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Losses and Loss Adjustment Expenses
 6 Months Ended
Jun. 30, 2013
Insurance [Abstract]  
Losses and Loss Adjustment Expenses

Note 8 — Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses is determined on an individual case basis for all claims reported. The liability also includes amounts for unallocated expenses, anticipated future claim development and losses incurred, but not reported.

 

Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows:

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2013     2012     2013     2012  

Balance, beginning of period

    $ 41,751        33,476        41,168        27,424   
  

 

 

    

 

 

    

 

 

    

 

 

  

Incurred related to:

         

Current period

      18,431        15,995        35,362        34,401   

Prior period

      (1,017 )      202        (2,076 )      964   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total incurred

      17,414        16,197        33,286        35,365   
  

 

 

    

 

 

    

 

 

    

 

 

  

Paid related to:

         

Current period

      (9,520 )      (8,691 )      (13,252 )      (13,082 ) 

Prior period

      (4,896 )      (3,669 )      (16,453 )      (12,394 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total paid

      (14,416 )      (12,360 )      (29,705 )      (25,476 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Balance, end of period

    $ 44,749        37,313        44,749        37,313   
  

 

 

    

 

 

    

 

 

    

 

 

  

The establishment of loss reserves is an inherently uncertain process and changes in loss reserve estimates are expected as such estimates are subject to the outcome of future events. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such adjustments are made. During the three and six months ended June 30, 2013, the Company experienced favorable development of $1,017 and $2,076, respectively, with respect to its net unpaid losses and loss adjustment expenses established as of March 31, 2013 and December 31, 2012. Factors attributable to this favorable development include a lower severity of claims, reduced frequency of claims, and actual case development being more favorable than originally anticipated.

The Company writes insurance in the state of Florida, which could be exposed to hurricanes or other natural catastrophes. The occurrence of a major catastrophe could have a significant effect on the Company’s monthly or quarterly results and cause a temporary disruption of the normal operations of the Company. However, the Company is unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.