The Company cedes and assumes certain premiums and losses to and from various companies and associations under a variety of reinsurance agreements. The Company seeks to limit the maximum net loss that can arise from large risks or risks in concentrated areas of exposure through use of these agreements, either on an automatic basis under general reinsurance contracts known as treaties or through facultative contracts on substantial individual risks. Reinsurance contracts do not relieve the Company from its obligations to policyholders.

During the year ended December 31, 2021, the Company retained the first $10,000 of weather-related losses from catastrophic events and had reinsurance under various reinsurance agreements up to $117,000 in excess of its $10,000 retained risk. The Company experienced one catastrophe event during 2021 in excess of the retention level, resulting in a reinsurance recovery of $5,612.

During the year ended December 31, 2020, the Company retained the first $10,000 of weather-related losses from catastrophic events and had reinsurance under various reinsurance agreements up to $97,000 in excess of its $10,000 retained risk. During the year ended December 31, 2019, the Company retained the first $10,000 of weather-related losses from catastrophic events and had reinsurance under various reinsurance agreements up to $78,600 in excess of its $10,000 retained risk. The Company did not experience any catastrophe events during 2020 or 2019 which exceeded the retention level.

For 2022, the catastrophe retention amount will increase to $15,000 while the overall catastrophic reinsurance program limit increased to $125,000 in excess of the $15,000 retention.

The Company actively monitors and evaluates the financial condition of the reinsurers and develops estimates of the uncollectible amounts due from reinsurers. Such estimates are made based on periodic evaluation of balances due from reinsurers, judgments regarding reinsurers’ solvency, known disputes, reporting characteristics of the underlying reinsured business, historical experience, current economic conditions, and the state of reinsurer relations in general. Collection risk is mitigated from reinsurers by entering into reinsurance arrangements only with reinsurers that have strong credit ratings and statutory surplus above certain levels. The Company’s reinsurance recoverables on paid and unpaid losses were due from reinsurance companies with AM Best ratings of “A” or higher.

A reconciliation of direct to net premiums on both a written and an earned basis is as follows:

	Year Ended December 31,
	2021						2020						2019
	Premiums Written			Premiums Earned			Premiums Written			Premiums Earned			Premiums Written			Premiums Earned
Direct premium	$	342,215		$	333,254		$	314,187		$	301,061		$	262,145		$	257,661
Assumed premium		8,183			8,035			6,590			6,459			5,921			5,897
Ceded premium		(42,629	)		(41,700	)		(23,633	)		(23,859	)		(17,120	)		(17,120	)
Net premiums	$	307,769		$	299,589		$	297,144		$	283,661		$	250,946		$	246,438

A reconciliation of direct to net losses and loss adjustment expenses is as follows:

	Year Ended December 31,
	2021			2020			2019
Direct losses and loss adjustment expenses	$	280,998		$	185,370		$	173,943
Assumed losses and loss adjustment expenses		6,899			3,308			4,032
Ceded losses and loss adjustment expenses		(71,518	)		(20,205	)		(8,265	)
Net losses and loss adjustment expenses	$	216,379		$	168,473		$	169,710

If 100% of our ceded reinsurance was cancelled as of December 31, 2021, no ceded commissions would need to be returned to the reinsurers. Reinsurance contracts are typically effective from January 1 through December 31 each year.