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Reinsurance
 12 Months Ended
Dec. 31, 2011
Reinsurance Disclosures [Abstract]  
Reinsurance
Reinsurance

The Company utilizes reinsurance and retrocessional reinsurance (“ceded reinsurance”) agreements to reduce its exposure to large claims and catastrophic loss occurrences with various reinsurance companies. These agreements provide for recovery from reinsurers of a portion of losses and LAE under certain circumstances without relieving the Company of its obligations to the policyholders. The Company remains liable to the extent that any reinsurance company fails to meet its obligations. Losses and LAE incurred and premiums earned are reported after deduction for reinsurance. In the event that one or more of the reinsurers are unable to meet their obligations under these reinsurance agreements, the Company would not realize the full value of the reinsurance recoverable balances.

The effect of retrocessional activity on premiums written and earned and on net loss and loss adjustment expenses for the years ended December 31, 2011, 2010 and 2009 was as follows:

 
For the Year Ended December 31,
 
2011
 
2010
 
2009
Premiums written
 
 
 
 
 
Direct
$
114,036

 
$
71,625

 
$
21,655

Assumed
1,698,561

 
1,226,430

 
1,027,021

Ceded
(89,076
)
 
(70,224
)
 
(18,302
)
Net
$
1,723,521

 
$
1,227,831

 
$
1,030,374

Premiums earned
 
 
 
 
 
Direct
$
112,308

 
$
68,967

 
$
4,118

Assumed
1,523,685

 
1,168,116

 
940,012

Ceded
(83,565
)
 
(67,293
)
 
(24,211
)
Net
$
1,552,428

 
$
1,169,790

 
$
919,919

Loss and loss adjustment expenses
 
 
 
 
 
Gross loss and loss adjustment expenses
$
1,103,821

 
$
788,815

 
$
616,905

Loss and loss adjustment expenses recovered
(60,767
)
 
(33,693
)
 
(8,292
)
Net
$
1,043,054

 
$
755,122

 
$
608,613


The reinsurers with the three largest balances accounted for 31.1%, 26.2% and 12.6%, respectively, of the Company's reinsurance recoverable on unpaid losses balance at December 31, 2011 (2010 – 29.0%, 17.3% and 9.5%, respectively). At December 31, 2011, $2,067 (2010 - $1,933) of the reinsurance recoverable on unpaid losses was due from Motors Insurance Corporation (“Motors”) and the remaining amount was due from reinsurers with an A- or better rating from A.M. Best or state pools. At December 31, 2011 and 2010, the Company had no valuation allowance against reinsurance recoverable on unpaid losses.