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Losses And Loss Adjustment Expense Reserves | 12 Months Ended
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Dec. 31, 2017
Insurance Loss Reserves [Abstract] |
Losses And Loss Adjustment Expense Reserves | Loss and Loss Adjustment Expense Reserves The following table presents the activity in loss and loss adjustment expense reserves:
| Year Ended December 31,
| 2017 |  | 2016 |  | 2015
| (Amounts in thousands)
Gross reserves at January 1 | $ | 1,290,248 |  |  | $ | 1,146,688 |  |  | $ | 1,091,797 |
Less reinsurance recoverables on unpaid losses | (13,161 | ) |  | (14,253 | ) |  | (14,192 | )
Net reserves at January 1 | 1,277,087 |  |  | 1,132,435 |  |  | 1,077,605 |
Acquisition of WAIC reserves | — |  |  | — |  |  | 18,677 |
Incurred losses and loss adjustment expenses related to: |  |  |  |  |
Current year | 2,390,453 |  |  | 2,269,769 |  |  | 2,132,837 |
Prior years | 54,431 |  |  | 85,369 |  |  | 12,658 |
Total incurred losses and loss adjustment expenses | 2,444,884 |  |  | 2,355,138 |  |  | 2,145,495 |
Loss and loss adjustment expense payments related to: |  |  |  |  |
Current year | 1,550,789 |  |  | 1,508,362 |  |  | 1,455,245 |
Prior years | 724,570 |  |  | 702,124 |  |  | 654,097 |
Total payments | 2,275,359 |  |  | 2,210,486 |  |  | 2,109,342 |
Net reserves at December 31 | 1,446,612 |  |  | 1,277,087 |  |  | 1,132,435 |
Reinsurance recoverables on unpaid losses | 64,001 |  |  | 13,161 |  |  | 14,253 |
Gross reserves at December 31 | $ | 1,510,613 |  |  | $ | 1,290,248 |  |  | $ | 1,146,688 |
The increase in the provision for insured events of prior years in 2017 of approximately $54.4 million primarily resulted from higher than estimated losses in California automobile and property lines, which experienced higher loss severity on liability coverages including Bodily Injury and Property Damage and higher loss adjustment expenses than originally estimated. The increase in the provision for insured events of prior years in 2016 of approximately $85.4 million primarily resulted from the California and Florida automobile lines of business which experienced higher loss severity on liability coverages including Bodily Injury, Combined Single Limits and Property Damage than was originally estimated. The increase in the provision for insured events of prior years in 2015 of approximately $12.7 million primarily resulted from the California homeowners and automobile lines of business outside of California, which was partially offset by favorable development in the California automobile line of business. The Company experienced pre-tax catastrophe losses and loss adjustment expenses of approximately $168 million ( $79 million net of reinsurance benefits), $27 million, and $19 million in 2017, 2016, and 2015, respectively. There were no reinsurance benefits used for catastrophe losses in 2016 and 2015. The losses in 2017 were primarily due to wildfires in Northern and Southern California, severe rainstorms in California, and the impact of Hurricane Harvey in Texas and Hurricane Irma in Florida and Georgia. The losses in 2016 were primarily due to severe storms outside of California, and rainstorms in California. The losses in 2015 were primarily due to severe storms outside of California, and rainstorms and wildfires in California. The following is information about incurred and paid claims development as of December 31, 2017, net of reinsurance, as well as cumulative claim frequency and the total of incurred-but-not-reported liabilities plus expected development on reported claims included within the net incurred claims amounts for our two major product lines: automobile and homeowners lines of business. As the information presented is for these two major product lines only, the total incurred and paid claims development shown below does not correspond to the aggregate development presented in the table above, which is for all product lines and includes unallocated claims adjustment expenses. The cumulative number of reported claims represents open claims, claims closed with payment, and claims closed without payment. It does not include an estimated amount for unreported claims. The number of claims is measured by claim event (such as a car accident or storm damage) and an individual claim event may result in more than one reported claim. The Company considers a claim that does not result in a liability as a claim closed without payment. The information about incurred and paid claims development for the years ended December 31, 2008 to 2016 is presented as unaudited supplementary information.
