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Loss And Loss Adjustment Expense Reserves | 12 Months Ended
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Dec. 31, 2020
Insurance Loss Reserves [Abstract] |
Loss 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,
| 2020 |  | 2019 |  | 2018
| (Amounts in thousands)
Gross reserves at January 1 | $ | 1,921,255 |  |  | $ | 1,829,412 |  |  | $ | 1,510,613 |
Reinsurance recoverables on unpaid losses | (76,100) |  |  | (180,859) |  |  | (64,001) |
Cumulative effect of adopting ASU 2016-13 | 149 |  |  | — |  |  | — |
Reinsurance recoverables on unpaid losses, as adjusted | (75,951) |  |  | (180,859) |  |  | (64,001) |
Net reserves at January 1, as adjusted | 1,845,304 |  |  | 1,648,553 |  |  | 1,446,612 |
Incurred losses and loss adjustment expenses related to: |  |  |  |  |
Current year | 2,372,364 |  |  | 2,696,230 |  |  | 2,483,693 |
Prior years | 22,979 |  |  | 9,794 |  |  | 93,096 |
Total incurred losses and loss adjustment expenses | 2,395,343 |  |  | 2,706,024 |  |  | 2,576,789 |
Loss and loss adjustment expense payments related to: |  |  |  |  |
Current year | 1,366,661 |  |  | 1,651,550 |  |  | 1,543,828 |
Prior years | 937,142 |  |  | 857,872 |  |  | 831,020 |
Total payments | 2,303,803 |  |  | 2,509,422 |  |  | 2,374,848 |
Net reserves at December 31 | 1,936,844 |  |  | 1,845,155 |  |  | 1,648,553 |
Reinsurance recoverables on unpaid losses | 54,460 |  |  | 76,100 |  |  | 180,859 |
Gross reserves at December 31 | $ | 1,991,304 |  |  | $ | 1,921,255 |  |  | $ | 1,829,412 |
The increase in the provision for insured events of prior years in 2020 of approximately $23.0 million primarily resulted from higher than estimated losses and loss adjustment expenses in the homeowners and commercial automobile lines of insurance business, partially offset by favorable development in the private passenger automobile line of insurance business. The increase in the provision for insured events of prior years in 2019 of approximately $9.8 million primarily resulted from higher than estimated defense and cost containment expenses in the California automobile line of insurance business, partially offset by favorable development in certain of the Company's other lines of insurance business. The increase in the provision for insured events of prior years in 2018 of approximately $93.1 million primarily resulted from higher than estimated California automobile losses resulting from severity in excess of expectations for bodily injury claims as well as higher than estimated defense and cost containment expenses in the California automobile line of insurance business. The Company recorded catastrophe losses net of reinsurance of approximately $64 million, $53 million, and $67 million in 2020, 2019, and 2018, respectively. Catastrophe losses due to the catastrophe events that occurred in 2020 totaled approximately $69 million, w ith no reinsurance benefits used for these losses, resulting primarily from wildfires and windstorms in California and extreme weather events outside of California. These losses were partially offset by favorable development of approximately $5 million on prior years' catastrophe losses. Catastrophe losses before reinsurance benefits totaled approximately $57 million in 2019, resulting primarily from wildfires and winter storms in California, a hurricane in Texas, and tornadoes and wind and hail storms in the Midwest. These losses were partially offset by favorable development of approximately $4 million on prior years' catastrophe losses. Catastrophe losses before reinsurance benefits totaled approximately $289 million in 2018, resulting primarily from wildfires in Northern and Southern California and weather-related catastrophes across several states. During the first quarter of 2019, the Company completed the sale of its subrogation rights related to the 2018 Camp and Woolsey Fires and the 2017 Thomas Fire (which was a component of the "2017 Southern California fires") to a third party. The Company’s reinsurers were the primary beneficiaries of this transaction, as they had absorbed most of the losses under the terms of the Treaty. The Company re-estimated its gross and net losses from the 2018 Camp and Woolsey Fires and the 2017 Southern California fires in conjunction with this sale, and its total gross losses from these catastrophes, after accounting for the assignment of subrogation rights and adjustments made to claims reserves as part of normal reserving procedures, were approximately $208 million, and its total net losses, after reinsurance benefits, were approximately $40 million at March 31, 2019. The Company benefited by approximately $10 million, before taxes, in the first quarter of 2019 from the sale of the subrogation rights, including adjustments made to the associated claims as a result of normal reserving procedures, reductions in the Company's retained portion of losses on the Camp and Woolsey Fires, and reduced reinstatement premiums recognized. The following is information about incurred and paid claims development as of December 31, 2020, 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, 2011 to 2019 is presented as unaudited supplementary information.
