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REINSURANCE
9 Months Ended
Sep. 30, 2018
Reinsurance Disclosures [Abstract]  
REINSURANCE
REINSURANCE
The effect of reinsurance on premiums written and earned, and losses and settlement expenses incurred, for the three and nine months ended September 30, 2018 and 2017 is presented below.  The classification of the assumed and ceded reinsurance amounts between affiliates and nonaffiliates is based on the participants in the underlying reinsurance agreements, and is intended to provide an understanding of the actual source of the reinsurance activities.  This presentation differs from the classifications used in the consolidated financial statements, where all amounts flowing through the pooling and quota share agreements and inter-company reinsurance programs with Employers Mutual are reported as “affiliated” balances.

 
 
Three months ended September 30, 2018
($ in thousands)
 
Property and
casualty
insurance
 
Reinsurance
 
Total
Premiums written
 
 
 
 
 
 
Direct
 
$
126,737

 
$

 
$
126,737

Assumed from nonaffiliates
 
1,138

 
42,211

 
43,349

Assumed from affiliates
 
159,648

 

 
159,648

Ceded to nonaffiliates
 
(7,309
)
 
(1,001
)
 
(8,310
)
Ceded to affiliates
 
(127,427
)
 
(1,312
)
 
(128,739
)
Net premiums written
 
$
152,787

 
$
39,898

 
$
192,685

 
 
 
 
 
 
 
Premiums earned
 
 
 
 
 
 
Direct
 
$
100,850

 
$

 
$
100,850

Assumed from nonaffiliates
 
1,017

 
41,128

 
42,145

Assumed from affiliates
 
133,781

 

 
133,781

Ceded to nonaffiliates
 
(7,895
)
 
(2,321
)
 
(10,216
)
Ceded to affiliates
 
(101,540
)
 
(1,312
)
 
(102,852
)
Net premiums earned
 
$
126,213

 
$
37,495

 
$
163,708

 
 
 
 
 
 
 
Losses and settlement expenses incurred
 
 
 
 
 
 
Direct
 
$
51,606

 
$

 
$
51,606

Assumed from nonaffiliates
 
1,039

 
31,378

 
32,417

Assumed from affiliates
 
87,992

 
311

 
88,303

Ceded to nonaffiliates
 
(5,205
)
 
(3,774
)
 
(8,979
)
Ceded to affiliates
 
(53,997
)
 
1,927

 
(52,070
)
Net losses and settlement expenses incurred
 
$
81,435

 
$
29,842

 
$
111,277

 
 
Three months ended September 30, 2017
($ in thousands)
 
Property and
casualty
insurance
 
Reinsurance
 
Total
Premiums written
 
 
 
 
 
 
Direct
 
$
122,665

 
$

 
$
122,665

Assumed from nonaffiliates
 
1,333

 
38,955

 
40,288

Assumed from affiliates
 
153,900

 

 
153,900

Ceded to nonaffiliates
 
(10,532
)
 
(1,220
)
 
(11,752
)
Ceded to affiliates
 
(123,355
)
 
(1,212
)
 
(124,567
)
Net premiums written
 
$
144,011

 
$
36,523

 
$
180,534

 
 
 
 
 
 
 
Premiums earned
 
 
 
 
 
 
Direct
 
$
96,547

 
$

 
$
96,547

Assumed from nonaffiliates
 
1,225

 
38,463

 
39,688

Assumed from affiliates
 
128,325

 

 
128,325

Ceded to nonaffiliates
 
(8,388
)
 
(2,533
)
 
(10,921
)
Ceded to affiliates
 
(97,237
)
 
(1,212
)
 
(98,449
)
Net premiums earned
 
$
120,472

 
$
34,718

 
$
155,190

 
 
 
 
 
 
 
Losses and settlement expenses incurred
 
 
 
 
 
 
Direct
 
$
62,745

 
$

 
$
62,745

Assumed from nonaffiliates
 
961

 
57,268

 
58,229

Assumed from affiliates
 
81,047

 
277

 
81,324

Ceded to nonaffiliates
 
(4,435
)
 
(3,039
)
 
(7,474
)
Ceded to affiliates
 
(66,279
)
 
(8,969
)
 
(75,248
)
Net losses and settlement expenses incurred
 
$
74,039

 
$
45,537

 
$
119,576

 
 
Nine months ended September 30, 2018
($ in thousands)
 
Property and
casualty
insurance
 
Reinsurance
 
Total
Premiums written
 
 
 
 
 
 
Direct
 
$
325,360

 
$

 
$
325,360

Assumed from nonaffiliates
 
3,440

 
122,564

 
126,004

Assumed from affiliates
 
430,699

 

 
430,699

Ceded to nonaffiliates
 
(23,232
)
 
(9,015
)
 
(32,247
)
Ceded to affiliates
 
(332,010
)
 
