In the normal course of business, the Company seeks to reduce the losses that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers. Reinsurance transactions are accounted for in accordance with the provisions of ASC 944.

Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policy. Reinsurance contracts do not relieve the Company from its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company; consequently, allowances are established for amounts deemed uncollectible. The Company determines the appropriate amount of reinsurance based on evaluations of the risks accepted and analyses prepared by consultants and on market conditions (including the availability and pricing of reinsurance). The Company also believes that the terms of its reinsurance contracts are consistent with industry practice in that they contain standard terms with respect to lines of business covered, limit and retention, arbitration and occurrence. The Company believes that its reinsurers are financially sound, based upon an ongoing review of financial strength ratings assigned to them by rating agencies, their reputations in the reinsurance marketplace, collections history, advice from third parties and the analysis, and guidance of the Company’s reinsurance advisors.

As a condition to conduct certain business in various states, the Company is required to participate in residual market mechanisms, facilities, and pooling arrangements such as the Michigan Catastrophic Claims Association (“MCCA”). The Company is subject to concentration of risk with respect to reinsurance ceded to the MCCA. Funding for MCCA comes from assessments against automobile insurers based upon their share of insured automobiles in the state for which the policyholders have elected unlimited personal injury protection (“PIP”) benefits. Insurers are allowed to pass along this cost to Michigan automobile policyholders that have elected unlimited PIP benefits. The Company ceded to the MCCA premiums earned and losses and LAE incurred of $84.6 million and $99.2 million, respectively, in 2020, $84.3 million and $108.5 million, respectively, in 2019, and $70.9 million and $108.8 million, respectively, in 2018. The MCCA represented 54.7% of the total reinsurance receivable balance at December 31, 2020. Reinsurance recoverables related to MCCA were $1,024.7 million and $1,023.7 million at December 31, 2020 and 2019, respectively. Because the MCCA is supported by assessments permitted by statute, and there have been no significant uncollectible balances from MCCA identified during the three years ending December 31, 2020, the Company believes that it has no significant exposure to uncollectible reinsurance balances from this entity.

YEARS ENDED DECEMBER 31	2020				2019				2018
(in millions)
Premiums written:
Direct	$	5,131.4			$	5,090.8			$	4,816.0
Assumed		23.1				27.7				27.6
Ceded		(556.0	)			(536.8	)			(458.8	)
Net premiums written	$	4,598.5			$	4,581.7			$	4,384.8
Premiums earned:
Direct	$	5,063.8			$	4,953.3			$	4,673.6
Assumed		24.6				26.3				26.6
Ceded		(561.0	)			(505.1	)			(445.8	)
Net premiums earned	$	4,527.4			$	4,474.5			$	4,254.4
Percentage of assumed to net premiums earned		0.5		%		0.6		%		0.6		%
Losses and LAE:
Direct	$	3,200.5			$	3,223.3			$	2,986.2
Assumed		15.9				21.4				25.2
Ceded		(371.2	)			(379.2	)			(286.8	)
Net losses and LAE	$	2,845.2			$	2,865.5			$	2,724.6