XML 29 R16.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Loss and Loss Adjustment Expenses | 12 Months Ended
--- | ---
Dec. 31, 2017
Insurance [Abstract] |
Loss and Loss Adjustment Expenses |
9. | Loss and Loss Adjustment Expenses
The following development tables provide the incurred and paid claims and allocated claim adjustment expenses, net of reinsurance, for workers’ compensation and general liability for accident years 2008 through 2017. The incurred but not reported (“IBNR”) claims and claims frequency is included for each accident year presented.
| Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance |  |  | As of |
| For the Years Ended December 31, |  |  | December 31, 2017 |
| (Dollars in thousands) |  |  | Total IBNR |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Plus |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Expected |  | Cumulative |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Development |  | Number of |
Accident | Unaudited (1) |  |  |  |  |  | on Reported |  | Claims |
Year | 2008 |  | 2009 |  | 2010 |  | 2011 |  | 2012 |  | 2013 |  | 2014 |  | 2015 |  | 2016 |  | 2017 |  |  | Claims |  | Reported |
2008 | $ | 196,923 |  | $ | 200,371 |  | $ | 195,619 |  | $ | 190,905 |  | $ | 187,695 |  | $ | 184,547 |  | $ | 182,846 |  | $ | 183,608 |  | $ | 182,901 |  | $ | 182,646 |  |  | $ | 2,649 |  |  | 6,487 |
2009 |  | - |  |  | 185,359 |  |  | 188,746 |  |  | 188,462 |  |  | 187,943 |  |  | 184,006 |  |  | 182,274 |  |  | 177,795 |  |  | 176,586 |  |  | 177,015 |  |  |  | 3,345 |  |  | 5,371 |
2010 |  | - |  |  | - |  |  | 179,156 |  |  | 202,479 |  |  | 208,035 |  |  | 205,769 |  |  | 198,861 |  |  | 193,029 |  |  | 191,000 |  |  | 189,403 |  |  |  | 5,805 |  |  | 5,971 |
2011 |  | - |  |  | - |  |  | - |  |  | 196,384 |  |  | 199,522 |  |  | 199,163 |  |  | 198,213 |  |  | 195,262 |  |  | 192,988 |  |  | 191,126 |  |  |  | 6,968 |  |  | 6,041 |
2012 |  | - |  |  | - |  |  | - |  |  | - |  |  | 222,549 |  |  | 222,075 |  |  | 212,738 |  |  | 193,515 |  |  | 184,460 |  |  | 182,859 |  |  |  | 7,840 |  |  | 5,746 |
2013 |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 241,810 |  |  | 241,811 |  |  | 233,656 |  |  | 220,457 |  |  | 214,701 |  |  |  | 10,501 |  |  | 5,762 |
2014 |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 268,846 |  |  | 268,846 |  |  | 249,097 |  |  | 235,058 |  |  |  | 13,503 |  |  | 5,827 |
2015 |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 262,573 |  |  | 262,573 |  |  | 252,514 |  |  |  | 22,863 |  |  | 5,506 |
2016 |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 250,491 |  |  | 250,491 |  |  |  | 17,066 |  |  | 5,346 |
2017 |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 244,094 |  |  |  | 7,964 |  |  | 4,919 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  | $ | 2,119,907 |  |  | $ | 98,504 |  |  |  |
| Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance |  |  |  |  |
| For the Years Ended December 31, |  |  |  |  |
| (Dollars in thousands) |  |  |  |  |
Accident | Unaudited (1) |  |  |  |  |  | Claim |
Year | 2008 |  | 2009 |  | 2010 |  | 2011 |  | 2012 |  | 2013 |  | 2014 |  | 2015 |  | 2016 |  | 2017 |  |  | Frequency (2) |
2008 | $ | 47,685 |  | $ | 103,057 |  | $ | 132,515 |  | $ | 147,377 |  | $ | 157,388 |  | $ | 163,933 |  | $ | 166,814 |  | $ | 170,347 |  | $ | 171,496 |  | $ | 173,138 |  |  |  | 20.98 |
2009 |  | - |  |  | 42,332 |  |  | 96,173 |  |  | 123,946 |  |  | 142,667 |  |  | 150,925 |  |  | 155,365 |  |  | 158,214 |  |  | 159,345 |  |  | 160,580 |  |  |  | 19.82 |
2010 |  | - |  |  | - |  |  | 47,520 |  |  | 108,714 |  |  | 141,029 |  |  | 156,974 |  |  | 165,834 |  |  | 169,565 |  |  | 172,426 |  |  | 175,019 |  |  |  | 24.94 |
2011 |  | - |  |  | - |  |  | - |  |  | 53,329 |  |  | 111,029 |  |  | 140,831 |  |  | 153,968 |  |  | 161,639 |  |  | 165,967 |  |  | 167,757 |  |  |  | 22.81 |
2012 |  | - |  |  | - |  |  | - |  |  | - |  |  | 50,579 |  |  | 107,467 |  |  | 133,658 |  |  | 149,161 |  |  | 154,553 |  |  | 157,206 |  |  |  | 18.72 |
2013 |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 51,396 |  |  | 119,507 |  |  | 150,304 |  |  | 165,994 |  |  | 172,479 |  |  |  | 16.54 |
2014 |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 53,060 |  |  | 119,820 |  |  | 153,320 |  |  | 169,736 |  |  |  | 14.96 |
2015 |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 54,141 |  |  | 121,599 |  |  | 151,818 |  |  |  | 14.22 |
2016 |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 52,238 |  |  | 115,713 |  |  |  | 14.11 |
2017 |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 56,951 |  |  |  | 13.86 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  |  | 1,500,397 |  |  |  |  |
All outstanding claim liabilities before 2008, net of reinsurance |  |  | 67,446 |  |  |  |  |
Liabilities for claims and claim adjustment expenses, net of reinsurance |  |  | 686,956 |  |  |  |  |
(1) Data presented for these calendar years is required supplementary information, which is unaudited. |
(2) Frequency, as calculated above, refers to reported claims divided by gross premium earned. |
The average annual percentage payout of incurred claims by age, net of reinsurance, for workers’ compensation and general liability as of December 31, 2017 is summarized below. Since workers’ compensation has long payout periods, the table below shows less than 100% in the years disclosed. This is required supplementary information, which is unaudited.