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Automobile Insurance) |  | As of December 31, 2020
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 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, |  |
| 2011(1) |  | 2012(1) |  | 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017(1) |  | 2018(1) |  | 2019(1) |  | 2020 |  |
|  | (Amounts in thousands) |  | (Amounts in thousands)
2011 |  | $ | 1,343,919 |  |  | $ | 1,367,000 |  |  | $ | 1,380,557 |  |  | $ | 1,388,363 |  |  | $ | 1,393,878 |  |  | $ | 1,398,518 |  |  | $ | 1,405,112 |  |  | $ | 1,401,178 |  |  | $ | 1,401,151 |  |  | $ | 1,401,543 |  |  | $ | 59 |  |  | 181
2012 |  |  |  | 1,424,754 |  |  | 1,408,222 |  |  | 1,409,104 |  |  | 1,414,878 |  |  | 1,426,735 |  |  | 1,436,034 |  |  | 1,438,250 |  |  | 1,439,660 |  |  | 1,440,537 |  |  | 116 |  |  | 181
2013 |  |  |  |  |  | 1,448,567 |  |  | 1,431,058 |  |  | 1,447,881 |  |  | 1,458,421 |  |  | 1,464,071 |  |  | 1,468,294 |  |  | 1,468,237 |  |  | 1,468,747 |  |  | 816 |  |  | 185
2014 |  |  |  |  |  |  |  | 1,467,175 |  |  | 1,454,366 |  |  | 1,473,545 |  |  | 1,486,322 |  |  | 1,498,504 |  |  | 1,501,075 |  |  | 1,501,713 |  |  | 718 |  |  | 180
2015 |  |  |  |  |  |  |  |  |  | 1,551,105 |  |  | 1,588,443 |  |  | 1,610,839 |  |  | 1,634,435 |  |  | 1,645,950 |  |  | 1,649,170 |  |  | 4,577 |  |  | 170
2016 |  |  |  |  |  |  |  |  |  |  |  | 1,672,853 |  |  | 1,669,642 |  |  | 1,713,696 |  |  | 1,731,997 |  |  | 1,732,410 |  |  | 8,206 |  |  | 155
2017 |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,703,857 |  |  | 1,727,277 |  |  | 1,741,825 |  |  | 1,733,425 |  |  | 22,626 |  |  | 149
2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,781,817 |  |  | 1,773,502 |  |  | 1,785,071 |  |  | 60,829 |  |  | 146
2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,916,269 |  |  | 1,911,268 |  |  | 165,108 |  |  | 147
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,514,551 |  |  | 407,969 |  |  | 85
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 16,138,435 |  |  |  |  |
__________ (1) The information for the years 2011 to 2019 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 |  | 2011(1) |  | 2012(1) |  | 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017(1) |  | 2018(1) |  | 2019(1) |  | 2020
|  | (Amounts in thousands)
2011 |  | $ | 926,983 |  |  | $ | 1,152,459 |  |  | $ | 1,277,808 |  |  | $ | 1,347,082 |  |  | $ | 1,378,920 |  |  | $ | 1,391,101 |  |  | $ | 1,394,684 |  |  | $ | 1,400,441 |  |  | $ | 1,400,958 |  |  | $ | 1,401,592 |
2012 |  |  |  | 955,647 |  |  | 1,194,648 |  |  | 1,304,511 |  |  | 1,372,828 |  |  | 1,409,911 |  |  | 1,422,705 |  |  | 1,434,956 |  |  | 1,438,686 |  |  | 1,440,482 |
2013 |  |  |  |  |  | 974,445 |  |  | 1,217,906 |  |  | 1,340,724 |  |  | 1,413,999 |  |  | 1,447,004 |  |  | 1,460,352 |  |  | 1,464,277 |  |  | 1,466,356 |
2014 |  |  |  |  |  |  |  | 967,481 |  |  | 1,231,413 |  |  | 1,358,472 |  |  | 1,432,472 |  |  | 1,476,944 |  |  | 1,490,366 |  |  | 1,496,814 |
