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Loss And Loss Adjustment Expense Reserves | 12 Months Ended
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Dec. 31, 2022
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,
| 2022 |  | 2021 |  | 2020
| (Amounts in thousands)
Gross reserves at January 1 | $ | 2,226,430 |  |  | $ | 1,991,304 |  |  | $ | 1,921,255 |
Reinsurance recoverables on unpaid losses | (41,379) |  |  | (54,461) |  |  | (76,100) |
Cumulative effect of adopting ASU 2016-13 | — |  |  | — |  |  | 149 |
Reinsurance recoverables on unpaid losses, as adjusted | (41,379) |  |  | (54,461) |  |  | (75,951) |
Net reserves at January 1, as adjusted | 2,185,051 |  |  | 1,936,843 |  |  | 1,845,304 |
Incurred losses and loss adjustment expenses related to: |  |  |  |  |
Current year | 3,314,938 |  |  | 2,786,246 |  |  | 2,372,364 |
Prior years | 47,281 |  |  | (26,091) |  |  | 22,979 |
Total incurred losses and loss adjustment expenses | 3,362,219 |  |  | 2,760,155 |  |  | 2,395,343 |
Loss and loss adjustment expense payments related to: |  |  |  |  |
Current year | 1,862,006 |  |  | 1,601,998 |  |  | 1,366,661 |
Prior years | 1,125,677 |  |  | 909,949 |  |  | 937,143 |
Total payments | 2,987,683 |  |  | 2,511,947 |  |  | 2,303,804 |
Net reserves at December 31 | 2,559,587 |  |  | 2,185,051 |  |  | 1,936,843 |
Reinsurance recoverables on unpaid losses | 25,323 |  |  | 41,379 |  |  | 54,461 |
Gross reserves at December 31 | $ | 2,584,910 |  |  | $ | 2,226,430 |  |  | $ | 1,991,304 |
During 2022, inflationary trends accelerated to their highest level in decades, which had a significant impact on the cost of automobile parts and labor as well as medical expenses for bodily injuries, and supply chain and labor shortage issues lengthened the time to repair vehicles. Bodily injury costs were also under pressure from social inflation. These factors contributed to higher losses and loss adjustment expenses related to the current accident year for 2022 compared to 2021 and 2020. The increase in the provision for insured events of prior years in 2022 of approximately $47.3 million primarily resulted from higher than estimated losses and loss adjustment expenses in the automobile line of insurance business. The inflationary pressures and the supply chain and labor shortage issues discussed above were major contributors to the adverse reserve development in the automobile line of insurance business for 2022. The decrease in the provision for insured events of prior years in 2021 of approximately $26.1 million primarily resulted from lower than estimated losses and loss adjustment expenses in the homeowners and private passenger automobile lines of insurance business. 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. The Company recorded catastrophe losses net of reinsurance of approximately $102 million, $104 million, and $64 million in 2022, 2021, and 2020, respectively. Catastrophe losses due to the events that occurred in 2022 totaled approximately $101 million, w ith no reinsurance benefits used for these losses, resulting primarily from the deep freeze of Winter Storm Elliott and other extreme weather events in Texas, Oklahoma and Georgia, winter storms in California, and the impact of Hurricane Ian in Florida. In addition, the Company experienced unfavorable development of approximately $1 million on prior years' catastrophe losses in 2022. Catastrophe losses due to the events that occurred in 2021 totaled approximately $109 million, with no reinsurance benefits used for these losses, resulting primarily from the deep freeze of Winter Storm Uri and other extreme weather events in Texas and Oklahoma, rainstorms, wildfires and winter storms in California, and the impact of Hurricane Ida in New Jersey and New York. These losses were partially offset by favorable development of approximately $5 million on prior years' catastrophe losses. Catastrophe losses due to the events that occurred in 2020 totaled approximately $69 million, with 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. The following is information about incurred and paid claims development as of December 31, 2022, 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, 2013 to 2021 is presented as unaudited supplementary information.
