Loss and Loss Adjustment Expenses

12 Months Ended

Dec. 31, 2024

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 2015 through 2024. 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, 2024
	(Dollars in thousands)																				Total IBNR
																					Plus
																					Expected				Cumulative
																					Development				Number of
Accident	Unaudited (1)																				on Reported				Claims
Year	2015		2016		2017		2018		2019		2020		2021		2022		2023		2024		Claims				Reported
2015	$	262,573	$	262,573	$	252,514	$	235,471	$	220,965	$	211,758	$	207,929	$	207,086	$	205,556	$	203,499		$	4,359			5,517
2016		—		250,491		250,491		241,406		218,005		209,214		202,820		201,604		198,566		197,359			4,666			5,395
2017		—		—		244,094		244,098		234,587		220,096		211,964		208,360		206,293		203,443			5,297			5,214
2018		—		—		—		250,487		250,487		235,641		217,369		208,517		205,001		203,456			3,865			5,478
2019		—		—		—		—		241,344		241,344		227,246		214,123		206,109		203,072			5,628			5,223
2020		—		—		—		—		—		220,710		220,710		214,500		207,047		200,698			12,923			4,391
2021		—		—		—		—		—		—		222,715		222,715		215,232		211,548			4,359			4,314
2022		—		—		—		—		—		—		—		192,907		192,907		190,117			(3,907	)		4,088
2023		—		—		—		—		—		—		—		—		189,659		189,659			3,422			3,924
2024		—		—		—		—		—		—		—		—		—		192,153			(11,366	)		3,577
																	Total		$	1,995,004		$	29,246


	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	2015		2016		2017		2018		2019		2020		2021		2022		2023		2024		Frequency (2)
2015	$	54,141	$	121,599	$	151,818	$	170,461	$	182,053	$	185,657	$	188,145	$	189,339	$	190,588	$	189,578		14.25
2016		—		52,238		115,713		143,016		156,860		166,887		172,133		174,134		178,572		179,521		14.23
2017		—		—		56,951		122,552		151,427		166,448		175,733		183,696		185,690		186,798		14.69
2018		—		—		—		62,061		126,057		152,328		172,423		181,081		184,797		187,196		15.23
2019		—		—		—		—		58,884		120,512		154,391		168,448		176,488		180,586		15.28
2020		—		—		—		—		—		50,113		109,882		137,411		153,974		162,703		13.95
2021		—		—		—		—		—		—		52,292		130,288		159,864		174,454		15.06
2022		—		—		—		—		—		—		—		50,954		110,494		138,000		14.48
2023		—		—		—		—		—		—		—		—		47,207		107,823		13.83
2024		—		—		—		—		—		—		—		—		—		52,869		12.39
																	Total			1,559,528
All outstanding liabilities before 2015, net of reinsurance																				103,092
Liabilities for loss and loss adjustment expenses, net of reinsurance																				538,567

(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, 2024 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
26.9%	32.1%	14.3%	7.9%	4.7%	2.4%	1.1%	1.1%	0.5%	(0.5)%

The following table provides a reconciliation of the beginning and ending reserve balances, net of related amounts recoverable from reinsurers, for 2024, 2023 and 2022:


	Year Ended December 31,
	2024			2023			2022
	(in thousands)
Balance, beginning of period	$	673,994		$	696,037		$	745,278
Less amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses		119,746			112,555			119,266
Net balance, beginning of period		554,248			583,482			626,012
Add incurred related to:
Current accident year		192,153			189,659			192,907
Prior accident years		(34,886	)		(41,396	)		(40,591	)
Total incurred		157,267			148,263			152,316
Less paid related to:
Current accident year		52,869			47,207			50,954
Prior accident years		120,079			130,290			143,892
Total paid		172,948			177,497			194,846
Net balance, end of period		538,567			554,248			583,482
Add amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses		112,742			119,746			112,555
Balance, end of period	$	651,309		$	673,994		$	696,037

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, 2024, 2023 and 2022. The favorable development reduced loss and loss adjustment expenses incurred by $34.9 million in 2024, driven primarily by accident years 2014 through 2022. In 2023 and 2022, the Company recorded favorable development of $41.4 million and $40.6 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,
	2024			2023		2022
	(in thousands)
Reserves for loss and LAE at beginning of year	$	310		$	248	$	260
Incurred losses and LAE during the current year		14			15		(2	)
Loss and LAE payments		(11	)		47		(10	)
Reserves for loss and LAE at end of year	$	313		$	310	$	248

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 39 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 based on actual development and are modified if necessary.