Reinsurance

The Company purchases retrocession and reinsurance to limit and diversify the Company’s risk exposure and to increase its own insurance and reinsurance underwriting capacity. These agreements provide for recovery of a portion of losses and loss adjustment expenses from reinsurers. As is the case with most reinsurance contracts, the Company remains liable to the extent that reinsurers do not meet their obligations under these agreements. In line with its risk management objectives, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk.

Balances pertaining to reinsurance transactions are reported “gross” on the consolidated balance sheet, meaning that reinsurance recoverable on unpaid losses and ceded unearned premiums are not deducted from insurance reserves but are recorded as assets. For more information on reinsurance recoverables, please refer to Note 20, “Concentrations of Credit Risk — Reinsurance recoverables” and Note 12, “Reserves for Losses and Loss Adjustment Expenses” of these consolidated financial statements.

The effect of assumed and ceded reinsurance on premiums written, premiums earned and insurance losses and loss adjustment expenses for the twelve months ended December 31, 2017, 2016 and 2015 was as follows:



	Twelve Months Ended December 31,
	2017			2016			2015
	($ in millions)
Premiums written:
Direct	$	1,812.4		$	1,733.8		$	1,748.4
Assumed	1,548.5			1,413.2			1,248.9
Ceded	(1,148.4		)	(553.3		)	(351.1		)
Net premiums written	$	2,212.5		$	2,593.7		$	2,646.2

Premiums earned:
Direct	$	1,757.4		$	1,768.4		$	1,703.3
Assumed	1,451.8			1,317.9			1,153.5
Ceded	(902.6		)	(449.0		)	(383.5		)
Net premiums earned	$	2,306.6		$	2,637.3		$	2,473.3

Insurance losses and loss adjustment expenses:
Direct	$	1,673.6		$	1,091.9		$	980.6
Assumed	1,399.9			699.6			493.0
Ceded	(1,078.8		)	(215.4		)	(107.4		)
Net insurance losses and loss adjustment expenses	$	1,994.7		$	1,576.1		$	1,366.2

The Company acquired retrospective reinsurance coverage during the twelve months ended December 31, 2017 as part of a loss portfolio transfer for $125.5 million which has been recognized within ceded insurance losses. For more information the loss portfolio transfer, please refer to Note 12, “Reserves for Losses and Loss Adjustment Expenses” of these consolidated financial statements.