Note 15. Reinsurance

12 Months Ended

Dec. 31, 2012

Notes

Note 15. Reinsurance

15.  Reinsurance

Independence American reinsures a portion of its direct business in order to limit the assumption of disproportionate risks.  Amounts not retained are ceded to other companies on an automatic basis.  Independence American is contingently liable with respect to reinsurance in the unlikely event that the assuming reinsurers are unable to meet their obligations.  The ceding of reinsurance does not discharge the primary liability of the original insurer to the insured.  At December 31, 2012, Independence American ceded to highly rated reinsurers.

The effect of reinsurance on insurance benefits and premiums earned is as follows (in thousands):

				ASSUMED		CEDED			% OF
				FROM		TO			AMOUNT
		DIRECT		OTHER		OTHER		NET	ASSUMED
		AMOUNT		COMPANIES		COMPANIES		AMOUNT	TO NET
Insurance Benefits:
Year ended December 31, 2012	$	32,057	$	31,526	$	6,734	$	56,849	55%
Year ended December 31, 2011		26,770		27,238		6,240		47,768	57%
Year ended December 31, 2010		25,265		31,467		6,506		50,226	63%

Premiums Earned:
Year ended December 31, 2012	$	42,318	$	49,703	$	8,243	$	83,778	59%
Year ended December 31, 2011		39,893		42,088		9,533		72,448	58%
Year ended December 31, 2010		41,264		45,315		12,720		73,859	61%

All premiums included in Assumed From Other Companies for 2012, 2011 and 2010 were assumed from subsidiaries of IHC.  Included in Ceded To Other Companies for 2012, 2011 and 2010 are premiums of $1,835,000, $1,250,000, and $1,718,000, respectively, which were ceded to subsidiaries of IHC.