Note 7 — Reinsurance

The Company cedes a portion of its homeowners insurance exposure to other entities under catastrophe excess of loss reinsurance treaties. The Company remains liable with respect to claims payments in the event that any of the reinsurers is unable to meet its obligations under the reinsurance agreements. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. The Company contracts with a number of established and rated or fully collateralized reinsurers to secure its annual reinsurance coverage, which becomes effective June 1st each year. The Company purchases reinsurance each year taking into consideration projected losses and reinsurance market conditions.

The impact of the catastrophe excess of loss reinsurance treaties on premiums written and earned is as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Premiums Written:
Direct	$	132,923			83,669			203,772			121,842
Assumed		(476	)		(342	)		(2,076	)		(1,620	)

Gross written		132,447			83,327			201,696			120,222
Ceded		(24,617	)		(16,702	)		(46,613	)		(30,969	)

Net premiums written	$	107,830			66,625			155,083			89,253


Premiums Earned:
Direct	$	64,826			39,873			117,953			73,171
Assumed		17,126			13,899			46,546			35,299

Gross earned		81,952			53,772			164,499			108,470
Ceded		(24,617	)		(16,702	)		(46,613	)		(30,969	)

Net premiums earned	$	57,335			37,070			117,886			77,501

During the three and six months ended June 30, 2013 and 2012, there were no recoveries pertaining to reinsurance contracts that were deducted from losses incurred. At June 30, 2013 and December 31, 2012, prepaid reinsurance premiums related to 27 and 31 reinsurers, respectively, and there were no amounts receivable with respect to reinsurers. Thus, there were no concentrations of credit risk associated with reinsurance receivables and prepaid reinsurance premiums as of June 30, 2013 and December 31, 2012.

Certain of the reinsurance contracts include retrospective provisions that adjust premiums, increase the amount of future coverage, or result in profit commissions in the event losses are minimal or zero. As of June 30, 2013, the Company has recognized a benefit of $1,301 in connection with these provisions. See “Reinsurance Contracts” under Note 1 — “Summary of Significant Accounting Policies.”