4. Reinsurance

The Company seeks to reduce its risk of loss by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers, generally as of the beginning of the hurricane season on June 1st of each year. The Company’s current reinsurance program consists of catastrophe excess of loss reinsurance, subject to the terms and conditions of the applicable agreements. The Company is responsible for deductible amounts before reinsurance attaches and insured losses related to catastrophes and other events in excess of coverage provided by its reinsurance program. The Company remains responsible for the settlement of insured losses irrespective of whether any of its reinsurers to make payments otherwise due to the Company.

Amounts recoverable from reinsurers are estimated in a manner consistent with the terms of the reinsurance contracts. Reinsurance premiums, losses and loss adjustment expenses (“LAE”) are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.

To reduce credit risk for amounts due from reinsurers, the Insurance Entities seek to do business with financially sound reinsurance companies and regularly evaluate the financial strength of all reinsurers used.

The following table presents ratings from rating agencies and the unsecured amounts due from the Company’s reinsurers whose aggregate balance exceeded 3% of the Company’s stockholders’ equity as of the dates presented (in thousands):

Ratings as of March 31, 2018

Due from as of

Standard

and Poor's

Moody's

AM Best

Rating

Investors

March 31,

December 31,

Reinsurer

Company

Services

Service, Inc.

2018

2017

Allianz Risk Transfer

A+

AA-

n/a

39,007

105,573

Florida Hurricane Catastrophe Fund (1)

n/a

20,822

52,054

Renaissance Reinsurance Ltd

A+

AA-

—

22,545

Total (2)

59,829

180,172

(1)	No rating is available, because the fund is not rated.

(2)	Amounts represent prepaid reinsurance premiums, reinsurance receivables, net recoverables for paid and unpaid losses, including incurred but not reported reserves, loss adjustment expenses, and offsetting reinsurance payables.

The Company’s reinsurance arrangements had the following effect on certain items in the Condensed Consolidated Statements of Income for the periods presented (in thousands):

	Three Months Ended March 31,
	2018								2017
						Losses and Loss									Losses and Loss
	Premiums		Premiums			Adjustment			Premiums			Premiums			Adjustment
	Written		Earned			Expenses			Written			Earned			Expenses
Direct	$	269,984	$	262,261		$	76,639		$	245,415		$	236,375		$	70,783
Ceded		—		(79,684	)		(713	)		(186	)		(74,816	)		(213	)
Net	$	269,984	$	182,577		$	75,926		$	245,229		$	161,559		$	70,570

The following prepaid reinsurance premiums and reinsurance recoverable (payable) and receivable are reflected in the Condensed Consolidated Balance Sheets as of the dates presented (in thousands):

	March 31,		December 31,
	2018		2017
Prepaid reinsurance premiums	$	53,123	$	132,806
Reinsurance recoverable on unpaid losses and LAE	$	72,641	$	182,405
Reinsurance receivable, net		492		—
Reinsurance recoverable (payable) and receivable	$	73,133	$	182,405