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Reinsurance | 12 Months Ended
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Dec. 31, 2011
Reinsurance [Abstract] |
Reinsurance | Note 8. Reinsurance Our consolidated financial statements reflect the effects of assumed and ceded reinsurance transactions. Assumed reinsurance refers to the acceptance of certain insurance risks that other insurance entities have underwritten. Ceded reinsurance involves transferring certain insurance risks (along with the related written and earned premiums) that we have underwritten to other insurance companies that agree to share these risks. The primary purpose of ceded reinsurance is to protect the Insurance Subsidiaries from potential losses in excess of the amount that we are prepared to accept. The Insurance Subsidiaries remain liable to policyholders to the extent that any reinsurer becomes unable to meet our contractual obligations. We evaluate and monitor the financial condition of our reinsurers under voluntary reinsurance arrangements to minimize our exposure to significant losses from reinsurer insolvencies. On an ongoing basis, we review amounts outstanding, length of collection period, changes in reinsurer credit ratings, and other relevant factors to determine collectability of reinsurance recoverables. The allowance for reinsurance recoverables was $3.9 million at December 31, 2011 and $3.4 million at December 31, 2010. The following table represents our total reinsurance balances segregated by reinsurer to depict our concentration of risk throughout our reinsurance portfolio:
|  | As of December 31, 2011 |  |  | As of December 31, 2010
|  |  |  | % of Net |  |  |  |  | % of Net |
|  | Reinsurance |  | Unsecured |  |  | Reinsurance |  | Unsecured |
($ in thousands) |  | Balances |  | Reinsurance |  |  | Balances |  | Reinsurance |
Total reinsurance recoverables | $ | 561,855 |  |  |  | $ | 318,752 |  |  |
Total prepaid reinsurance premiums |  | 147,686 |  |  |  |  | 110,327 |  |  |
Less: collateral1 |  | (146,364) |  |  |  |  | (81,707) |  |  |
Net unsecured reinsurance balances |  | 563,177 |  |  |  |  | 347,372 |  |  |
Federal and state pools2: |  |  |  |  |  |  |  |  |  |
NJ Unsatisfied Claim Judgment Fund |  | 69,179 |  | 12 | % |  | 62,098 |  | 18 | %
National Flood Insurance Program ("NFIP") |  | 267,600 |  | 48 |  |  | 119,241 |  | 34 |
Other |  | 4,235 |  | 1 |  |  | 5,157 |  | 2 |
Total federal and state pools |  | 341,014 |  | 61 |  |  | 186,496 |  | 54 |
Remaining unsecured reinsurance |  | 222,163 |  | 39 |  |  | 160,876 |  | 46 |
Hannover Ruckversicherungs AG (A.M. Best rated "A") |  | 50,636 |  | 9 |  |  | 33,203 |  | 10 |
Munich Re Group (A.M. Best rated "A+") |  | 34,902 |  | 6 |  |  | 29,312 |  | 8 |
Swiss Re Group (A.M. Best rated "A+") |  | 28,634 |  | 5 |  |  | 24,552 |  | 7 |
AXIS Reinsurance Company (A.M. Best rated "A") |  | 26,172 |  | 5 |  |  | 15,665 |  | 5 |
Partner Reinsurance Company of the U.S.(A.M. Best rated "A+") |  | 19,105 |  | 3 |  |  | 14,206 |  | 4 |
All other reinsurers |  | 62,714 |  | 11 |  |  | 43,938 |  | 12 |
Total | $ | 222,163 |  | 39 | % | $ | 160,876 |  | 46 | %
1 Includes letters of credit, trust funds, and funds withheld.
2 Considered to have minimal risk of default.
Note: Some amounts may not foot due to rounding
Under our reinsurance arrangements, which are prospective in nature, reinsurance premiums ceded are recorded as prepaid reinsurance and amortized over the remaining contract period in proportion to the reinsurance protection provided, or recorded periodically, as per the terms of the contract, in a direct relationship to the gross premium recording. Reinsurance recoveries are recognized as gross losses are incurred. The following table contains a listing of direct, assumed, and ceded reinsurance amounts for premiums written, premiums earned, and losses and loss expenses incurred:
($ in thousands) |  | 2011 |  | 2010 |  | 2009
Premiums written: |  |  |  |  |  |
Direct | $ | 1,725,393 |  | 1,634,415 |  | 1,657,142
Assumed |  | 51,515 |  | 25,254 |  | 22,784
Ceded |  | (291,559) |  | (269,128) |  | (257,271)
Net | $ | 1,485,349 |  | 1,390,541 |  | 1,422,655
Premiums earned: |  |  |  |  |  |
Direct | $ | 1,693,021 |  | 1,654,301 |  | 1,657,911
Assumed |  | 29,011 |  | 26,619 |  | 21,501
Ceded |  | (282,719) |  | (264,322) |  | (248,365)
Net | $ | 1,439,313 |  | 1,416,598 |  | 1,431,047
Losses and loss expenses incurred: |  |  |  |  |  |
Direct | $ | 1,499,340 |  | 1,102,326 |  | 1,065,594
Assumed |  | 20,788 |  | 14,994 |  | 14,794
Ceded |  | (445,141) |  | (135,202) |  | (108,483)
Net | $ | 1,074,987 |  | 982,118 |  | 971,905
Assumed premiums written increased by $26.3 million in 2011, as compared to 2010, primarily due to the August 2011 E&S renewal rights acquisition. Since this acquisition we have assumed $24.1 million in E&S premium. The increases in direct and ceded losses and loss expenses incurred in 2011 primarily reflect the impact of our Flood operation, which experienced increased volume associated with the elevated levels of catastrophic weather events, the results of which are included in the table below:
($ in thousands) |  | 2011 |  | 2010 |  | 2009
Ceded premiums written | $ | (206,711) |  | (190,964) |  | (178,934)
Ceded premiums earned |  | (198,153) |  | (184,833) |  | (171,941)
Ceded losses and loss expenses incurred |  | (352,619) |  | (60,479) |  | (35,597)
In addition, on a net basis, losses and loss expenses incurred also reflect increased catastrophic losses that we have retained. These losses increased by $62.3 million, to $118.8 million in 2011, from 2010. Hurricane Irene represented the majority of the 2011 losses, with the remainder of losses in 2011 resulting from more than 20 additional events. The total impact of Hurricane Irene was $40.2 million ($47.1 million on a gross basis), including the reinstatement premium.

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- Definition The entire disclosure pertaining to the existence, magnitude and information about insurance that has been ceded to or assumed from another insurance company, including the methodologies and assumptions used in determining recorded amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 605 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6486672&loc=d3e27261-158547 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 605 -Section 55 -Paragraph 13 -URI http://asc.fasb.org/extlink&oid=6588590&loc=d3e27795-158548 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 7 -Section 03 -Paragraph 13 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 310 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6485557&loc=d3e21549-158491 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 113 -Paragraph 120 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 92-5 -Paragraph 19 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 605 -Section 55 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6588590&loc=d3e27703-158548 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 113 -Paragraph 27 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 605 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6486672&loc=d3e27374-158547 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.7-03.6,13) -URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6480758&loc=d3e6811-158387 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 7 -Section 03 -Paragraph 6 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6480758&loc=d3e6816-158387 + Details
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