(3,937
)
 
(335,947
)
Net premiums written
 
$
404,257

 
$
109,612

 
$
513,869

 
 
 
 
 
 
 
Premiums earned
 
 
 
 
 
 
Direct
 
$
295,606

 
$

 
$
295,606

Assumed from nonaffiliates
 
3,319

 
122,577

 
125,896

Assumed from affiliates
 
394,697

 

 
394,697

Ceded to nonaffiliates
 
(25,026
)
 
(7,540
)
 
(32,566
)
Ceded to affiliates
 
(302,256
)
 
(3,937
)
 
(306,193
)
Net premiums earned
 
$
366,340

 
$
111,100

 
$
477,440

 
 
 
 
 
 
 
Losses and settlement expenses incurred
 
 
 
 
 
 
Direct
 
$
165,962

 
$

 
$
165,962

Assumed from nonaffiliates
 
2,801

 
84,846

 
87,647

Assumed from affiliates
 
269,672

 
908

 
270,580

Ceded to nonaffiliates
 
(10,107
)
 
(6,338
)
 
(16,445
)
Ceded to affiliates
 
(169,137
)
 
2,389

 
(166,748
)
Net losses and settlement expenses incurred
 
$
259,191

 
$
81,805

 
$
340,996

 
 
Nine months ended September 30, 2017
($ in thousands)
 
Property and
casualty
insurance
 
Reinsurance
 
Total
Premiums written
 
 
 
 
 
 
Direct
 
$
312,809

 
$

 
$
312,809

Assumed from nonaffiliates
 
3,542

 
108,056

 
111,598

Assumed from affiliates
 
415,426

 

 
415,426

Ceded to nonaffiliates
 
(27,109
)
 
(9,074
)
 
(36,183
)
Ceded to affiliates
 
(319,459
)
 
(3,637
)
 
(323,096
)
Net premiums written
 
$
385,209

 
$
95,345

 
$
480,554

 
 
 
 
 
 
 
Premiums earned
 
 
 
 
 
 
Direct
 
$
287,821

 
$

 
$
287,821

Assumed from nonaffiliates
 
3,370

 
110,563

 
113,933

Assumed from affiliates
 
375,601

 

 
375,601

Ceded to nonaffiliates
 
(22,014
)
 
(7,719
)
 
(29,733
)
Ceded to affiliates
 
(294,471
)
 
(3,637
)
 
(298,108
)
Net premiums earned
 
$
350,307

 
$
99,207

 
$
449,514

 
 
 
 
 
 
 
Losses and settlement expenses incurred
 
 
 
 
 
 
Direct
 
$
198,317

 
$

 
$
198,317

Assumed from nonaffiliates
 
2,406

 
104,685

 
107,091

Assumed from affiliates
 
258,169

 
942

 
259,111

Ceded to nonaffiliates
 
(9,400
)
 
(4,626
)
 
(14,026
)
Ceded to affiliates
 
(218,425
)
 
(8,979
)
 
(227,404
)
Net losses and settlement expenses incurred
 
$
231,067

 
$
92,022

 
$
323,089



Individual lines in the above tables are defined as follows:
“Direct” represents business produced by the property and casualty insurance subsidiaries.
“Assumed from nonaffiliates” for the property and casualty insurance subsidiaries represents their aggregate 30 percent pool participation percentage of involuntary business assumed by the pool participants pursuant to state law. For the reinsurance subsidiary, this line represents the reinsurance business assumed through the quota share agreement (including “fronting” activities initiated by Employers Mutual) and the business assumed outside the quota share agreement.
“Assumed from affiliates” for the property and casualty insurance subsidiaries represents their aggregate 30 percent pool participation percentage of all the pool members’ direct business.  The amounts reported under the caption “Losses and settlement expenses incurred” also include claim-related services provided by Employers Mutual that are allocated to the property and casualty insurance subsidiaries and the reinsurance subsidiary.
“Ceded to nonaffiliates” for the property and casualty insurance subsidiaries represents their aggregate 30 percent pool participation percentage of 1) the amounts ceded to nonaffiliated reinsurance companies in accordance with the terms of the reinsurance agreements providing protection to the pool and each of its participants, and 2) the amounts ceded on a mandatory basis to state organizations in connection with various programs.  For the reinsurance subsidiary, this line includes 1) reinsurance business that is ceded to other insurance companies in connection with “fronting” activities initiated by Employers Mutual, and 2) amounts ceded in connection with the purchase of additional reinsurance protection in peak exposure territories from external parties.
“Ceded to affiliates” for the property and casualty insurance subsidiaries represents the cession of their direct business to Employers Mutual under the terms of the pooling agreement and amounts ceded to Employers Mutual under the terms of the inter-company reinsurance program.  For the reinsurance subsidiary this line represents amounts ceded to Employers Mutual under the terms of the inter-company reinsurance program.