2015 |  |  |  |  |  |  |  |  |  | 1,040,253 |  |  | 1,336,223 |  |  | 1,466,368 |  |  | 1,560,480 |  |  | 1,614,188 |  |  | 1,634,780 |
2016 |  |  |  |  |  |  |  |  |  |  |  | 1,094,006 |  |  | 1,395,199 |  |  | 1,554,217 |  |  | 1,656,192 |  |  | 1,699,069 |
2017 |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,076,079 |  |  | 1,399,202 |  |  | 1,561,850 |  |  | 1,648,328 |
2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,082,127 |  |  | 1,417,637 |  |  | 1,588,049 |
2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,134,859 |  |  | 1,494,342 |
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 825,398 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 14,695,210 |
|  |  |  |  |  |  |  | All outstanding liabilities before 2011, net of reinsurance |  | (531) |
|  |  |  |  |  |  |  | Loss and allocated loss adjustment expense reserves, net of reinsurance |  | $ | 1,442,694 |
__________ (1) The information for the years 2011 to 2019 is presented as unaudited supplemental information.
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Homeowners' Insurance) |  | As of December 31, 2020
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 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, |  |
| 2011(1) |  | 2012(1) |  | 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017(1) |  | 2018(1) |  | 2019(1) |  | 2020 |  |
|  | (Amounts in thousands) |  | (Amounts in thousands)
2011 |  | $ | 167,414 |  |  | $ | 170,623 |  |  | $ | 170,052 |  |  | $ | 169,600 |  |  | $ | 169,390 |  |  | $ | 169,621 |  |  | $ | 170,126 |  |  | $ | 170,334 |  |  | $ | 170,174 |  |  | $ | 170,402 |  |  | $ | 167 |  |  | 23
2012 |  |  |  | 196,063 |  |  | 188,010 |  |  | 190,376 |  |  | 191,548 |  |  | 192,057 |  |  | 191,804 |  |  | 192,905 |  |  | 192,790 |  |  | 193,002 |  |  | 120 |  |  | 25
2013 |  |  |  |  |  | 191,903 |  |  | 188,915 |  |  | 188,026 |  |  | 186,795 |  |  | 187,165 |  |  | 188,014 |  |  | 187,147 |  |  | 187,683 |  |  | 142 |  |  | 23
2014 |  |  |  |  |  |  |  | 199,298 |  |  | 202,621 |  |  | 203,218 |  |  | 202,513 |  |  | 204,986 |  |  | 208,003 |  |  | 208,743 |  |  | 592 |  |  | 25
2015 |  |  |  |  |  |  |  |  |  | 234,800 |  |  | 234,881 |  |  | 233,501 |  |  | 236,855 |  |  | 238,652 |  |  | 239,941 |  |  | 2,950 |  |  | 24
2016 |  |  |  |  |  |  |  |  |  |  |  | 250,691 |  |  | 259,489 |  |  | 259,497 |  |  | 259,708 |  |  | 260,496 |  |  | 1,821 |  |  | 24
2017 |  |  |  |  |  |  |  |  |  |  |  |  |  | 309,491 |  |  | 295,163 |  |  | 288,322 |  |  | 289,869 |  |  | 2,702 |  |  | 30
2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 311,798 |  |  | 308,361 |  |  | 310,695 |  |  | 9,704 |  |  | 25
2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 359,643 |  |  | 366,139 |  |  | 17,580 |  |  | 30
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 420,257 |  |  | 77,396 |  |  | 26
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 2,647,227 |  |  |  |  |
__________ (1) The information for the years 2011 to 2019 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 |  | 2011(1) |  | 2012(1) |  | 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017(1) |  | 2018(1) |  | 2019(1) |  | 2020
|  | (Amounts in thousands)