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Automobile Insurance) |  | As of December 31, 2022
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 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, |  |
| 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017(1) |  | 2018(1) |  | 2019(1) |  | 2020(1) |  | 2021(1) |  | 2022 |  |
|  | (Amounts in thousands) |  | (Amounts in thousands)
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 |  |  | $ | 1,468,679 |  |  | $ | 1,468,976 |  |  | $ | 805 |  |  | 185
2014 |  |  |  | 1,467,175 |  |  | 1,454,366 |  |  | 1,473,545 |  |  | 1,486,322 |  |  | 1,498,504 |  |  | 1,501,075 |  |  | 1,501,713 |  |  | 1,501,850 |  |  | 1,502,161 |  |  | 57 |  |  | 180
2015 |  |  |  |  |  | 1,551,105 |  |  | 1,588,443 |  |  | 1,610,839 |  |  | 1,634,435 |  |  | 1,645,950 |  |  | 1,649,170 |  |  | 1,653,878 |  |  | 1,654,843 |  |  | 1,078 |  |  | 170
2016 |  |  |  |  |  |  |  | 1,672,853 |  |  | 1,669,642 |  |  | 1,713,696 |  |  | 1,731,997 |  |  | 1,732,410 |  |  | 1,740,807 |  |  | 1,743,417 |  |  | 2,483 |  |  | 155
2017 |  |  |  |  |  |  |  |  |  | 1,703,857 |  |  | 1,727,277 |  |  | 1,741,825 |  |  | 1,733,425 |  |  | 1,748,289 |  |  | 1,755,702 |  |  | 11,421 |  |  | 149
2018 |  |  |  |  |  |  |  |  |  |  |  | 1,781,817 |  |  | 1,773,502 |  |  | 1,785,071 |  |  | 1,806,240 |  |  | 1,807,297 |  |  | 15,370 |  |  | 147
2019 |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,916,269 |  |  | 1,911,268 |  |  | 1,959,262 |  |  | 1,954,151 |  |  | 42,928 |  |  | 148
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,514,551 |  |  | 1,448,083 |  |  | 1,452,343 |  |  | 76,899 |  |  | 90
2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,811,064 |  |  | 1,879,751 |  |  | 206,875 |  |  | 104
2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,255,032 |  |  | 642,129 |  |  | 109
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 17,473,673 |  |  |  |  |
__________ (1) The information for the years 2013 to 2021 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 |  | 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017(1) |  | 2018(1) |  | 2019(1) |  | 2020(1) |  | 2021(1) |  | 2022
|  | (Amounts in thousands)
2013 |  | $ | 974,445 |  |  | $ | 1,217,906 |  |  | $ | 1,340,724 |  |  | $ | 1,413,999 |  |  | $ | 1,447,004 |  |  | $ | 1,460,352 |  |  | $ | 1,464,277 |  |  | $ | 1,466,356 |  |  | $ | 1,467,332 |  |  | $ | 1,467,838 |
2014 |  |  |  | 967,481 |  |  | 1,231,413 |  |  | 1,358,472 |  |  | 1,432,472 |  |  | 1,476,944 |  |  | 1,490,366 |  |  | 1,496,814 |  |  | 1,500,243 |  |  | 1,501,483 |
2015 |  |  |  |  |  | 1,040,253 |  |  | 1,336,223 |  |  | 1,466,368 |  |  | 1,560,480 |  |  | 1,614,188 |  |  | 1,634,780 |  |  | 1,643,443 |  |  | 1,651,465 |
2016 |  |  |  |  |  |  |  | 1,094,006 |  |  | 1,395,199 |  |  | 1,554,217 |  |  | 1,656,192 |  |  | 1,699,069 |  |  | 1,722,293 |  |  | 1,736,697 |
2017 |  |  |  |  |  |  |  |  |  | 1,076,079 |  |  | 1,399,202 |  |  | 1,561,850 |  |  | 1,648,328 |  |  | 1,701,298 |  |  | 1,733,196 |
2018 |  |  |  |  |  |  |  |  |  |  |  | 1,082,127 |  |  | 1,417,637 |  |  | 1,588,049 |  |  | 1,697,228 |  |  | 1,757,923 |
2019 |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,134,859 |  |  | 1,494,342 |  |  | 1,698,121 |  |  | 1,828,410 |
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 825,398 |  |  | 1,089,096 |  |  | 1,242,000 |
2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 992,705 |  |  | 1,410,748 |
2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,237,725 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 15,567,485 |
|  |  |  |  |  |  |  | All outstanding liabilities before 2013, net of reinsurance |  | (1,048) |
|  |  |  |  |  |  |  | Loss and allocated loss adjustment expense reserves, net of reinsurance |  | $ | 1,905,140 |
