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Note 4 - Reserve for Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2024

Reserve for Losses and Loss Adjustment Expenses [Text Block]

4. Reserve for Losses and Loss Adjustment Expenses

The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses (“LAE”):

	*Three Months Ended March 31,*
	*2024*		*2023*
	(in thousands)
Reserve for losses and LAE net of reinsurance recoverables at beginning of period	$	97,653	$	77,520
Add: Incurred losses and LAE, net of reinsurance, related to:
Current year		26,333		17,300
Prior years		504		3,352
Total incurred		26,837		20,652
Deduct: Loss and LAE payments, net of reinsurance, related to:
Current year		4,895		1,393
Prior years		9,432		15,413
Total payments		14,327		16,806
Reserve for losses and LAE net of reinsurance recoverables at end of period		110,163		81,366
Add: Reinsurance recoverables on unpaid losses and LAE at end of period		292,024		183,601
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period	$	402,187	$	264,967

Considerable variability is inherent in the estimate of the reserve for losses and LAE. Although management believes the liability recorded for losses and LAE is adequate, the variability inherent in this estimate could result in changes to the ultimate liability, which may be material to stockholders’ equity.

The Company experienced adverse prior year development of $0.5 million and $3.4 prior year development during the three months ended March 31, 2024 and 2023, respectively.

Adverse prior year development during the three months ended March 31, 2024 was primarily due to higher than anticipated severity of attritional losses on certain discontinued lines of business. Adverse prior year development during the three months ended March 31, 2023 was primarily due to higher than anticipated severity of attritional losses, offset by lower than anticipated severity of catastrophe losses.