Liability for Unpaid Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2023

Liability for Unpaid Losses and Loss Adjustment Expenses

Set forth in the following table is the change in liability for unpaid losses and LAE for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Balance at beginning of period	$	870,407	$	244,482	$	1,038,790	$	346,216
Less: Reinsurance recoverable	(669,946)		(65,403)		(798,680)		(115,860)
Net balance at beginning of period	200,461		179,079		240,110		230,356
Incurred related to:
Current year	209,902		196,594		412,738		381,045
Prior years	13,825		3,710		17,143		4,365
Total incurred	223,727		200,304		429,881		385,410
Paid related to:
Current year	123,258		164,888		191,041		236,615
Prior years	133,161		47,118		311,181		211,774
Total paid	256,419		212,006		502,222		448,389
Net balance at end of period	167,769		167,377		167,769		167,377
Plus: Reinsurance recoverable	495,250		18,972		495,250		18,972
Balance at end of period	$	663,019	$	186,349	$	663,019	$	186,349

Prior year development was $13.8 million in the second quarter ended June 30, 2023 compared to $3.7 million in the second quarter of 2022. The prior year increase in loss and LAE estimates reflects differences in the settlement of prior gross and ceded claims compared to previous estimates particularly related to non-CAT weather events and Hurricanes Irma and Sally, which predate the most significant reform legislation and have not benefited significantly from the statutory changes.

Prior year development was $17.1 million in the six months ended June 30, 2023 compared to $4.4 million in the six months ended June 30, 2022. The prior year increase in loss and LAE estimates reflects differences in the settlement of prior gross and ceded claims compared to previous estimates particularly related to non-CAT weather events and Hurricanes Irma and Sally, which predate the most significant reform legislation and have not benefited significantly from the statutory changes.

Prior years development was $3.7 million during the three months ended June 30, 2022. The net prior years reserve development for the quarter ended June 30, 2022 was principally due to Hurricane Irma. In addition to Hurricane Irma development, the Company concluded a favorable commutation during the quarter, favorably increasing ceded prior year loss payments which was offset by a provisory increase in direct prior incurred but not reported (“IBNR”) amount, resulting in no net effect.

Prior years’ reserve development was $4.4 million during the six months ended June 30, 2022. The net prior years’ reserve development for the six months ended June 30, 2022 was principally due to Hurricane Irma of $4.2 million in the period. Additionally, the Company concluded a favorable commutation during the six months ended June 30, 2022, favorably increasing ceded prior year loss payments which was offset by a provisory direct prior year IBNR amount, resulting in no net effect. Hurricane Matthew direct and net losses increased $0.1 million.