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Loss and Loss Adjustment Expenses | 12 Months Ended
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Dec. 31, 2023
Insurance [Abstract] |
Loss and Loss Adjustment Expenses | 9. Loss and Loss Adjustment Expenses The following development tables provide the incurred and paid losses and allocated loss adjustment expenses, net of reinsurance, for workers’ compensation and general liability for accident years 2014 through 2023. The incurred but not reported (IBNR) losses and claims frequency is included for each accident year presented.
|  | Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance |  |  | As of |
|  | For the Years Ended December 31, |  |  | December 31, 2023 |
|  | (Dollars in thousands) |  | Total IBNR |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Plus |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Expected |  | Cumulative |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Development |  | Number of |
Accident |  | Unaudited (1) |  |  |  |  | on Reported |  | Claims |
Year |  | 2014 |  | 2015 |  | 2016 |  | 2017 |  | 2018 |  | 2019 |  | 2020 |  | 2021 |  | 2022 |  |  | 2023 |  | Claims |  | Reported |
2014 |  | $ | 268,846 |  | $ | 268,846 |  | $ | 249,097 |  | $ | 235,058 |  | $ | 226,933 |  | $ | 218,386 |  | $ | 212,417 |  | $ | 210,811 |  | $ | 210,096 |  |  | $ | 209,210 |  |  | $ | 4,097 |  |  |  | 5,841 |
2015 |  |  | — |  |  | 262,573 |  |  | 262,573 |  |  | 252,514 |  |  | 235,471 |  |  | 220,965 |  |  | 211,758 |  |  | 207,929 |  |  | 207,086 |  |  |  | 205,556 |  |  |  | 4,374 |  |  |  | 5,517 |
2016 |  |  | — |  |  | — |  |  | 250,491 |  |  | 250,491 |  |  | 241,406 |  |  | 218,005 |  |  | 209,214 |  |  | 202,820 |  |  | 201,604 |  |  |  | 198,566 |  |  |  | 4,691 |  |  |  | 5,394 |
2017 |  |  | — |  |  | — |  |  | — |  |  | 244,094 |  |  | 244,098 |  |  | 234,587 |  |  | 220,096 |  |  | 211,964 |  |  | 208,360 |  |  |  | 206,293 |  |  |  | 5,324 |  |  |  | 5,214 |
2018 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 250,487 |  |  | 250,487 |  |  | 235,641 |  |  | 217,369 |  |  | 208,517 |  |  |  | 205,001 |  |  |  | 4,347 |  |  |  | 5,477 |
2019 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 241,344 |  |  | 241,344 |  |  | 227,246 |  |  | 214,123 |  |  |  | 206,109 |  |  |  | 5,672 |  |  |  | 5,223 |
2020 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 220,710 |  |  | 220,710 |  |  | 214,500 |  |  |  | 207,047 |  |  |  | 13,909 |  |  |  | 4,391 |
2021 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 222,715 |  |  | 222,715 |  |  |  | 215,232 |  |  |  | 2,894 |  |  |  | 4,304 |
2022 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 192,907 |  |  |  | 192,907 |  |  |  | (12,814 | ) |  |  | 4,065 |
2023 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  | 189,659 |  |  |  | 12,433 |  |  |  | 3,715 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  |  | $ | 2,035,580 |  |  | $ | 44,927 |  |  |  |
|  | Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance |  |  |  |
|  | For the Years Ended December 31, |  |  |  |
|  | (Dollars in thousands) |  |  |  |
Accident |  | Unaudited (1) |  |  |  |  |  | Claim |
Year |  | 2014 |  | 2015 |  | 2016 |  | 2017 |  | 2018 |  | 2019 |  | 2020 |  | 2021 |  | 2022 |  |  | 2023 |  |  | Frequency (2) |
2014 |  | $ | 53,060 |  | $ | 119,820 |  | $ | 153,320 |  | $ | 169,736 |  | $ | 180,683 |  | $ | 186,129 |  | $ | 191,394 |  | $ | 192,169 |  | $ | 193,192 |  |  | $ | 195,409 |  |  |  | 14.99 |
2015 |  |  | — |  |  | 54,141 |  |  | 121,599 |  |  | 151,818 |  |  | 170,461 |  |  | 182,053 |  |  | 185,657 |  |  | 188,145 |  |  | 189,339 |  |  |  | 190,588 |  |  |  | 14.25 |
2016 |  |  | — |  |  | — |  |  | 52,238 |  |  | 115,713 |  |  | 143,016 |  |  | 156,860 |  |  | 166,887 |  |  | 172,133 |  |  | 174,134 |  |  |  | 178,572 |  |  |  | 14.23 |
2017 |  |  | — |  |  | — |  |  | — |  |  | 56,951 |  |  | 122,552 |  |  | 151,427 |  |  | 166,448 |  |  | 175,733 |  |  | 183,696 |  |  |  | 185,690 |  |  |  | 14.69 |
2018 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 62,061 |  |  | 126,057 |  |  | 152,328 |  |  | 172,423 |  |  | 181,081 |  |  |  | 184,797 |  |  |  | 15.23 |
2019 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 58,884 |  |  | 120,512 |  |  | 154,391 |  |  | 168,448 |  |  |  | 176,488 |  |  |  | 15.28 |
2020 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 50,113 |  |  | 109,882 |  |  | 137,411 |  |  |  | 153,974 |  |  |  | 13.95 |
2021 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 52,292 |  |  | 130,288 |  |  |  | 159,864 |  |  |  | 15.02 |
2022 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 50,954 |  |  |  | 110,494 |  |  |  | 14.40 |
2023 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  | 47,207 |  |  |  | 13.09 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  |  |  | 1,583,083 |  |  |  |
All outstanding liabilities before 2014, net of reinsurance |  |  |  | 101,752 |  |  |  |
Liabilities for loss and loss adjustment expenses, net of reinsurance |  |  |  | 554,248 |  |  |  |
