Reinsurance

In the normal course of business, the Company reinsures portions of certain policies that we underwrite to limit disproportionate risks. During 2012 and 2011, we retained varying amounts of individual insurance up to a maximum retention of $100,000 on any life. The Company also reinsures 100% of our accidental death benefit rider coverage. Catastrophe reinsurance is in place for our property policies. In 2012 and 2011, this reinsurance provided $10,000,000 of coverage above a $500,000 deductible. Our health insurance policies are substantially all reinsured on a 100% coinsurance basis. We remain contingently liable to the extent that the reinsuring companies cannot meet their obligations under these reinsurance treaties.

Our amounts recoverable from reinsurers represent receivables from and reserves ceded to reinsurers. We obtain reinsurance from multiple reinsurers, and we monitor concentration as well as financial strength ratings of our principal reinsurers. The ratings by A.M. Best Company range from B+ (Good) to A+ (Superior). To protect our position, we have established and funded a trust to cover the contingent liabilities related to accident and health reinsurance ceded to Puritan Life Insurance Company of America, which represents $4.9 million of the $9.7 million of reinsurance recoverable at December 31, 2012.

Assumed and ceded life reinsurance activity as of December 31, 2012 and 2011 is summarized as follows:



	At December 31,
	2012			2011
	(In thousands)
Aggregate assumed life insurance in force	$	801,261		1,147,222
Aggregate ceded life insurance in force	$	(466,898	)	(462,220	)
Net life insurance in force	$	4,976,157		5,244,200

The Company's reinsurance recoveries on ceded reinsurance were $9.7 million in 2012 and $9.6 million in 2011. Premiums, claims and surrenders assumed and ceded for all lines of business for these years are summarized as follows:



	For the Years Ended December 31,
	2012			2011		2010
	(In thousands)
Premiums from short-duration contracts:
Direct	$	7,274		7,227		6,994
Assumed	—			—		—
Ceded	(1,034		)	(1,128	)	(1,131	)
Net premiums earned	6,240			6,099		5,863
Premiums from long-duration contracts:
Direct	168,272			159,860		152,125
Assumed	1,275			1,874		1,553
Ceded	(5,914		)	(6,438	)	(7,489	)
Net premiums earned	163,633			155,296		146,189
Total premiums earned	$	169,873		161,395		152,052
Claims and surrenders assumed	$	1,313		1,865		1,549
Claims and surrenders ceded	$	(5,486	)	(3,204	)	(5,341	)

SPFIC has catastrophe reinsurance that covers the first event in excess of a $500,000 deductible up to $10.0 million. In consideration for a reinstatement premium, second event coverage is provided in excess of a $500,000 deductible up to $10.0 million. The annual premium was approximately $1.0 million in 2012, and $1.1 million in 2011 and 2010.