Reinsurance

9 Months Ended

Sep. 30, 2012

Reinsurance [Abstract]

Reinsurance

(6) 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.

	Nine months ended September 30,				Three months ended September 30,
	2012		2011		2012		2011
Direct written premium	$	1,826,610	$	1,724,869	$	603,844	$	555,427
Reinsurance assumed		313,395		295,268		61,919		73,420
Reinsurance ceded		(409,206)		(359,046)		(135,456)		(116,513)
Net written premium	$	1,730,799	$	1,661,091	$	530,307	$	512,334
Direct earned premium	$	1,795,109	$	1,728,082	$	601,572	$	574,571
Reinsurance assumed		259,870		255,293		90,988		96,799
Reinsurance ceded		(378,857)		(406,388)		(128,910)		(127,114)
Net earned premium	$	1,676,122	$	1,576,987	$	563,650	$	544,256
Direct loss and loss adjustment expense	$	1,029,227	$	1,197,225	$	301,306	$	410,573
Reinsurance assumed		96,143		186,805		35,108		44,600
Reinsurance ceded		(155,603)		(321,790)		(32,400)		(74,801)
Net loss and loss adjustment expense	$	969,767	$	1,062,240	$	304,014	$	380,372

Policy acquisition costs	$	299,854	$	292,645	$	101,698	$	100,975
Ceding commissions		(88,300)		(99,465)		(34,078)		(43,479)
Net policy acquisition costs	$	211,554	$	193,180	$	67,620	$	57,496

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

		September 30,		December 31,
		2012		2011
Reinsurance recoverable on paid losses		$	58,220	$	83,109
Reinsurance recoverable on outstanding losses			479,378		477,760
Reinsurance recoverable on incurred but not reported losses			477,859		497,074
Reserve for uncollectible reinsurance			(1,500)		(1,875)
	Total reinsurance recoverables	$	1,013,957	$	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 September 30,2012 and December 31, 2011.

		September 30,		December 31,
		2012		2011
Payables to reinsurers		$	201,598	$	195,806
Letters of credit			97,357		120,589
Cash			112,105		83,731
	Total credits	$	411,060	$	400,126

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

		September 30,		December 31,
		2012		2011
Loss and loss adjustment expense payable		$	3,692,250	$	3,658,317
Reinsurance recoverable on outstanding losses			(479,378)		(477,760)
Reinsurance recoverable on incurred but not reported losses			(477,859)		(497,074)
	Net reserves	$	2,735,013	$	2,683,483
Unearned premium		$	1,118,094	$	1,031,034
Ceded unearned premium			(262,168)		(222,300)
	Net unearned premium	$	855,926	$	808,734
Deferred policy acquisition costs		$	199,401	$	189,633
Deferred ceding commissions			(74,441)		(62,364)
	Net deferred policy acquisition costs	$	124,960	$	127,269