Note D – Reinsurance

The Insurance Subsidiaries cede portions of their gross premiums written to certain other insurers under excess of loss and quota share treaties and by facultative placements. Reinsurance treaties with other companies permit the recovery of a portion of related direct losses. Management determines the amount of net exposure it is willing to accept generally on a product line basis. Certain historical treaties covering fleet transportation risks include annual deductibles which must be exceeded before the Company can recover under the terms of the treaty. The Company retains a higher percentage of the direct premium in consideration of these deductible provisions. The Company remains liable to the extent the reinsuring companies are unable to meet their obligations under reinsurance contracts.

The Company also serves as an assuming reinsurer on treaties with direct writing insurance companies and, prior to June 30, 2015, under retrocessions from other reinsurers for catastrophic property coverages. Accordingly, for periods prior to that date, the occurrence of catastrophic events could have had a significant impact on the Company's operations. In addition, the Insurance Subsidiaries participate in certain mandatory residual market pools which require insurance companies to provide coverages on assigned risks. The assigned risk pools allocate participation to all insurers based upon each insurer's portion of premium writings on a state or national level. Historically, the operation of these assigned risk pools have resulted in net losses allocated to the Company, although such losses have not been material in relation to the Company's operations.

The following table summarizes the impact of reinsurance ceded and assumed on the Company's net premiums written and earned for the most recent three years:

	Premiums Written												Premiums Earned
	2017				2016				2015				2017				2016				2015
Direct	$	504,033			$	395,625			$	366,668			$	470,158			$	394,679			$	370,499
Ceded on direct		(151,348	)			(131,166	)			(128,338	)			(145,201	)			(129,926	)			(128,135	)
Net direct		352,685				264,459				238,330				324,957				264,753				242,364

Assumed		704				7,379				16,885				3,188				11,344				21,533
Ceded on assumed		-				(86	)			(562	)			-				(86	)			(562	)
Net assumed		704				7,293				16,323				3,188				11,258				20,971

Net	$	353,389			$	271,752			$	254,653			$	328,145			$	276,011			$	263,335

Net losses and loss expenses incurred for 2017, 2016 and 2015 have been reduced by ceded reinsurance recoveries of approximately $128,086, $108,656 and $75,581, respectively. Ceded reinsurance premiums and loss recoveries for the purchase of catastrophe reinsurance coverage on the Company's net direct business were not material.

Net losses and loss expenses incurred for 2017, 2016 and 2015 include approximately $5,223, $14,746 and $13,492, respectively, relating to reinsurance assumed from non-affiliated insurance or reinsurance companies.

Components of reinsurance recoverable at December 31 are as follows:

	2017		2016
Case unpaid losses, net of valuation allowance	$	119,615	$	126,244
Incurred but not reported unpaid losses and loss expenses		187,163		123,819
Paid losses and loss expenses		2,206		1,760
Unearned premiums		9,347		3,201
	$	318,331	$	255,024