2011 |  | $ | 111,909 |  |  | $ | 153,845 |  |  | $ | 162,870 |  |  | $ | 166,375 |  |  | $ | 167,806 |  |  | $ | 168,621 |  |  | $ | 168,914 |  |  | $ | 169,757 |  |  | $ | 169,899 |  |  | $ | 169,958 |
2012 |  |  |  | 128,618 |  |  | 175,029 |  |  | 182,756 |  |  | 188,121 |  |  | 190,373 |  |  | 190,649 |  |  | 191,660 |  |  | 192,362 |  |  | 192,454 |
2013 |  |  |  |  |  | 133,528 |  |  | 174,295 |  |  | 180,858 |  |  | 183,860 |  |  | 185,168 |  |  | 186,132 |  |  | 186,494 |  |  | 186,816 |
2014 |  |  |  |  |  |  |  | 139,615 |  |  | 186,996 |  |  | 194,605 |  |  | 198,758 |  |  | 202,193 |  |  | 203,333 |  |  | 207,524 |
2015 |  |  |  |  |  |  |  |  |  | 163,196 |  |  | 213,994 |  |  | 224,178 |  |  | 230,480 |  |  | 234,683 |  |  | 235,971 |
2016 |  |  |  |  |  |  |  |  |  |  |  | 173,537 |  |  | 234,215 |  |  | 245,878 |  |  | 253,919 |  |  | 256,642 |
2017 |  |  |  |  |  |  |  |  |  |  |  |  |  | 217,900 |  |  | 269,254 |  |  | 278,341 |  |  | 283,311 |
2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 213,038 |  |  | 271,534 |  |  | 286,658 |
2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 240,240 |  |  | 324,953 |
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 271,208 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 2,415,495 |
|  |  |  |  |  |  |  | All outstanding liabilities before 2011, net of reinsurance |  | 1,457 |
|  |  |  |  |  |  |  | Loss and allocated loss adjustment expense reserves, net of reinsurance |  | $ | 233,189 |
__________ (1) The information for the years 2011 to 2019 is presented as unaudited supplemental information. The following is unaudited supplementary information about average historical claims duration as of December 31, 2020.
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 |  | 62.6 | % |  | 17.6 | % |  | 8.7 | % |  | 5.2 | % |  | 2.6 | % |  | 1.0 | % |  | 0.5 | % |  | 0.3 | % |  | 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 |  | 67.9 | % |  | 21.9 | % |  | 4.1 | % |  | 2.3 | % |  | 1.2 | % |  | 0.4 | % |  | 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, 2020
|  | (Amounts in thousands)
Net outstanding liabilities |  |
Automobile insurance |  | $ | 1,442,694 |
Homeowners' insurance |  | 233,189 |
WAIC automobile insurance |  | 13,903 |
Other short-duration insurance lines |  | 130,291 |
Loss and loss adjustment expense reserves, net of reinsurance recoverables on unpaid losses |  | 1,820,077 |
Reinsurance recoverables on unpaid losses |  |
Automobile insurance |  | 18,187 |
Homeowners' insurance |  | 35,214 |
Other short-duration insurance lines |  | 1,059 |
Total reinsurance recoverables on unpaid losses |  | 54,460 |
Insurance lines other than short-duration |  | 676 |
Unallocated claims adjustment expenses |  | 116,091 |
|  | 116,767 |
Total gross loss and loss adjustment expense reserves |  | $ | 1,991,304 |

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -URI http://asc.fasb.org/subtopic&trid=2560295 + Details
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