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Reinsurance | 3 Months Ended
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Mar. 31, 2020
Reinsurance Disclosures [Abstract] |
Reinsurance | Reinsurance We evaluate and monitor the financial condition of our reinsurers under voluntary reinsurance arrangements to minimize our exposure to significant losses from reinsurer insolvencies. The following table provides (i) a disaggregation of our reinsurance recoverable balance by financial strength rating, and (ii) an aging analysis of our past due reinsurance recoverable balances as of March 31, 2020:
|  | March 31, 2020
($ in thousands) |  | Current |  | Past Due |  | Total Reinsurance Recoverables
Financial strength rating of rated reinsurers 1 |  |  |  |  |  |
A++ |  | $ | 20,835 |  |  | $ | — |  |  | $ | 20,835 |
A+ |  | 428,354 |  |  | 3,229 |  |  | 431,583 |
A |  | 25,915 |  |  | — |  |  | 25,915 |
A- |  | 508 |  |  | — |  |  | 508 |
B++ |  | 316 |  |  | 94 |  |  | 410 |
B+ |  | 21 |  |  | — |  |  | 21 |
Total rated reinsurers |  | $ | 475,949 |  |  | $ | 3,323 |  |  | $ | 479,272 |
Non-rated reinsurers |  |  |  |  |  |
Federal and state pools |  | 80,245 |  |  | 60 |  |  | 80,305 |
Other than federal and state pools |  | 5,459 |  |  | — |  |  | 5,459 |
Total non-rated reinsurers |  | $ | 85,704 |  |  | $ | 60 |  |  | $ | 85,764 |
Total reinsurance recoverable, gross |  | $ | 561,653 |  |  | $ | 3,383 |  |  | $ | 565,036 |
Less: allowance for credit losses 2 |  | (1,502 | ) |  | — |  |  | (1,502 | )
Total reinsurance recoverable, net |  | $ | 560,151 |  |  | $ | 3,383 |  |  | $ | 563,534 |
1 Credit ratings as of March 31, 2020. 2 Represents our current expectation of credit losses on total current and past due reinsurance recoverables, and is not identifiable by reinsurer. We evaluate our estimate of expected credit losses through the methodology outlined in Note 1. “Basis of Presentation and Accounting Policies.” The following table provides a rollforward of the allowance for credit losses on our reinsurance recoverable balance at March 31, 2020:
($ in thousands) |  | March 31, 2020
Balance, December 31, 2019 |  | $ | 4,400 |
Cumulative effect adjustment 1 |  | (2,903 | )
Balance, January 1, 2020 |  | $ | 1,497 |
Current period provision for expected credit losses |  | 5 |
Write-offs charged against the allowance |  | — |
Recoveries |  | — |
Allowance for credit losses, end of period |  | $ | 1,502 |
1 See Note 2. "Adoption of Accounting Pronouncements" for additional information regarding our adoption of ASU 2016-13. The following table contains a listing of direct, assumed, and ceded reinsurance amounts for premiums written, premiums earned, and loss and loss expenses incurred for the periods indicated. For more information concerning reinsurance, refer to Note 8. “Reinsurance” in Item 8. “Financial Statements and Supplementary Data.” of our 2019 Annual Report.
|  | Quarter Ended March 31,
($ in thousands) |  | 2020 |  | 2019
Premiums written: |  |  |  |  |  |
Direct |  | $ | 746,431 |  |  | 766,394 |
Assumed |  | 6,043 |  |  | 6,555 |
Ceded |  | (105,147 | ) |  | (100,002 | )
Net |  | $ | 647,327 |  |  | 672,947 |
Premiums earned: |  |  |  |  |  |
Direct |  | $ | 754,892 |  |  | 728,037 |
Assumed |  | 6,173 |  |  | 6,562 |
Ceded |  | (109,362 | ) |  | (102,026 | )
Net |  | $ | 651,703 |  |  | 632,573 |
Loss and loss expenses incurred: |  |  |  |  |  |
Direct |  | $ | 425,795 |  |  | 424,657 |
Assumed |  | 4,898 |  |  | 5,265 |
Ceded |  | (30,369 | ) |  | (43,343 | )
Net |  | $ | 400,324 |  |  | 386,579 |
Direct premiums written decreased in First Quarter 2020 compared to First Quarter 2019 as a result of a $75 million increase in our return audit and mid-term endorsement premium accrual during First Quarter 2020, which reflects lower exposure that determines the premium that we charge due to the economic impacts of the COVID-19 pandemic and the anticipated decline in sales and payroll exposures on the general liability and workers compensation lines of business. Ceded premiums and losses related to our participation in the NFIP, under which 100% of our flood premiums, losses, and loss expenses are ceded to the NFIP, are as follows:
Ceded to NFIP |  | Quarter Ended March 31,
($ in thousands) |  | 2020 |  | 2019
Ceded premiums written |  | $ | (62,087 | ) |  | (60,013 | )
Ceded premiums earned |  | (66,861 | ) |  | (62,263 | )
Ceded loss and loss expenses incurred |  | (5,096 | ) |  | (13,686 | )

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -URI http://asc.fasb.org/topic&trid=2303980 + Details
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