Reinsurance

9 Months Ended

Sep. 30, 2013

Reinsurance [Abstract]

Reinsurance

(6) Reinsurance

In the normal course of business, our insurance companies cede a portion of their premium to 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.

		Nine months ended September 30,				Three months ended September 30,
		2013		2012		2013		2012
Direct written premium		$	1,911,619	$	1,826,610	$	616,938	$	603,844
Reinsurance assumed			296,942		313,395		61,975		61,919
Reinsurance ceded			(478,609)		(409,206)		(157,179)		(135,456)
	Net written premium	$	1,729,952	$	1,730,799	$	521,734	$	530,307
Direct earned premium		$	1,860,093	$	1,795,109	$	622,464	$	601,572
Reinsurance assumed			252,902		259,870		81,594		90,988
Reinsurance ceded			(433,785)		(378,857)		(147,390)		(128,910)
	Net earned premium	$	1,679,210	$	1,676,122	$	556,668	$	563,650
Direct loss and loss adjustment expense		$	1,210,862	$	1,029,227	$	517,382	$	301,306
Reinsurance assumed			119,315		96,143		8,607		35,108
Reinsurance ceded			(337,630)		(155,603)		(205,613)		(32,400)
	Net loss and loss adjustment expense	$	992,547	$	969,767	$	320,376	$	304,014

Policy acquisition costs		$	309,285	$	299,854	$	105,254	$	101,698
Ceding commissions			(105,898)		(88,300)		(39,612)		(34,078)
	Net policy acquisition costs	$	203,387	$	211,554	$	65,642	$	67,620

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

		September 30,		December 31,
		2013		2012
Reinsurance recoverable on paid losses		$	51,262	$	54,675
Reinsurance recoverable on outstanding losses			456,364		479,026
Reinsurance recoverable on incurred but not reported losses			709,451		539,021
Reserve for uncollectible reinsurance			(1,500)		(1,500)
	Total reinsurance recoverables	$	1,215,577	$	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 September 30, 2013 and December 31, 2012.

		September 30,		December 31,
		2013		2012
Payables to reinsurers		$	194,857	$	190,228
Letters of credit			82,115		89,832
Funds held in trust			89,050		116,597
	Total credits	$	366,022	$	396,657

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

		September 30,		December 31,
		2013		2012
Loss and loss adjustment expense payable		$	4,021,847	$	3,767,850
Reinsurance recoverable on outstanding losses			(456,364)		(479,026)
Reinsurance recoverable on incurred but not reported losses			(709,451)		(539,021)
	Net reserves	$	2,856,032	$	2,749,803
Unearned premium		$	1,165,580	$	1,069,956
Ceded unearned premium			(301,891)		(256,988)
	Net unearned premium	$	863,689	$	812,968
Deferred policy acquisition costs		$	204,740	$	191,960
Deferred ceding commissions			(86,804)		(74,609)
	Net deferred policy acquisition costs	$	117,936	$	117,351