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Reinsurance | 6 Months Ended
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Jun. 30, 2018
Insurance [Abstract] |
Reinsurance | 4. Reinsurance The Company seeks to reduce their 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 programs consist of catastrophe excess of loss reinsurance, subject to the terms and conditions of the applicable agreements. The Company is responsible for certain retained loss amounts before reinsurance attaches and insured losses related to catastrophes and other events that exceed coverage provided by their reinsurance programs. The Company remains responsible for the settlement of insured losses irrespective of whether any of their reinsurers fail to make payments otherwise due. 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 June 30, 2018 |  | Due from as of |
|  |  |  | Standard |  |  |  |  |  |  |  |  |  |
|  |  |  | and Poor's |  | Moody's |  |  |  |  |  |  |  |
|  | AM Best |  | Rating |  | Investors |  | June 30, |  |  | December 31, |
Reinsurer |  | Company |  | Services |  | Service, Inc. |  | 2018 |  |  | 2017 |
Lloyd's of London Syndicate |  | A |  | A+ |  | n/a |  | $ | 33,966 |  |  | $ | — |
Allianz Risk Transfer |  | A+ |  | AA- |  | n/a |  |  | 18,406 |  |  |  | 105,573 |
Florida Hurricane Catastrophe Fund (1) |  | n/a |  | n/a |  | n/a |  |  | — |  |  |  | 52,054 |
Renaissance Reinsurance Ltd |  | n/a |  | n/a |  | n/a |  |  | — |  |  |  | 22,545 |
Total (2) |  |  |  |  |  |  |  | $ | 52,372 |  |  | $ | 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 June 30, |
| 2018 |  |  | 2017 |
|  |  |  |  |  |  |  |  | Losses and Loss |  |  |  |  |  |  |  |  |  |  | Losses and Loss |
| Premiums |  |  | Premiums |  |  | Adjustment |  |  | Premiums |  |  | Premiums |  |  | Adjustment |
| Written |  |  | Earned |  |  | Expenses |  |  | Written |  |  | Earned |  |  | Expenses |
Direct | $ | 342,781 |  |  | $ | 274,027 |  |  | $ | 246,622 |  |  | $ | 296,191 |  |  | $ | 244,623 |  |  | $ | 85,656 |
Ceded |  | (339,251 | ) |  |  | (81,755 | ) |  |  | (156,780 | ) |  |  | (311,338 | ) |  |  | (75,614 | ) |  |  | (5,472 | )
Net | $ | 3,530 |  |  | $ | 192,272 |  |  | $ | 89,842 |  |  | $ | (15,147 | ) |  | $ | 169,009 |  |  | $ | 80,184 |
| Six Months Ended June 30, |
| 2018 |  |  | 2017 |
|  |  |  |  |  |  |  |  | Losses and Loss |  |  |  |  |  |  |  |  |  |  | Losses and Loss |
| Premiums |  |  | Premiums |  |  | Adjustment |  |  | Premiums |  |  | Premiums |  |  | Adjustment |
| Written |  |  | Earned |  |  | Expenses |  |  | Written |  |  | Earned |  |  | Expenses |
Direct | $ | 612,765 |  |  | $ | 536,288 |  |  | $ | 323,261 |  |  | $ | 541,606 |  |  | $ | 480,998 |  |  | $ | 156,439 |
Ceded |  | (339,251 | ) |  |  | (161,439 | ) |  |  | (157,493 | ) |  |  | (311,524 | ) |  |  | (150,430 | ) |  |  | (5,685 | )
Net | $ | 273,514 |  |  | $ | 374,849 |  |  | $ | 165,768 |  |  | $ | 230,082 |  |  | $ | 330,568 |  |  | $ | 150,754 |
The following prepaid reinsurance premiums and reinsurance recoverable and receivable are reflected in the Condensed Consolidated Balance Sheets as of the dates presented (in thousands):
| June 30, |  |  | December 31, |
| 2018 |  |  | 2017 |
Prepaid reinsurance premiums | $ | 310,618 |  |  | $ | 132,806 |
Reinsurance recoverable on paid losses and LAE | $ | 21,002 |  |  | $ | — |
Reinsurance recoverable on unpaid losses and LAE |  | 96,849 |  |  |  | 182,405 |
Reinsurance receivable, net |  | 1,402 |  |  |  | — |
Reinsurance recoverable and receivable | $ | 119,253 |  |  | $ | 182,405 |

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- Definition The entire disclosure pertaining to the existence, magnitude and information about insurance that has been ceded to or assumed from another insurance company, including the methodologies and assumptions used in determining recorded amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -URI http://asc.fasb.org/topic&trid=2303980 + Details
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