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Automobile Insurance) |  | As of December 31, 2017
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims |  | Cumulative Number of Reported Claims
Accident Year |  | For the Years Ended December 31, |  |
| 2008(1) |  | 2009(1) |  | 2010(1) |  | 2011(1) |  | 2012(1) |  | 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017 |  |
|  | (Amounts in thousands) |  | (Amounts in thousands)
2008 |  | $ | 1,505,732 |  |  | $ | 1,440,301 |  |  | $ | 1,442,691 |  |  | $ | 1,455,858 |  |  | $ | 1,461,084 |  |  | $ | 1,463,659 |  |  | $ | 1,465,623 |  |  | $ | 1,466,108 |  |  | $ | 1,466,137 |  |  | $ | 1,466,687 |  |  | $ | 55 |  |  | 199
2009 |  |  |  | 1,372,833 |  |  | 1,349,025 |  |  | 1,361,116 |  |  | 1,361,652 |  |  | 1,365,551 |  |  | 1,371,779 |  |  | 1,372,694 |  |  | 1,372,259 |  |  | 1,371,812 |  |  | 82 |  |  | 186
2010 |  |  |  |  |  | 1,367,547 |  |  | 1,357,750 |  |  | 1,364,307 |  |  | 1,374,638 |  |  | 1,379,336 |  |  | 1,381,056 |  |  | 1,386,105 |  |  | 1,388,077 |  |  | 158 |  |  | 184
2011 |  |  |  |  |  |  |  | 1,343,919 |  |  | 1,367,000 |  |  | 1,380,557 |  |  | 1,388,363 |  |  | 1,393,878 |  |  | 1,398,518 |  |  | 1,405,112 |  |  | 9,367 |  |  | 181
2012 |  |  |  |  |  |  |  |  |  | 1,424,754 |  |  | 1,408,222 |  |  | 1,409,104 |  |  | 1,414,878 |  |  | 1,426,735 |  |  | 1,436,034 |  |  | 1,756 |  |  | 181
2013 |  |  |  |  |  |  |  |  |  |  |  | 1,448,567 |  |  | 1,431,058 |  |  | 1,447,881 |  |  | 1,458,421 |  |  | 1,464,071 |  |  | 4,011 |  |  | 185
2014 |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,467,175 |  |  | 1,454,366 |  |  | 1,473,545 |  |  | 1,486,322 |  |  | 12,959 |  |  | 180
2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,551,105 |  |  | 1,588,443 |  |  | 1,610,839 |  |  | 40,444 |  |  | 170
2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,672,853 |  |  | 1,669,642 |  |  | 102,672 |  |  | 154
2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,703,857 |  |  | 347,296 |  |  | 140
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 15,002,453 |  |  |  |  |
__________ (1) The information for the years 2008 to 2016 is presented as unaudited supplemental information.
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Automobile Insurance)
|  | For the Years Ended December 31,
Accident Year |  | 2008(1) |  | 2009(1) |  | 2010(1) |  | 2011(1) |  | 2012(1) |  | 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017
|  | (Amounts in thousands)
2008 |  | $ | 992,844 |  |  | $ | 1,226,787 |  |  | $ | 1,345,354 |  |  | $ | 1,418,274 |  |  | $ | 1,450,172 |  |  | $ | 1,459,216 |  |  | $ | 1,463,384 |  |  | $ | 1,464,763 |  |  | $ | 1,465,832 |  |  | $ | 1,466,704 |
2009 |  |  |  | 913,340 |  |  | 1,137,807 |  |  | 1,260,424 |  |  | 1,326,439 |  |  | 1,355,210 |  |  | 1,363,526 |  |  | 1,370,564 |  |  | 1,371,956 |  |  | 1,371,933 |
2010 |  |  |  |  |  | 908,954 |  |  | 1,143,984 |  |  | 1,268,142 |  |  | 1,335,871 |  |  | 1,365,464 |  |  | 1,375,799 |  |  | 1,384,333 |  |  | 1,387,835 |
2011 |  |  |  |  |  |  |  | 926,983 |  |  | 1,152,459 |  |  | 1,277,808 |  |  | 1,347,082 |  |  | 1,378,920 |  |  | 1,391,101 |  |  | 1,394,684 |
2012 |  |  |  |  |  |  |  |  |  | 955,647 |  |  | 1,194,648 |  |  | 1,304,511 |  |  | 1,372,828 |  |  | 1,409,911 |  |  | 1,422,705 |
2013 |  |  |  |  |  |  |  |  |  |  |  | 974,445 |  |  | 1,217,906 |  |  | 1,340,724 |  |  | 1,413,999 |  |  | 1,447,004 |
2014 |  |  |  |  |  |  |  |  |  |  |  |  |  | 967,481 |  |  | 1,231,413 |  |  | 1,358,472 |  |  | 1,432,472 |
2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,040,253 |  |  | 1,336,223 |  |  | 1,466,368 |
2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,094,006 |  |  | 1,395,199 |
2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,076,079 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 13,860,983 |
|  |  |  |  |  |  |  | All outstanding liabilities before 2008, net of reinsurance |  |  | (169 | )
|  |  |  |  |  |  |  | Loss and allocated loss adjustment expense reserves, net of reinsurance |  |  | $ | 1,141,300 |
