
	7.	Reinsurance:

We reinsure a portion of the risk we underwrite in order to control the exposure to losses and to protect capital resources. We cede to reinsurers a portion of these risks and pay premiums based upon the risk and exposure of the policies subject to such reinsurance. Ceded reinsurance involves credit risk and is generally subject to aggregate loss limits. Although the reinsurer is liable to us to the extent of the reinsurance ceded, we are ultimately liable as the direct insurer on all risks reinsured. Reinsurance recoverables are reported after allowances for uncollectible amounts. We monitor the financial condition of reinsurers on an ongoing basis and review our reinsurance arrangements periodically. Reinsurers are selected based on their financial condition, business practices and the price of their product offerings. In order to mitigate credit risk to reinsurance companies, most of our reinsurance recoverable balance as of December 31, 2016 was with reinsurers that had an A.M. Best rating of “A–” or better. We also mitigate our credit risk for the remaining reinsurance recoverable by obtaining letters of credit.

The following table presents our gross and net premiums written and earned and reinsurance recoveries for each of the last three years (in thousands):

Included in reinsurance recoverable on the consolidated balance sheets are paid loss recoverables of $XX million and $17.0 million as of December 31, 2015 and 2014, respectively.



	2016		2015		2014
Premium Written :
Direct	$	549,077	$	514,223	$	473,233
Assumed		-		-		(15)
Ceded		(187,248)		(157,279)		(148,866)
	$	361,829	$	356,944	$	324,352

Premium Earned:
Direct	$	524,229	$	494,643	$	461,367
Assumed		-		-		327
Ceded		(170,859)		(145,562)		(140,477)
	$	353,370	$	349,081	$	321,217

Reinsurance recoveries	$	116,057	$	89,892	$	99,911

Included in reinsurance recoverable on the consolidated balance sheets are paid loss recoverables of $24.4 million and $11.1 million as of December 31, 2016 and 2015, respectively.