NOTE 8. Reinsurance

The following table contains a listing of direct, assumed, and ceded reinsurance amounts for premiums written, premiums earned, and losses and loss expenses incurred. For more information concerning reinsurance, refer to Note 8. "Reinsurance" in Item 8. "Financial Statements and Supplementary Data." in our 2011 Annual Report.


		Quarter ended
		March 31,
($ in thousands)		2012	2011
Premiums written:
Direct	$	475,966	423,342
Assumed		21,989	5,653
Ceded		(77,783)	(67,160)
Net	$	420,172	361,835

Premiums earned:
Direct	$	451,988	412,879
Assumed		15,049	5,889
Ceded		(88,208)	(67,425)
Net	$	378,829	351,343

Losses and loss expenses incurred:
Direct	$	252,203	269,404
Assumed		10,599	3,833
Ceded		(9,896)	(24,031)
Net	$	252,906	249,206

Direct premium written ("DPW") for First Quarter 2012 was $52.6 million higher than First Quarter 2011 due to the following: (i) our E&S operations that generated DPW of $13.2 million; (ii) Commercial Lines renewal pure price increases of 5.1% coupled with a three-point increase in retention to 83%; (iii) Personal Lines filed rate increases that were effective for the quarter that averaged 5.9% while retention improved one point from a year ago to 87%; (iv) an increase in direct new business premiums of $21.8 million; and (v) audit and endorsement additional premium of $5.7 million compared to return premium of $4.0 million. Direct premium earned increases in First Quarter 2012 were consistent with the fluctuation in DPW for the twelve-month period ended March 31, 2012 as compared to the twelve-month period ended March 31, 2011.

Assumed premiums written and earned for First Quarter 2012 was $16.3 million and $9.2 million higher, respectively, than First Quarter 2011 primarily due to the August 2011 E&S renewal rights acquisition.

The ceded premiums and losses related to our involvement with the National Flood Insurance Program ("NFIP"), in which all of our Flood premiums, losses, and loss expenses are ceded to the NFIP, are as follows:


National Flood Insurance Program		Quarter ended
		March 31,
($ in thousands)		2012	2011
Ceded premiums written	$	(51,724)	(48,314)
Ceded premiums earned		(51,905)	(47,948)
Ceded losses and loss expenses incurred	$	14,922	(14,540)

NFIP ceded losses and loss expenses incurred in First Quarter 2012 were $29.5 million lower than First Quarter 2011. This decrease was a direct result of Hurricane Irene and Lee claims from August and September 2011 being settled in First Quarter 2012 for roughly $15 million less than their original estimates. On an overall company basis, this decrease was partially offset by ceded loss activity related to our E&S business.