__________ (1) The information for the years 2008 to 2016 is presented as unaudited supplemental information.
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Homeowners' Insurance) |  | As of December 31, 2017
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total of Incurred But Not Reported Liabilities Plus Expected Development on Reported Claims |  | Cumulative Number of Reported Claims
Accident Year |  | For the Years Ended December 31, |  |
| 2008(1) |  | 2009(1) |  | 2010(1) |  | 2011(1) |  | 2012(1) |  | 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017 |  |
|  | (Amounts in thousands) |  | (Amounts in thousands)
2008 |  | $ | 146,486 |  |  | $ | 139,549 |  |  | $ | 138,605 |  |  | $ | 139,142 |  |  | $ | 138,190 |  |  | $ | 138,803 |  |  | $ | 139,149 |  |  | $ | 139,156 |  |  | $ | 139,216 |  |  | $ | 139,188 |  |  | $ | — |  |  | 16
2009 |  |  |  | 135,889 |  |  | 135,000 |  |  | 131,680 |  |  | 133,087 |  |  | 133,121 |  |  | 134,718 |  |  | 134,597 |  |  | 134,478 |  |  | 134,359 |  |  | 26 |  |  | 17
2010 |  |  |  |  |  | 165,727 |  |  | 157,566 |  |  | 160,983 |  |  | 160,472 |  |  | 160,206 |  |  | 160,015 |  |  | 159,608 |  |  | 159,662 |  |  | 117 |  |  | 21
2011 |  |  |  |  |  |  |  | 167,414 |  |  | 170,623 |  |  | 170,052 |  |  | 169,600 |  |  | 169,390 |  |  | 169,621 |  |  | 170,126 |  |  | 234 |  |  | 23
2012 |  |  |  |  |  |  |  |  |  | 196,063 |  |  | 188,010 |  |  | 190,376 |  |  | 191,548 |  |  | 192,057 |  |  | 191,804 |  |  | 428 |  |  | 25
2013 |  |  |  |  |  |  |  |  |  |  |  | 191,903 |  |  | 188,915 |  |  | 188,026 |  |  | 186,795 |  |  | 187,165 |  |  | 524 |  |  | 23
2014 |  |  |  |  |  |  |  |  |  |  |  |  |  | 199,298 |  |  | 202,621 |  |  | 203,218 |  |  | 202,513 |  |  | 1,330 |  |  | 25
2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 234,800 |  |  | 234,881 |  |  | 233,501 |  |  | 4,368 |  |  | 24
2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 250,691 |  |  | 259,489 |  |  | 9,995 |  |  | 24
2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 309,491 |  |  | 47,502 |  |  | 28
