5.	REINSURANCE

In the ordinary course of business, the Company assumes and cedes premiums and selected insured risks with other insurance companies, known as reinsurance. A large portion of the reinsurance is put into effect under contracts known as treaties and, in some instances, by negotiation on each individual risk (known as facultative reinsurance). In addition, there are several types of treaties including quota share, excess of loss and catastrophe reinsurance contracts that protect against losses over stipulated amounts arising from any

one

occurrence or event. The arrangements allow the Company to pursue greater diversification of business and serve to limit the maximum net loss to a single event, such as a catastrophe. Through the quantification of exposed policy limits in each region and the extensive use of computer-assisted modeling techniques, management monitors the concentration of risks exposed to catastrophic events.

Through the purchase of reinsurance, the Company also generally limits its net loss on any individual risk to a maximum of

$1,000,000

for casualty business,

$500,000

for property, and

$500,000

for workers' compensation, although certain treaties contain an annual aggregate deductible before reinsurance applies.

Premiums, written and earned, along with losses and settlement expenses incurred for the periods presented is summarized

as follows:

	Three-Month Periods Ended September 30,
	2020			2019
WRITTEN
Direct	$	14,534,058		$	16,305,222
Reinsurance assumed		51,551			70,200
Reinsurance ceded		(2,328,734	)		(2,410,170	)
Net	$	12,256,875		$	13,965,252
EARNED
Direct	$	14,825,942		$	16,007,232
Reinsurance assumed		51,108			64,863
Reinsurance ceded		(2,344,083	)		(2,392,349	)
Net	$	12,532,967		$	13,679,746
LOSS AND SETTLEMENT EXPENSES INCURRED
Direct	$	10,536,397		$	13,034,216
Reinsurance assumed		6,073			36,297
Reinsurance ceded		(1,679,417	)		(3,461,166	)
Net	$	8,863,053		$	9,609,347

	Nine-Month Periods Ended September 30,
	2020			2019
WRITTEN
Direct	$	44,240,437		$	48,349,466
Reinsurance assumed		114,924			178,446
Reinsurance ceded		(7,921,708	)		(7,730,458	)
Net	$	36,433,653		$	40,797,454
EARNED
Direct	$	44,710,106		$	46,710,351
Reinsurance assumed		116,404			174,583
Reinsurance ceded		(7,904,808	)		(7,665,052	)
Net	$	36,921,702		$	39,219,882
LOSSES AND SETTLEMENT EXPENSES INCURRED
Direct	$	37,370,896		$	37,778,378
Reinsurance assumed		44,409			119,498
Reinsurance ceded		(11,501,686	)		(9,780,507	)
Net	$	25,913,619		$	28,117,369