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Reserve for Losses and Loss Adjustment Expenses (Tables)

9 Months Ended

Sep. 30, 2023

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, 2023						Nine Months Ended September 30, 2022						Year Ended December 31, 2022
Balance, beginning of year			$	3,471,147					$	3,579,940					$	3,579,940
Less reinsurance recoverables on unpaid losses and loss adjustment expenses			431,889						451,741						451,741
Net balance, beginning of year			3,039,258						3,128,199						3,128,199
Net losses:
Current year(1)			596,872						616,694						813,515
(Favorable) unfavorable development of reserves established in prior years, net(2)			8,373						(31,528)						(36,753)
Total			605,245						585,166						776,762
Paid related to:
Current year			(67,894)						(77,854)						(108,139)
Prior years			(598,281)						(557,066)						(757,564)
Total paid			(666,175)						(634,920)						(865,703)
Net balance, end of period			2,978,328						3,078,445						3,039,258
Plus reinsurance recoverables on unpaid losses and loss adjustment expenses			417,323						466,483						431,889
Balance, end of period			$	3,395,651					$	3,544,928					$	3,471,147

(1) Current year net losses for both the nine months ended September 30, 2022 and year ended December 31, 2022 included $4.9 million of purchase accounting amortization of the negative VOBA associated with NORCAL's assumed unearned premium, which was 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 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2022 report on Form 10-K). As of June 30, 2022, the negative VOBA was fully amortized.

(2) Net prior year reserve development recognized for the nine months ended September 30, 2023 and 2022 as well as the year ended December 31, 2022 included $6.7 million, $8.3 million and $10.8 million, respectively, of amortization of the purchase accounting fair value adjustment on NORCAL's assumed net reserve and amortization of the negative VOBA associated with NORCAL's DDR reserve which is recorded as a reduction to prior accident year net losses and loss adjustment expenses (see Note 2 of the Notes to Consolidated Financial Statements in ProAssurance's December 31, 2022 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
-Topic 944
-SubTopic 40
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480081/944-40-50-3

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