Reinsurance

6 Months Ended

Jun. 30, 2012

Reinsurance [Abstract]

Reinsurance

(4) Reinsurance

In the normal course of business, our insurance companies cede a portion of their premium to domestic and foreign reinsurers through treaty and facultative reinsurance agreements. Although reinsurance does not discharge the direct insurer from liability to its policyholder, our insurance companies participate in such agreements in order to limit their loss exposure, protect them against catastrophic losses and diversify their business. The following tables present the effect of such reinsurance transactions on our premium, loss and loss adjustment expense and policy acquisition costs.

	Six months ended June 30,				Three months ended June 30,
	2012		2011		2012		2011
Direct written premium	$	1,222,766	$	1,169,442	$	677,996	$	661,301
Reinsurance assumed		251,476		221,848		113,557		80,781
Reinsurance ceded		(273,750)		(242,533)		(149,465)		(132,209)
Net written premium	$	1,200,492	$	1,148,757	$	642,088	$	609,873
Direct earned premium	$	1,193,537	$	1,153,511	$	602,354	$	578,703
Reinsurance assumed		168,882		158,494		86,544		79,113
Reinsurance ceded		(249,947)		(279,274)		(123,567)		(133,565)
Net earned premium	$	1,112,472	$	1,032,731	$	565,331	$	524,251
Direct loss and loss adjustment expense	$	727,921	$	786,652	$	362,529	$	343,898
Reinsurance assumed		61,035		142,205		24,326		68,298
Reinsurance ceded		(123,203)		(246,989)		(50,030)		(77,914)
Net loss and loss adjustment expense	$	665,753	$	681,868	$	336,825	$	334,282

Policy acquisition costs	$	198,156	$	191,670	$	102,421	$	93,847
Ceding commissions		(54,222)		(55,986)		(27,931)		(28,006)
Net policy acquisition costs	$	143,934	$	135,684	$	74,490	$	65,841

The table below shows the components of our reinsurance recoverables in our consolidated balance sheets.

		June 30,		December 31,
		2012		2011
Reinsurance recoverable on paid losses		$	51,795	$	83,109
Reinsurance recoverable on outstanding losses			518,288		477,760
Reinsurance recoverable on incurred but not reported losses			488,416		497,074
Reserve for uncollectible reinsurance			(1,500)		(1,875)
	Total reinsurance recoverables	$	1,056,999	$	1,056,068

Reinsurers not authorized by the respective states of domicile of our U.S. domiciled insurance companies are required to collateralize reinsurance obligations due to us. The table below shows the amounts of letters of credit and cash available to us as collateral, plus other potential offsetsat June 30, 2012 and December 31, 2011.

		June 30,		December 31,
		2012		2011
Payables to reinsurers		$	229,525	$	195,806
Letters of credit			104,097		120,589
Cash			105,586		83,731
	Total credits	$	439,208	$	400,126

The tables below show the calculation of net reserves, net unearned premium and net deferred policy acquisition costs.

		June 30,		December 31,
		2012		2011
Loss and loss adjustment expense payable		$	3,755,699	$	3,658,317
Reinsurance recoverable on outstanding losses			(518,288)		(477,760)
Reinsurance recoverable on incurred but not reported losses			(488,416)		(497,074)
	Net reserves	$	2,748,995	$	2,683,483
Unearned premium		$	1,147,121	$	1,031,034
Ceded unearned premium			(255,078)		(222,300)
	Net unearned premium	$	892,043	$	808,734
Deferred policy acquisition costs		$	204,387	$	189,633
Deferred ceding commissions			(71,767)		(62,364)
	Net deferred policy acquisition costs	$	132,620	$	127,269