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Reserve for Losses and Loss Adjustment Expenses (Tables)

9 Months Ended

Sep. 30, 2021

Insurance [Abstract]

Schedule of Reserve for Losses and Loss Adjustment Expenses

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

(In thousands)			Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020						Year Ended December 31, 2020
Balance, beginning of year			$	2,417,179					$	2,346,526					$	2,346,526
Less reinsurance recoverables on unpaid losses and loss adjustment expenses			385,087						390,708						390,708
Net balance, beginning of year			2,032,092						1,955,818						1,955,818
Net reserves acquired from NORCAL acquisition			1,089,103						—						—
Net losses:
Current year(1)(2)(3)			582,235						555,969						711,846
Favorable development of reserves established in prior years, net			(27,205)						(34,557)						(50,399)
Total			555,030						521,412						661,447
Paid related to:
Current year			(62,276)						(60,449)						(83,204)
Prior years			(457,578)						(400,930)						(501,969)
Total paid			(519,854)						(461,379)						(585,173)
Net balance, end of period			3,156,371						2,015,851						2,032,092
Plus reinsurance recoverables on unpaid losses and loss adjustment expenses			476,315						391,637						385,087
Balance, end of period			$	3,632,686					$	2,407,488					$	2,417,179

(1) Current year net losses for the nine months ended September 30, 2021 included $4.3 million of amortization of the negative VOBA associated with NORCAL's assumed unearned premium, which is being amortized over a period in proportion to the earn-out of the associated premium as a reduction to current accident year net losses (see Note 2). Additionally, current year net losses for the nine months ended September 30, 2021 included $5.1 million related to a Custom Physician tail policy in the Specialty P&C segment.

(2) Current year net losses for the nine months ended September 30, 2021 included incurred losses of $2.9 million related to an assumed reinsurance arrangement entered into during the first quarter of 2021 in the Specialty P&C segment (see Note 5).

(3) Current year net losses for the nine months ended September 30, 2020 and the year ended December 31, 2020 included the impact of a large national healthcare account in the Specialty P&C segment including losses of $60.0 million associated with a tail policy and $9.2 million of amortization of a related PDR. For additional information, see Note 7 of the Notes to Consolidated Financial Statements included in ProAssurance's December 31, 2020 report on Form 10-K.

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- References

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- Definition

Tabular disclosure of the activity in the reserve for settling insured claims and expenses incurred in the claims settlement process for the period. The estimated liability includes the amount of money that will be required for future payments of (a) claims that have been reported to the insurer, (b) claims related to insured events that have occurred but that have not been reported to the insurer as of the date the liability is estimated, and (c) claim adjustment expenses. Claim adjustment expenses include costs incurred in the claim settlement process such as legal fees; outside adjuster fees; and costs to record, process, and adjust claims.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=116884095&loc=d3e14764-158437

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