7. Reinsurance

In the normal course of its business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding risks to other insurance enterprises under excess coverage and coinsurance contracts. The Company retains an initial maximum of $3,500 of coverage per individual life. This initial retention limit of $3,500 may increase due to automatic policy increases in coverage at a maximum rate of $175 per annum, with an overall maximum increase in coverage of $1,000.

Ceded reinsurance contracts do not relieve the Company from its obligations to policyholders. The 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 concentrations 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. At December 31, 2012 and 2011, the reinsurance receivables had carrying values in the amounts of $638,797 and $616,336, respectively. Included in these amounts are $533,446 and $502,093 at December 31, 2012 and 2011, respectively, associated with reinsurance agreements with related parties. At December 31, 2012 and 2011, 83% and 81%, respectively, of the total reinsurance receivable was due from CLAC, a related party.

The Company assumes risk from approximately forty insurers and reinsurers by participating in yearly renewable term and coinsurance pool agreements. When assuming risk, the Company seeks to generate revenue while maintaining reciprocal working relationships with these partners as they also seek to limit their exposure to loss on any single life.

Maximum capacity to be retained by the Company is dictated at the treaty level and is monitored annually to ensure the total risk retained on any one life is limited to a maximum retention of $4,500.

The following tables summarize life insurance in-force and total premium income at and for the year ended December 31, 2012:

	Life insurance in-force
	Individual			Group			Total
Written and earned direct	$	51,324,176		$	38,587,771		$	89,911,947
Reinsurance ceded	(11,138,163		)	—			(11,138,163		)
Reinsurance assumed	72,580,078			—			72,580,078
Net	$	112,766,091		$	38,587,771		$	151,353,862

Percentage of amount assumed to net	64.4		%	0.0		%	48.2		%

	Premium income
	Life insurance			Annuities		Total
Written and earned direct	$	323,236		$	3,712	$	326,948
Reinsurance ceded	(53,950		)	3,648		(50,302		)
Reinsurance assumed	145,507			—		145,507
Net	$	414,793		$	7,360	$	422,153

The following tables summarize life insurance in-force and total premium income at and for the year ended December 31, 2011:

	Life insurance in-force
	Individual			Group			Total
Written and earned direct	$	50,461,815		$	37,007,795		$	87,469,610
Reinsurance ceded	(11,157,504		)	—			(11,157,504		)
Reinsurance assumed	77,352,956			—			77,352,956
Net	$	116,657,267		$	37,007,795		$	153,665,062

Percentage of amount assumed to net	66.3		%	0.0		%	50.3		%

	Premium income
	Life insurance			Annuities			Total
Written and earned direct	$	395,419		$	1,960		$	397,379
Reinsurance ceded	(40,654		)	(66		)	(40,720		)
Reinsurance assumed	166,557			—			166,557
Net	$	521,322		$	1,894		$	523,216

The following tables summarize total premium income at and for the year ended December 31, 2010:

	Premium income
	Life insurance			Annuities			Total
Written and earned direct	$	674,726		$	5,665		$	680,391
Reinsurance ceded	(41,362		)	(112		)	(41,474		)
Reinsurance assumed	166,705			—			166,705
Net	$	800,069		$	5,553		$	805,622