Loss And Loss Adjustment Expense Reserves

6 Months Ended

Jun. 30, 2021

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:


	Six Months Ended June 30,
	2021		2020

	(Amounts in thousands)
Gross reserves, beginning of period	$	1,991,304	$	1,921,255
Reinsurance recoverables on unpaid losses, beginning of period	(54,460)		(76,100)
Cumulative effect of adopting ASU 2016-13 for reinsurance recoverables on unpaid losses (1)	—		149
Reinsurance recoverables on unpaid losses, beginning of period, as adjusted	(54,460)		(75,951)
Net reserves, beginning of period, as adjusted	1,936,844		1,845,304
Incurred losses and loss adjustment expenses related to:
Current year	1,298,981		1,119,502
Prior years	(15,409)		27,468
Total incurred losses and loss adjustment expenses	1,283,572		1,146,970
Loss and loss adjustment expense payments related to:
Current year	641,726		563,921
Prior years	539,871		612,773
Total payments	1,181,597		1,176,694
Net reserves, end of period	2,038,819		1,815,580
Reinsurance recoverables on unpaid losses, end of period	52,196		49,530
Gross reserves, end of period	$	2,091,015	$	1,865,110

__________

(1) See Note 1 for additional information on adoption of ASU 2016-13.

The decrease in the provision for insured events of prior years during the six months ended June 30, 2021 of $15.4 million was primarily attributable to lower than estimated losses and loss adjustment expenses in the commercial property and private passenger automobile lines of insurance business, partially offset by unfavorable development in the commercial automobile line of insurance business. The increase in the provision for insured events of prior years during the six months ended June 30, 2020 of $27.5 million was primarily attributable to higher than estimated losses and loss adjustment expenses in the commercial automobile, homeowners and Florida private passenger automobile lines of insurance business.

For the six months ended June 30, 2021 and 2020, the Company recorded catastrophe losses net of reinsurance of approximately $60 million and $14 million, respectively. Catastrophe losses due to the events that occurred during the six months ended June 30, 2021 totaled approximately $64 million, with no reinsurance benefits used for these losses, resulting primarily from the deep freeze and other extreme weather events in Texas and Oklahoma and winter storms in California. These

losses were partially offset by favorable development of approximately $4 million on prior years' catastrophe losses. Catastrophe losses due to the events that occurred during the six months ended June 30, 2020 totaled approximately $18 million, with no reinsurance benefits used for these losses, resulting primarily from extreme weather events outside of California and windstorms in California. These losses were partially offset by favorable development of approximately $4 million on prior years' catastrophe losses.