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Reinsurance
 12 Months Ended
Dec. 31, 2012
Reinsurance [Abstract]  
Reinsurance
6. Reinsurance

The Company cedes certain premiums and losses to various reinsurers under quota share and excess-of-loss treaties. These reinsurance arrangements provide for greater diversification of business, allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. Ceded reinsurance contracts do not relieve the Company from its obligations to policyholders. The Company remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet the obligations assumed under the reinsurance agreements. To minimize its exposure to significant losses from reinsurer insolvencies, 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 on a continual basis. The effect of reinsurance on premiums written and earned in 2012, 2011 and 2010 was as follows:

 

                                                 
    2012 Premiums     2011 Premiums     2010 Premiums  
    Written     Earned     Written     Earned     Written     Earned  
    (In thousands)  

Gross

   $ 328,823     $ 306,994     $ 272,101     $ 264,896     $ 228,424     $ 239,430  

Ceded

     (16,305 )      (16,305 )      (13,881 )      (13,881 )      (20,549 )      (20,549 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net premiums

   $ 312,518     $ 290,689     $ 258,220     $ 251,015     $ 207,875     $ 218,881  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The amounts recoverable from reinsurers consist of the following:

 

                 
    December 31,  
    2012     2011  
    (In thousands)  

Unpaid losses recoverable:

                

Case basis

   $ 31,105     $ 35,069  

Incurred but not reported

     24,085       25,868  

Paid losses recoverable

     746       764  

Experience-rated commissions recoverable

     45,416       34,511  
   

 

 

    

 

 

  

Total

   $ 101,352     $ 96,212  
   

 

 

    

 

 

  

Amounts recoverable from reinsurers consists of ceded case reserves, ceded incurred but not reported (“IBNR”) reserves, paid losses recoverable and experience-rated commissions recoverable. Ceded case and ceded IBNR reserves represent the portion of gross loss and loss adjustment expense liabilities that are recoverable under reinsurance agreements, but are not yet due from reinsurers. Paid losses recoverable are receivables currently due from reinsurers for ceded paid losses. The Company considers paid losses recoverable outstanding for more than 90 days to be past due. At December 31, 2012, there were no paid losses recoverable past due. Experience-rated commissions recoverable represents earned commission from certain reinsurance companies based on the financial results of the applicable risks ceded to the reinsurers.

The Company received reinsurance recoveries of $5,344,000 in 2012, $2,861,000 in 2011 and $3,667,000 in 2010.

At December 31, 2012, unsecured reinsurance recoverables from reinsurers that exceeded 1.5% of statutory surplus of the Company’s insurance subsidiary are shown below (in thousands). The A.M. Best Company rating for the reinsurer is shown parenthetically.

 

         

Hannover Reinsurance (Ireland) Limited (A+)

   $ 31,904  

Aspen Insurance (Bermuda) Limited (A)

     14,191  

Odyssey America Reinsurance Corporation (A)

     12,426  

Minnesota Workers’ Compensation Reinsurance Association (NR)

     8,641  

Clearwater Insurance Company (B+)

     5,769  

Finial Reinsurance Company (A-)

     4,975  

SCOR Reinsurance Company (A)

     4,904  

Other reinsurers

     18,542  
   

 

 

  

Total reinsurance recoverables

     101,352  

Letters of credit and funds held

     (58,993 ) 
   

 

 

  

Total unsecured reinsurance recoverables

   $ 42,359