Note 7 — Reinsurance

The Company cedes a portion of its homeowners’ insurance exposure to other entities under catastrophe excess of loss reinsurance treaties and one quota share arrangement. The Company remains liable for claims payments in the event that any reinsurer is unable to meet its obligations under the reinsurance agreements. Failure of reinsurers to honor their obligations could result in losses to the Company. 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 reinsurers to secure its annual reinsurance coverage, which generally becomes effective June 1st each year. The Company purchases reinsurance each year taking into consideration probable maximum losses and reinsurance market conditions.

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Premiums Written:
Direct	$	156,151		$	141,280		$	238,140		$	220,942
Assumed		(841	)		(360	)		(1,376	)		(1,083	)

Gross written		155,310			140,920			236,764			219,859
Ceded		(31,378	)		(28,572	)		(59,217	)		(56,080	)

Net premiums written	$	123,932		$	112,348		$	177,547		$	163,779

Premiums Earned:
Direct	$	87,196		$	81,761		$	170,802		$	160,281
Assumed		20,569			9,460			46,530			24,828

Gross earned		107,765			91,221			217,332			185,109
Ceded		(31,378	)		(28,572	)		(59,217	)		(56,080	)

Net premiums earned	$	76,387		$	62,649		$	158,115		$	129,029

During the three and six months ended June 30, 2015 and 2014, there were no recoveries pertaining to reinsurance contracts that were deducted from losses incurred. At June 30, 2015 and December 31, 2014, there were 21 and 28, respectively, reinsurers participating in the Company’s reinsurance program. There were no amounts receivable with respect to reinsurers at June 30, 2015 and December 31, 2014. Thus, there were no concentrations of credit risk associated with reinsurance receivables and prepaid reinsurance premiums as of June 30, 2015 and December 31, 2014.

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. These adjustments are reflected in the consolidated statements of income as net reductions in ceded premiums of $6,241 and $5,056 for the three months ended June 30, 2015 and 2014, respectively, and $12,614 and $10,540 for the six months ended June 30, 2015 and 2014, respectively. At June 30, 2015 and December 31, 2014, other assets included $41,503 and $28,596, respectively, and prepaid reinsurance premiums included $5,691 and $5,983, respectively, which are related to these adjustments.