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Unaudited) |
Year 1 |  | Year 2 |  | Year 3 |  | Year 4 |  | Year 5 |  | Year 6 |  | Year 7 |  | Year 8 |  | Year 9 |  | Year 10 |
24.3% |  | 29.6% |  | 14.9% |  | 8.1% |  | 4.1% |  | 2.4% |  | 1.4% |  | 1.3% |  | 0.7% |  | 0.9% |
The following table provides a reconciliation of the beginning and ending reserve balances, net of related amounts recoverable from reinsurers, for 2017, 2016 and 2015:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
|  | (in thousands) |
Balance, beginning of period |  | $ | 742,776 |  |  | $ | 718,033 |  |  | $ | 687,602 |
Less amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses |  |  | 78,256 |  |  |  | 64,858 |  |  |  | 59,334 |
Net balance, beginning of period |  |  | 664,520 |  |  |  | 653,175 |  |  |  | 628,268 |
Add incurred related to: |  |  |  |  |  |  |  |  |  |  |  |
Current accident year |  |  | 244,094 |  |  |  | 250,337 |  |  |  | 262,387 |
Prior accident years |  |  | (34,770 | ) |  |  | (51,306 | ) |  |  | (47,814 | )
Total incurred |  |  | 209,324 |  |  |  | 199,031 |  |  |  | 214,573 |
Less paid related to: |  |  |  |  |  |  |  |  |  |  |  |
Current accident year |  |  | 56,951 |  |  |  | 52,085 |  |  |  | 53,955 |
Prior accident years |  |  | 129,937 |  |  |  | 135,601 |  |  |  | 135,711 |
Total paid |  |  | 186,888 |  |  |  | 187,686 |  |  |  | 189,666 |
Net balance, end of period |  |  | 686,956 |  |  |  | 664,520 |  |  |  | 653,175 |
Add amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses |  |  | 84,889 |  |  |  | 78,256 |  |  |  | 64,858 |
Balance, end of period |  | $ | 771,845 |  |  | $ | 742,776 |  |  | $ | 718,033 |
The foregoing reconciliation reflects favorable development of the net reserves at December 31, 2017, 2016 and 2015. The favorable development reduced loss and loss adjustment expenses incurred by $34.8 million in 2017, driven primarily by accident years 2013, 2014 and 2015 of $5.8 million, $14.0 million and $10.1 million, respectively. In 2016 and 2015, the Company recorded favorable development of $51.3 million and $47.8 million, respectively. The revisions to the Company’s reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and is reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years or longer to settle and the Company continually revises estimates as more information about claimants’ medical conditions and potential disability becomes known and the claims get closer to being settled. Multiple factors can cause loss development both unfavorable and favorable. The favorable loss development we experienced across accident years was largely due to favorable case reserve development from closed claims and claims where the worker had reached maximum medical improvement. Reserves established for workers’ compensation insurance have included the exposure to occupational disease or accidents related to asbestos or environmental claims. The exposure to asbestos claims emanate from the direct sale of workers’ compensation insurance. These claims resulted from industry workers who were exposed to tremolite asbestos dust and electricians and carpenters who were exposed to products that contained asbestos. There has been no known exposure to asbestos claims arising from assumed business. The emergence of these claims is slow and highly unpredictable. The Company estimates full impact of the asbestos exposure by establishing full case basis reserves on all known losses. Reserves for losses incurred but not reported (IBNR) include a provision for development of reserves on reported losses. Reserves are established for loss adjustment expenses (LAE) associated with these case and IBNR loss reserves. The following table details our exposures to various asbestos related claims:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
|  | (in thousands) |
Reserves for loss and LAE at beginning of year |  | $ | 1,487 |  |  | $ | 958 |  |  | $ | 819 |
Incurred losses and LAE during the current year |  |  | 556 |  |  |  | 816 |  |  |  | 444 |
Loss and LAE payments |  |  | (295 | ) |  |  | (287 | ) |  |  | (305 | )
Reserves for loss and LAE at end of year |  | $ | 1,748 |  |  | $ | 1,487 |  |  | $ | 958 |
The Company has historically written general liability coverages that are reported in other liability lines of business. These coverages may be associated with the property and casualty industry’s exposure to environmental claims. However, the Company has not been notified by any insured for which exposure exists due to these types of claims. Company management believes potential exposure to environmental claims to be remote. Therefore, the Company has no loss or loss adjustment expense reserves for such liabilities. The anticipated effect of inflation is implicitly considered when estimating liabilities for loss and loss adjustment expenses. Average severities are projected based on historical trends adjusted for implemented changes in underwriting standards, policy provisions and general economic trends. These anticipated trends are monitored based on actual development and are modified if necessary.

X
- References No definition available. + Details
Name: | us-gaap_InsuranceAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -URI http://asc.fasb.org/subtopic&trid=2560295 + Details
Name: | us-gaap_LiabilityForFuturePolicyBenefitsAndUnpaidClaimsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration