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REINSURANCE
 12 Months Ended
Dec. 31, 2012
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,
2012
2011
2010
(Dollars in Thousands)
 
Premium written
 
 
 
Direct and Assumed
$
119,459
$
98,269
$
96,410
Ceded
(51,085
)
(46,293
)
(52,963
)
$
68,374
$
51,976
$
43,447
Premiums earned
Direct and Assumed
$
109,312
$
97,473
$
100,131
Ceded
(49,953
)
(48,950
)
(55,071
)
$
59,359
$
48,523
$
45,060
Losses and LAE incurred
Direct and Assumed
$
33,329
$
33,055
$
42,723
Ceded
(3,120
)
(2,159
)
(2,635
)
$
30,209
$
30,896
$
40,088

As of December 31,
 
2012
2011
(Dollars in Thousands)
Unpaid losses and LAE, net
 
 
Direct and Assumed
$
49,908
$
59,983
Ceded
(3,503
)
(2,087
)
$
46,405
$
57,896
Unearned premiums
Direct and Assumed
$
59,006
$
47,933
Ceded
(24,083
)
(22,024
)
$
34,923
$
25,909
  
The Company holds collateral under related reinsurance agreements in the form of fully funded trust agreements totaling $4.8 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,
2012
2011
(Dollars in Thousands)
Transatlantic Reinsurance Company (A+ A.M. Best rated)
Reinsurance (payable) recoverable on paid losses and LAE
8
$
(23
)
Unpaid losses and LAE
$
62
113
$
70
$
90