We utilize reinsurance principally to reduce our exposure on individual risks, to protect against catastrophic losses and to stabilize loss ratios and net underwriting results. Reinsurers are liable to us to the extent the risk is transferred or ceded to them. However, ceded reinsurance arrangements do not eliminate our obligation to pay claims to our policyholders. Accordingly, we bear credit risk with respect to our reinsurers.

We are protected by various treaty and facultative reinsurance agreements. Our exposure to credit risk from any one reinsurer is managed through diversification of reinsurers, principally in the U.S. and European reinsurance markets. A reinsurer generally must have a rating from A.M. Best and/or S&P of “A” or better, or an equivalent financial strength if not rated, plus at least $500 million in policyholders’ surplus to meet our standards of acceptability. Our Reinsurance Security Committee, which is part of our Enterprise Risk Management Finance and Credit Sub-Committee of our Board of Directors, monitors the financial strength of our reinsurers and the related reinsurance recoverables and periodically reviews the list of acceptable reinsurers.

The following table lists our Company’s 10 largest reinsurers measured by the amount of total reinsurance recoverables as of December 31, 2018, and the reinsurers’ ratings from A.M. Best and S&P:

	Reinsurance Recoverables
	Unearned		Paid/Unpaid				Collateral
amounts in thousands	Premium		Losses ⁽¹⁾		Total		Held		A.M. Best	S&P
Everest Reinsurance Company	$	34,809	$	106,334	$	141,143	$	1,547	A+	A+
Swiss Reinsurance America Corporation		13,514		64,457		77,971		4,223	A+	AA-
National Indemnity Company		5,338		61,540		66,878		8,320	A++	AA+
Transatlantic Reinsurance Company		7,597		48,328		55,925		2,541	A+	A+
Munich Reinsurance America Inc.		10,932		41,369		52,301		6,054	A+	AA-
Employers Mutual Casualty Company		16,491		34,445		50,936		18,120	A	NR
Aspen Insurance UK Ltd.		11,801		31,508		43,309		6,446	A	A
Allied World Reinsurance		7,303		30,439		37,742		1,757	A	A-
XL Reinsurance America Inc.		7,240		21,250		28,490		2,761	A+	AA-
Ace Property & Casualty Insurance Company		1,591		24,148		25,739		63	A++	AA
Top 10 Reinsurers	$	116,616	$	463,818	$	580,434	$	51,832
Others		110,107		474,630		584,737		154,085
Total	$	226,723	$	938,448	$	1,165,171	$	205,917

(1) - Net of reserve for uncollectible reinsurance of approximately $13.4 million.

Our Company holds reserves for uncollectible reinsurance in the amounts of $13.4 million and $12.6 million as of December 31, 2018 and 2017, respectively. This reserve is determined by reinsurer specific default risk as indicated by their financial strength ratings as well as additional default risk for asbestos and environmental related recoverables. Actual uncollectible reinsurance could exceed or be less than our reserve balance. The increase in our reserves for uncollectible reinsurance as compared to 2017 is driven primarily by one of our reinsurers having been placed in liquidation by the State of California. We continue to monitor the liquidation process and assess our potential exposure.

Our Company holds collateral of $205.9 million, which consists of $145.0 million in ceded balances payable, $41.2 million in letters of credit and $19.7 million of funds held as trust account balances. NIC and NSIC are required to collateralize reinsurance obligations due to us from reinsurers not authorized by their respective states of domicile.

	Years Ended December 31,
amounts in thousands	2018			2017			2016
Direct	$	1,613,825		$	1,489,422		$	1,403,865
Assumed		299,136			223,843			165,046
Ceded		(441,876	)		(441,935	)		(382,687	)
Net Written Premiums	$	1,471,085		$	1,271,330		$	1,186,224

	Years Ended December 31,
amounts in thousands	2018			2017			2016
Direct	$	1,553,852		$	1,425,582		$	1,330,265
Assumed		256,509			187,609			171,978
Ceded		(447,138	)		(426,771	)		(401,898	)
Net Earned Premiums	$	1,363,223		$	1,186,420		$	1,100,345

	Years Ended December 31,
amounts in thousands	2018			2017			2016
Direct	$	1,002,358		$	938,640		$	795,414
Assumed		159,989			148,606			87,995
Ceded		(268,568	)		(280,981	)		(217,961	)
Net Losses and LAE	$	893,779		$	806,265		$	665,448