Reinsurance

3 Months Ended

Mar. 31, 2013

Reinsurance [Abstract]

Reinsurance

(5) Reinsurance

In the normal course of business, our insurance companies cede a portion of their premium to domestic and foreign reinsurers through treaty and facultative reinsurance agreements. Although reinsurance does not discharge the direct insurer from liability to its policyholder, our insurance companies participate in such agreements in order to limit their loss exposure, protect them against catastrophic losses and diversify their business. The following tables present the effect of such reinsurance transactions on our premium, loss and loss adjustment expense and policy acquisition costs.

	Three months ended March 31,
	2013		2012
Direct written premium	$	581,571	$	544,770
Reinsurance assumed		138,634		137,919
Reinsurance ceded		(141,021)		(124,285)
Net written premium	$	579,184	$	558,404
Direct earned premium	$	616,405	$	591,183
Reinsurance assumed		85,272		82,338
Reinsurance ceded		(140,491)		(126,380)
Net earned premium	$	561,186	$	547,141
Direct loss and loss adjustment expense	$	357,512	$	365,392
Reinsurance assumed		39,691		36,709
Reinsurance ceded		(64,506)		(73,173)
Net loss and loss adjustment expense	$	332,697	$	328,928

	Three months ended March 31,
	2013		2012
Policy acquisition costs	$	100,286	$	95,735
Ceding commissions		(33,337)		(26,291)
Net policy acquisition costs	$	66,949	$	69,444

The table below shows the components of our reinsurance recoverables in our consolidated balance sheets.

		March 31,		December 31,
		2013		2012
Reinsurance recoverable on paid losses		$	54,931	$	54,675
Reinsurance recoverable on outstanding losses			461,886		479,026
Reinsurance recoverable on incurred but not reported losses			551,034		539,021
Reserve for uncollectible reinsurance			(1,500)		(1,500)
	Total reinsurance recoverables	$	1,066,351	$	1,071,222

Reinsurers not authorized by the respective states of domicile of our U.S. domiciled insurance companies are required to collateralize reinsurance obligations due to us. The table below shows the amounts of letters of credit and cash available to us as collateral, plus other potential offsetsat March 31, 2013 and December 31, 2012.

		March 31,		December 31,
		2013		2012
Payables to reinsurers		$	161,271	$	190,228
Letters of credit			83,053		89,832
Cash			89,215		116,597
	Total credits	$	333,539	$	396,657

The tables below show the calculation of net reserves, net unearned premium and net deferred policy acquisition costs.

		March 31,		December 31,
		2013		2012
Loss and loss adjustment expense payable		$	3,774,162	$	3,767,850
Reinsurance recoverable on outstanding losses			(461,886)		(479,026)
Reinsurance recoverable on incurred but not reported losses			(551,034)		(539,021)
	Net reserves	$	2,761,242	$	2,749,803
Unearned premium		$	1,085,833	$	1,069,956
Ceded unearned premium			(257,359)		(256,988)
	Net unearned premium	$	828,474	$	812,968
Deferred policy acquisition costs		$	192,199	$	191,960
Deferred ceding commissions			(72,992)		(74,609)
	Net deferred policy acquisition costs	$	119,207	$	117,351