__________ (1) The information for the years 2013 to 2021 is presented as unaudited supplemental information.
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance (Homeowners Insurance) |  | As of December 31, 2022
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 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, |  |
| 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017(1) |  | 2018(1) |  | 2019(1) |  | 2020(1) |  | 2021(1) |  | 2022 |  |
|  | (Amounts in thousands) |  | (Amounts in thousands)
2013 |  | $ | 191,903 |  |  | $ | 188,915 |  |  | $ | 188,026 |  |  | $ | 186,795 |  |  | $ | 187,165 |  |  | $ | 188,014 |  |  | $ | 187,147 |  |  | $ | 187,683 |  |  | $ | 187,627 |  |  | $ | 187,465 |  |  | $ | 95 |  |  | 23
2014 |  |  |  | 199,298 |  |  | 202,621 |  |  | 203,218 |  |  | 202,513 |  |  | 204,986 |  |  | 208,003 |  |  | 208,743 |  |  | 209,622 |  |  | 209,071 |  |  | 128 |  |  | 25
2015 |  |  |  |  |  | 234,800 |  |  | 234,881 |  |  | 233,501 |  |  | 236,855 |  |  | 238,652 |  |  | 239,941 |  |  | 240,927 |  |  | 237,872 |  |  | 393 |  |  | 24
2016 |  |  |  |  |  |  |  | 250,691 |  |  | 259,489 |  |  | 259,497 |  |  | 259,708 |  |  | 260,496 |  |  | 259,984 |  |  | 259,722 |  |  | 435 |  |  | 24
2017 |  |  |  |  |  |  |  |  |  | 309,491 |  |  | 295,163 |  |  | 288,322 |  |  | 289,869 |  |  | 289,294 |  |  | 291,360 |  |  | 92 |  |  | 30
2018 |  |  |  |  |  |  |  |  |  |  |  | 311,798 |  |  | 308,361 |  |  | 310,695 |  |  | 305,292 |  |  | 306,347 |  |  | 1,192 |  |  | 25
2019 |  |  |  |  |  |  |  |  |  |  |  |  |  | 359,643 |  |  | 366,139 |  |  | 361,421 |  |  | 360,609 |  |  | 4,888 |  |  | 30
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 420,257 |  |  | 411,404 |  |  | 413,882 |  |  | 7,838 |  |  | 29
2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 510,724 |  |  | 511,311 |  |  | 22,449 |  |  | 31
2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 578,489 |  |  | 135,547 |  |  | 27
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 3,356,128 |  |  |  |  |
__________ (1) The information for the years 2013 to 2021 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 |  | 2013(1) |  | 2014(1) |  | 2015(1) |  | 2016(1) |  | 2017(1) |  | 2018(1) |  | 2019(1) |  | 2020(1) |  | 2021(1) |  | 2022
|  | (Amounts in thousands)
2013 |  | $ | 133,528 |  |  | $ | 174,295 |  |  | $ | 180,858 |  |  | $ | 183,860 |  |  | $ | 185,168 |  |  | $ | 186,132 |  |  | $ | 186,494 |  |  | $ | 186,816 |  |  | $ | 187,141 |  |  | $ | 187,222 |
2014 |  |  |  | 139,615 |  |  | 186,996 |  |  | 194,605 |  |  | 198,758 |  |  | 202,193 |  |  | 203,333 |  |  | 207,524 |  |  | 207,801 |  |  | 208,737 |
2015 |  |  |  |  |  | 163,196 |  |  | 213,994 |  |  | 224,178 |  |  | 230,480 |  |  | 234,683 |  |  | 235,971 |  |  | 236,143 |  |  | 236,983 |
2016 |  |  |  |  |  |  |  | 173,537 |  |  | 234,215 |  |  | 245,878 |  |  | 253,919 |  |  | 256,642 |  |  | 258,477 |  |  | 259,045 |
2017 |  |  |  |  |  |  |  |  |  | 217,900 |  |  | 269,254 |  |  | 278,341 |  |  | 283,311 |  |  | 286,531 |  |  | 290,291 |
2018 |  |  |  |  |  |  |  |  |  |  |  | 213,038 |  |  | 271,534 |  |  | 286,658 |  |  | 294,099 |  |  | 300,742 |
2019 |  |  |  |  |  |  |  |  |  |  |  |  |  | 240,240 |  |  | 324,953 |  |  | 340,237 |  |  | 350,288 |
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 271,208 |  |  | 365,910 |  |  | 386,297 |
2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 316,314 |  |  | 458,124 |
2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 339,242 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 3,016,971 |
|  |  |  |  |  |  |  | All outstanding liabilities before 2013, net of reinsurance |  | 1,152 |
|  |  |  |  |  |  |  | Loss and allocated loss adjustment expense reserves, net of reinsurance |  | $ | 340,309 |
__________ (1) The information for the years 2013 to 2021 is presented as unaudited supplemental information. The following is unaudited supplementary information about average historical claims duration as of December 31, 2022.
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 |  | 60.0 | % |  | 18.3 | % |  | 9.2 | % |  | 5.6 | % |  | 2.9 | % |  | 1.2 | % |  | 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 |  | 67.0 | % |  | 22.2 | % |  | 4.1 | % |  | 2.3 | % |  | 1.4 | % |  | 0.7 | % |  | 0.6 | % |  | 0.2 | % |  | 0.3 | % |  | — | %
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, 2022
|  | (Amounts in thousands)
Net outstanding liabilities |  |
Automobile insurance |  | $ | 1,905,140 |
Homeowners insurance |  | 340,309 |
Other short-duration insurance lines |  | 175,448 |
Loss and loss adjustment expense reserves, net of reinsurance recoverables on unpaid losses |  | 2,420,897 |
Reinsurance recoverables on unpaid losses |  |
Automobile insurance |  | 17,341 |
Homeowners insurance |  | 6,952 |
Other short-duration insurance lines |  | 1,030 |
Total reinsurance recoverables on unpaid losses |  | 25,323 |
Insurance lines other than short-duration |  | 1,077 |
Unallocated claims adjustment expenses |  | 137,613 |
|  | 138,690 |
Total gross loss and loss adjustment expense reserves |  | $ | 2,584,910 |

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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 https://asc.fasb.org/subtopic&trid=2560295 + Details
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