Reinsurance

3 Months Ended

Mar. 31, 2019

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 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 the reinsurance programs. The Company remains responsible for the settlement of insured losses irrespective of whether any of the 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 reinsurers whose aggregate balances exceeded 3% of the Company’s stockholders’ equity as of the dates presented (in thousands):

Ratings as of March 31, 2019

Due from as of

Reinsurer

AM Best

Company

Standard

and Poor’s

Rating

Services, Inc.

Moody’s

Investors Service, Inc.

March 31, 2019

December 31, 2018

Allianz Risk Transfer

A+

Aa3

109,183

139,565

Florida Hurricane Catastrophe Fund (1)

n/a

107,537

165,022

Renaissance Reinsurance Ltd

A+

26,299

39,459

Chubb Tempest Reinsurance Ltd

n/a

—

16,208

Total (2)

243,019

360,254


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


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

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,
	2019								2018
	Premiums Written		Premiums Earned			Losses and Loss Adjustment Expenses			Premiums Written		Premiums Earned			Losses and Loss Adjustment Expenses
Direct	$	289,234	$	295,377		$	115,742		$	269,984	$	262,261		$	76,639
Ceded	—		(85,650		)	(2,648		)	—		(79,684		)	(713		)
Net	$	289,234	$	209,727		$	113,094		$	269,984	$	182,577		$	75,926

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):



	March 31, 2019		December 31, 2018
Prepaid reinsurance premiums	$	57,100	$	142,750
Reinsurance recoverable on paid losses and LAE	$	54,223	$	25,238
Reinsurance recoverable on unpaid losses and LAE	269,071		393,365
Reinsurance recoverable and receivable	$	323,294	$	418,603