(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 losses by age, net of reinsurance, for workers’ compensation and general liability as of December 31, 2023 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 Losses 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
26.4% | 31.7% | 14.3% | 8.0% | 4.8% | 2.5% | 1.4% | 1.1% | 0.5% |  | 1.1%
The following table provides a reconciliation of the beginning and ending reserve balances, net of related amounts recoverable from reinsurers, for 2023, 2022 and 2021:
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
|  | (in thousands) |
Balance, beginning of period |  | $ | 696,037 |  |  | $ | 745,278 |  |  | $ | 760,561 |
Less amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses |  |  | 112,555 |  |  |  | 119,266 |  |  |  | 105,707 |
Net balance, beginning of period |  |  | 583,482 |  |  |  | 626,012 |  |  |  | 654,854 |
Add incurred related to: |  |  |  |  |  |  |  |  |
Current accident year |  |  | 189,659 |  |  |  | 192,907 |  |  |  | 222,715 |
Prior accident years |  |  | (41,396 | ) |  |  | (40,591 | ) |  |  | (61,917 | )
Total incurred |  |  | 148,263 |  |  |  | 152,316 |  |  |  | 160,798 |
Less paid related to: |  |  |  |  |  |  |  |  |
Current accident year |  |  | 47,207 |  |  |  | 50,954 |  |  |  | 52,292 |
Prior accident years |  |  | 130,290 |  |  |  | 143,892 |  |  |  | 137,348 |
Total paid |  |  | 177,497 |  |  |  | 194,846 |  |  |  | 189,640 |
Net balance, end of period |  |  | 554,248 |  |  |  | 583,482 |  |  |  | 626,012 |
Add amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses |  |  | 119,746 |  |  |  | 112,555 |  |  |  | 119,266 |
Balance, end of period |  | $ | 673,994 |  |  | $ | 696,037 |  |  | $ | 745,278 |
The final resolution of the estimated loss reserve liability may be different from that anticipated at the reporting date because of the inherent uncertainty in loss reserve estimates, including, but not limited to, the future settlement environment. Consequently, actual paid losses in the future may result in a significantly different amount than currently reserved, favorable or unfavorable. The difference between currently estimated losses and losses estimated for a prior period at a prior valuation date is known as development. Development is unfavorable when the losses ultimately settle for more than they were reserved for or future estimates suggest that reserves should be increased on unresolved claims. Development is favorable when the losses ultimately settle for less than they were reserved for or future estimates suggest that reserves should be decreased on unresolved claims. Favorable or unfavorable development of loss reserves are reflected in our results of operations in the period the estimates are changed. The foregoing reconciliation reflects favorable development of the net reserves at December 31, 2023, 2022 and 2021. The favorable development reduced loss and loss adjustment expenses incurred by $41.4 million in 2023, driven primarily by accident years 2018 through 2021. In 2022 and 2021, the Company recorded favorable development of $40.6 million and $61.9 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 includes the exposure to occupational disease or accidents related to asbestos or environmental claims. The exposure to asbestos claims emanates 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, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
|  | (in thousands) |
Reserves for loss and LAE at beginning of year |  | $ | 248 |  |  | $ | 260 |  |  | $ | 318 |
Incurred losses and LAE during the current year |  |  | 15 |  |  |  | (2 | ) |  |  | (44 | )
Loss and LAE payments |  |  | 47 |  |  |  | (10 | ) |  |  | (14 | )
Reserves for loss and LAE at end of year |  | $ | 310 |  |  | $ | 248 |  |  | $ | 260 |
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. In establishing our reserves for loss and loss adjustment expenses, we review the results of analyses using individual case-base valuations and statistical and actuarial methods that utilize historical loss data from our more than 38 years of underwriting workers’ compensation insurance. The actuarial analysis of our historical data provides some of the factors we use in estimating our loss reserves. These factors are primarily measures over time of the number of claims paid and reported, average paid and incurred claim amounts, claim closure rates and claim payment patterns. In evaluating the results of our analyses, management also uses substantial judgment in considering other factors that are not considered in these actuarial analyses, including changes in business mix, claims management, regulatory issues, medical trends, employment and wage patterns, insurance policy coverage interpretations, judicial determinations and other subjective factors. Due to the inherent uncertainty associated with these estimates, and the cost of incurred but unreported claims, our actual liabilities may vary significantly from our original estimates. These anticipated trends are monitored

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