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 June 30,					Six Months ended June 30,
($ in thousands)	2012			2011		2012		2011
Premiums written:
Direct	$	507,520		447,595		983,486		870,937
Assumed	4,747			1,537		26,736		7,190
Ceded	(86,704		)	(74,629	)	(164,487	)	(141,789	)
Net	$	425,563		374,503		845,735		736,338
Premiums earned:
Direct	$	463,330		418,977		915,318		831,856
Assumed	16,039			5,351		31,088		11,240
Ceded	(87,157		)	(68,748	)	(175,365	)	(136,173	)
Net	$	392,212		355,580		771,041		706,923
Losses and loss expenses incurred:
Direct	$	301,451		296,963		553,654		566,367
Assumed	10,470			3,739		21,069		7,572
Ceded	(24,018		)	(26,147	)	(33,914	)	(50,178	)
Net	$	287,903		274,555		540,809		523,761

Direct premium written ("DPW") increases in both Second Quarter and Six Months 2012 were attributable to our newly acquired E&S business coupled with higher renewal premiums in our standard insurance operations. In addition, an increase in new business from our standard Insurance Operations contributed to the increase in DPW in Six Months 2012 compared to Six Months 2011.

Direct premium earned increases in Second Quarter 2012 and Six Months 2012 were consistent with the fluctuation in DPW for the twelve-month period ended June 30, 2012 as compared to the twelve-month period ended June 30, 2011.

Assumed premiums written and earned increased in Second Quarter and Six Months 2012 compared to the same periods last year primarily due to the August 2011 E&S renewal rights acquisition.

Direct losses and loss expenses incurred were significantly impacted by catastrophe losses in both 2012 and 2011. Catastrophe losses were $30.2 million and $38.1 million in Second Quarter 2012 and 2011, respectively, and $37.1 million and $44.9 million in Six Months 2012 and 2011, respectively.

Ceded losses and loss expenses incurred decreased by $2.1 million in Second Quarter 2012 and $16.3 million in Six Months 2012, compared to the same periods last year. These decreases were primarily due to NFIP Hurricane Irene and Lee claims from August and September 2011 being settled in 2012 for less than their original estimates. This decrease was partially offset by ceded loss activity related to our E&S business driven by cessions to Montpelier Reinsurance Ltd. in connection with the December 2011 acquisition of MUSIC.

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 June 30,					Six Months ended June 30,
($ in thousands)	2012			2011		2012		2011
Ceded premiums written	$	(60,525	)	(55,265	)	(112,249	)	(103,579	)
Ceded premiums earned	(52,768		)	(48,907	)	(104,673	)	(96,855	)
Ceded losses and loss expenses incurred	$	(6,754	)	(15,339	)	8,168		(29,879	)