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 1,987,298 |  |  |  |  |
__________ (1) The information for the years 2008 to 2016 is presented as unaudited supplemental information.
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Homeowners' Insurance)
|  | For the Years Ended December 31,
Accident Year |  | 2008(1) |  | 2009(1) |  | 2010(1) |  | 2011(1) |  | 2012(1) |  | 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017
|  | (Amounts in thousands)
2008 |  | $ | 86,954 |  |  | $ | 122,239 |  |  | $ | 129,821 |  |  | $ | 135,500 |  |  | $ | 137,284 |  |  | $ | 138,137 |  |  | $ | 138,680 |  |  | $ | 138,809 |  |  | $ | 138,922 |  |  | $ | 138,963 |
2009 |  |  |  | 86,034 |  |  | 119,306 |  |  | 126,591 |  |  | 130,928 |  |  | 132,180 |  |  | 134,381 |  |  | 134,378 |  |  | 134,301 |  |  | 134,229 |
2010 |  |  |  |  |  | 95,057 |  |  | 137,628 |  |  | 149,084 |  |  | 155,191 |  |  | 156,853 |  |  | 158,053 |  |  | 158,943 |  |  | 159,268 |
2011 |  |  |  |  |  |  |  | 111,909 |  |  | 153,845 |  |  | 162,870 |  |  | 166,375 |  |  | 167,806 |  |  | 168,621 |  |  | 168,914 |
2012 |  |  |  |  |  |  |  |  |  | 128,618 |  |  | 175,029 |  |  | 182,756 |  |  | 188,121 |  |  | 190,373 |  |  | 190,649 |
2013 |  |  |  |  |  |  |  |  |  |  |  | 133,528 |  |  | 174,295 |  |  | 180,858 |  |  | 183,860 |  |  | 185,168 |
2014 |  |  |  |  |  |  |  |  |  |  |  |  |  | 139,615 |  |  | 186,996 |  |  | 194,605 |  |  | 198,758 |
2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 163,196 |  |  | 213,994 |  |  | 224,178 |
2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 173,537 |  |  | 234,215 |
2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 217,900 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 1,852,242 |
|  |  |  |  |  |  |  | All outstanding liabilities before 2008, net of reinsurance |  |  | 2,141 |
|  |  |  |  |  |  |  | Loss and allocated loss adjustment expense reserves, net of reinsurance |  |  | $ | 137,195 |
__________ (1) The information for the years 2008 to 2016 is presented as unaudited supplemental information. The following is unaudited supplementary information about average historical claims duration as of December 31, 2017.
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years |  | 1 |  | 2 |  | 3 |  | 4 |  | 5 |  | 6 |  | 7 |  | 8 |  | 9 |  | 10
Automobile insurance |  | 65.8 | % |  | 17.1 | % |  | 8.5 | % |  | 5 | % |  | 2.3 | % |  | 0.7 | % |  | 0.4 | % |  | 0.1 | % |  | — | % |  | 0.1 | %
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years |  | 1 |  | 2 |  | 3 |  | 4 |  | 5 |  | 6 |  | 7 |  | 8 |  | 9 |  | 10
Homeowners insurance |  | 66.5 | % |  | 23.9 | % |  | 4.8 | % |  | 2.7 | % |  | 1.0 | % |  | 0.7 | % |  | 0.3 | % |  | 0.1 | % |  | — | % |  | — | %
The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated balance sheets is as follows. Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Loss and Loss Adjustment Expense Reserves
|  | December 31, 2017
|  | (Amounts in thousands)
Net outstanding liabilities |  |
Automobile insurance |  | $ | 1,141,300 |
Homeowners' insurance |  | 137,195 |
WAIC automobile insurance |  | 12,076 |
Other short-duration insurance lines |  | 69,327 |
Loss and loss adjustment expense reserves, net of reinsurance recoverables on unpaid losses |  | 1,359,898 |
Reinsurance recoverables on unpaid losses |  |
Automobile insurance |  | 10,004 |
Homeowners' insurance |  | 53,323 |
Other short-duration insurance lines |  | 674 |
Total reinsurance recoverables on unpaid losses |  | 64,001 |
Insurance lines other than short-duration |  | 1,183 |
Unallocated claims adjustment expenses |  | 85,531 |
|  | 86,714 |
Total gross loss and loss adjustment expense reserves |  | $ | 1,510,613 |

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- Definition The entire disclosure for liabilities related to future policy benefits and unpaid claims and claim adjustments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6482852&loc=d3e14931-158439 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65670824&loc=d3e14754-158437 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.7-03.13(a)(1),(b)) -URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65670824&loc=d3e14764-158437 + Details
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