Reinsurance

6 Months Ended

Jun. 30, 2014

Reinsurance [Abstract]

Reinsurance

(4) Reinsurance

In the normal course of business, our insurance companies cede a portion of their premium to 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,
		2014		2013		2014		2013
Direct written premium		$	1,369,751	$	1,294,681	$	749,239	$	713,110
Reinsurance assumed			209,700		234,967		83,490		96,333
Reinsurance ceded			(342,255)		(321,430)		(185,715)		(180,409)
	Net written premium	$	1,237,196	$	1,208,218	$	647,014	$	629,034
Direct earned premium		$	1,288,995	$	1,237,629	$	651,682	$	621,224
Reinsurance assumed			152,341		171,308		76,318		86,036
Reinsurance ceded			(306,476)		(286,395)		(155,752)		(145,904)
	Net earned premium	$	1,134,860	$	1,122,542	$	572,248	$	561,356
Direct loss and loss adjustment expense		$	725,911	$	693,480	$	375,184	$	335,968
Reinsurance assumed			63,274		110,708		21,472		71,017
Reinsurance ceded			(140,247)		(132,017)		(69,562)		(67,511)
	Net loss and loss adjustment expense	$	648,938	$	672,171	$	327,094	$	339,474

Policy acquisition costs		$	215,210	$	204,031	$	110,565	$	103,745
Ceding commissions			(73,199)		(66,286)		(37,595)		(32,949)
	Net policy acquisition costs	$	142,011	$	137,745	$	72,970	$	70,796

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

		June 30,		December 31,
		2014		2013
Reinsurance recoverable on paid losses		$	98,451	$	156,026
Reinsurance recoverable on outstanding losses			453,653		459,134
Reinsurance recoverable on incurred but not reported losses			627,596		663,597
Reserve for uncollectible reinsurance			(1,500)		(1,500)
	Total reinsurance recoverables	$	1,178,200	$	1,277,257

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 letters of credit and cash that are available to us as collateral, as well as amounts we owe reinsurers that can be offset against amounts due to us.

		June 30,		December 31,
		2014		2013
Payables to reinsurers		$	220,281	$	208,850
Letters of credit			85,752		100,529
Funds held in trust			148,508		88,310
	Total credits	$	454,541	$	397,689