REINSURANCE

12 Months Ended

Dec. 31, 2011

REINSURANCE [Abstract]

REINSURANCE

(5) REINSURANCE

We reinsure (cede) a portion of written premiums on an excess of loss or a quota-share basis to nonaffiliated insurance companies in order to limit our loss exposure. To the extent that reinsuring companies are unable to meet their obligations assumed under these reinsurance agreements, we remain primarily liable to our policyholders.

The impact of the excess of loss reinsurance treaties on the financial statements is as follows.

	Years Ended December 31,
	2011			2010			2009
	(Dollars in Thousands)
Premium written
Direct and Assumed	$	98,269		$	96,410		$	104,379
Ceded		(46,293	)		(52,963	)		(56,217	)
	$	51,976		$	43,447		$	48,162
Premiums earned
Direct and Assumed	$	97,473		$	100,131		$	94,030
Ceded		(48,950	)		(55,071	)		(46,054	)
	$	48,523		$	45,060		$	47,976
Losses and LAE incurred
Direct and Assumed	$	33,055		$	42,723		$	54,204
Ceded		(2,159	)		(2,635	)		(10,498	)
	$	30,896		$	40,088		$	43,706

	As of December 31,
	2011			2010
	(Dollars in Thousands)
Unpaid losses and LAE, net
Direct and Assumed	$	59,983		$	66,529
Ceded		(2,088	)		(6,810	)
	$	57,895		$	59,719
Unearned premiums
Direct and Assumed	$	47,933		$	47,136
Ceded		(22,024	)		(24,680	)
	$	25,909		$	22,456

The Company holds collateral under related reinsurance agreements in the form of fully funded trust agreements totaling $4.6 million that can be drawn on for amounts that remain unpaid for more than 120 days.

The impact of the quota-share reinsurance treaties on the financial statements is as follows.

	As of December 31,
	2011			2010
	(Dollars in Thousands)
Transatlantic Reinsurance Company (A+ A.M. Best rated)
Reinsurance (payable) recoverable on paid losses and LAE		(23	)	$	1
Unpaid losses and LAE	$	113			38
	$	90		$	39