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Reinsurance
 12 Months Ended
Dec. 31, 2019
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract]  
Reinsurance REINSURANCE
The Company purchases reinsurance and other protection to manage its risk portfolio and to reduce its exposure to large losses. The Company currently has in place contracts that provide for recovery of a portion of certain claims and claim expenses, generally in excess of various retentions or on a proportional basis. In addition to loss recoveries, certain of the Company’s ceded reinsurance contracts provide for payments of additional premiums, for reinstatement premiums and for lost no-claims bonuses, which are incurred when losses are ceded to the respective reinsurance contracts. The Company remains liable to the extent that any reinsurer fails to meet its obligations.
The following table sets forth the effect of reinsurance and retrocessional activity on premiums written and earned and on net claims and claim expenses incurred:
 
 
 
 
 
 
 
 
 
Year ended December 31,
2019
 
2018
 
2017
 
 
Premiums written
 
 
 
 
 
 
 
Direct
$
461,409

 
$
337,587

 
$
290,730

 
 
Assumed
4,346,341

 
2,972,840

 
2,506,810

 
 
Ceded
(1,426,257
)
 
(1,178,525
)
 
(926,215
)
 
 
Net premiums written
$
3,381,493

 
$
2,131,902

 
$
1,871,325

 
 
Premiums earned
 
 
 
 
 
 
 
Direct
$
404,525

 
$
292,219

 
$
244,285

 
 
Assumed
4,348,261

 
2,779,796

 
2,307,219

 
 
Ceded
(1,414,383
)
 
(1,095,886
)
 
(833,929
)
 
 
Net premiums earned
$
3,338,403

 
$
1,976,129

 
$
1,717,575

 
 
Claims and claim expenses
 
 
 
 
 
 
 
Gross claims and claim expenses incurred
$
3,221,778

 
$
2,578,536

 
$
3,420,388

 
 
Claims and claim expenses recovered
(1,124,757
)
 
(1,458,518
)
 
(1,558,960
)
 
 
Net claims and claim expenses incurred
$
2,097,021

 
$
1,120,018

 
$
1,861,428

 
 
 
 
 
 
 
 
 

At December 31, 2019, the Company’s reinsurance recoverable balance was $2.8 billion (2018 - $2.4 billion). Of the Company’s reinsurance recoverable balance at December 31, 2019, 57.5% is fully collateralized by our reinsurers, 41.0% is recoverable from reinsurers rated A- or higher by major rating agencies and 1.5% is recoverable from reinsurers rated lower than A- by major rating agencies (2018 - 60.8%, 38.0% and 1.2%, respectively). The reinsurers with the three largest balances accounted for 12.7%, 7.2% and 7.0%, respectively, of the Company’s reinsurance recoverable balance at December 31, 2019 (2018 - 15.5%, 6.7% and 6.5%, respectively). The valuation allowance recorded against reinsurance recoverable was $7.3 million at December 31, 2019 (2018 - $9.0 million). The three largest company-specific components of the valuation allowance represented 18.1%, 7.9% and 7.2%, respectively, of the Company’s total valuation allowance at December 31, 2019 (2018 - 16.2%, 14.8% and 12.3%, respectively).