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Reinsurance
 3 Months Ended
Mar. 31, 2019
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract]  
Reinsurance REINSURANCE
The Company purchases reinsurance and other protection to manage its risk portfolio and to reduce its exposure to large losses. The Company currently has in place contracts that provide for recovery of a portion of certain claims and claim expenses, generally in excess of various retentions or on a proportional basis. In addition to loss recoveries, certain of the Company’s ceded reinsurance contracts provide for payments of additional premiums, for reinstatement premiums and for lost no-claims bonuses, which are incurred when losses are ceded to the respective reinsurance contracts. The Company remains liable to the extent that any reinsurer fails to meet its obligations.
The following table sets forth the effect of reinsurance and retrocessional activity on premiums written and earned and on net claims and claim expenses incurred:
 
 
 
 
 
 
 
 
Three months ended
 
 
 
March 31,
2019
 
March 31,
2018
 
 
Premiums written
 
 
 
 
 
Direct
$
110,968

 
$
85,167

 
 
Assumed
1,453,327

 
1,074,485

 
 
Ceded
(635,264
)
 
(496,608
)
 
 
Net premiums written
$
929,031

 
$
663,044

 
 
Premiums earned
 
 
 
 
 
Direct
$
89,814

 
$
70,032

 
 
Assumed
765,433

 
605,483

 
 
Ceded
(305,219
)
 
(235,233
)
 
 
Net premiums earned
$
550,028

 
$
440,282

 
 
Claims and claim expenses
 
 
 
 
 
Gross claims and claim expenses incurred
$
338,119

 
$
225,742

 
 
Claims and claim expenses recovered
(111,084
)
 
(54,039
)
 
 
Net claims and claim expenses incurred
$
227,035

 
$
171,703

 
 
 
 
 
 
 

At March 31, 2019, the Company’s reinsurance recoverable balance was $2.9 billion (December 31, 2018 - $2.4 billion). Included in the Company’s reinsurance recoverable balance at March 31, 2019 is $548.7 million of reinsurance recoverable acquired as a result of the acquisition of the TMR Group Entities. See “Note 3. Acquisition of Tokio Millennium Re” for additional information related to the acquisition of the TMR Group Entities. Of the Company’s reinsurance recoverable balance at March 31, 2019, 65.8% is fully collateralized by our reinsurers, 32.1% is recoverable from reinsurers rated A- or higher by major rating agencies and 2.1% is recoverable from reinsurers rated lower than A- by major rating agencies (December 31, 2018 - 60.8%, 38.0% and 1.2%, respectively). The reinsurers with the three largest balances accounted for 12.0%, 6.9% and 6.5%, respectively, of the Company’s reinsurance recoverable balance at March 31, 2019 (December 31, 2018 - 15.5%, 6.7% and 6.5%, respectively). The valuation allowance recorded against reinsurance recoverable was $8.5 million at March 31, 2019 (December 31, 2018 - $9.0 million). The impact of the acquisition of the TMR Group Entities on the Company’s valuation allowance from the acquisition date, March 22, 2019, through March 31, 2019 was not material and as a result was not reflected in the Company’s consolidated statements of operations and financial position for the quarter ended March 31, 2019. The three largest company-specific components of the valuation allowance represented 17.6%, 13.2% and 12.0%, respectively, of the Company’s total valuation allowance at March 31, 2019 (December 31, 2018 - 16.2%, 14.8% and 12.3%, respectively).