v3.3.1.900
Reinsurance
 12 Months Ended
Dec. 31, 2015
Reinsurance Disclosures [Abstract]  
Reinsurance
Reinsurance

We use retrocessional agreements ("ceded reinsurance") to mitigate volatility and to reduce our exposure on certain specialty reinsurance risks and to provide capital support. These agreements provide for recovery from reinsurers of a portion of losses and LAE under certain circumstances without relieving the Company of its obligations to the policyholders. The Company remains liable to the extent that any reinsurance company fails to meet its obligations. Losses and LAE incurred and premiums earned are reported after deduction for reinsurance. In the event that one or more of the reinsurers are unable to meet their obligations under these reinsurance agreements, the Company would not realize the full value of the reinsurance recoverable balances.

Effective January 1, 2015, the Company entered into a retrocessional quota share agreement with a highly rated global insurer to cede certain lines of business from both of our reportable segments.

The effect of ceded reinsurance on net premiums written and earned and on net loss and LAE for the years ended December 31, 2015, 2014 and 2013 was as follows:
For the Year Ended December 31,
 
2015
 
2014
 
2013
Premiums written
 


 


 


Direct
 
$
9,160

 
$
48,565

 
$
104,976

Assumed
 
2,653,666

 
2,458,787

 
2,099,183

Ceded
 
(148,710
)
 
(49,216
)
 
(107,858
)
Net
 
$
2,514,116

 
$
2,458,136

 
$
2,096,301

Premiums earned
 


 


 


Direct
 
$
26,358

 
$
70,807

 
$
118,170

Assumed
 
2,481,515

 
2,253,750

 
1,994,225

Ceded
 
(78,804
)
 
(72,814
)
 
(111,508
)
Net
 
$
2,429,069

 
$
2,251,743

 
$
2,000,887

Loss and loss adjustment expenses
 


 


 


Gross loss and LAE
 
$
1,687,564

 
$
1,592,795

 
$
1,421,328

Loss and LAE ceded
 
(53,994
)
 
(94,524
)
 
(71,698
)
Net
 
$
1,633,570

 
$
1,498,271

 
$
1,349,630



The reinsurers with the three largest balances accounted for 40.9%, 35.5% and 4.8%, respectively, of the Company's reinsurance recoverable on unpaid losses balance at December 31, 2015 (2014 – 45.6%, 10.6% and 9.9%, respectively). At December 31, 2015, 99.1% of the reinsurance recoverable on unpaid losses was due from reinsurers with credit ratings from A.M Best of A, or better, and 0.9% of the reinsurance recoverable on unpaid losses was due from reinsurers without ratings. At December 31, 2015 and 2014, the Company had no valuation allowance against reinsurance recoverable on unpaid losses.