		(1,264	)		(4,397	)
Net losses and loss adjustment expenses	$	40,721		$	36,230		$	59,570		$	53,951

If 100% of our ceded reinsurance was cancelled as of June 30, 2018 or December 31, 2017, no ceded commissions would need to be returned to the reinsurers. Reinsurance contracts are typically effective from January 1 through December 31 each year.