Liability for Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Balance at beginning of period	$	663,019	$	186,349	$	1,038,790	$	346,216
Less: Reinsurance recoverable	(495,250)		(18,972)		(798,680)		(115,860)
Net balance at beginning of period	167,769		167,377		240,110		230,356
Incurred related to:
Current year	270,266		327,729		683,004		708,774
Prior years	17,706		2,715		34,849		7,080
Total incurred	287,972		330,444		717,853		715,854
Paid related to:
Current year	178,384		216,735		369,425		453,350
Prior years	(16,963)		57,227		294,218		269,001
Total paid	161,421		273,962		663,643		722,351
Net balance at end of period	294,320		223,859		294,320		223,859
Plus: Reinsurance recoverable	256,687		929,768		256,687		929,768
Balance at end of period	$	551,007	$	1,153,627	$	551,007	$	1,153,627

Prior years’ development was $17.7 million in the third quarter ended September 30, 2023 compared to $2.7 million in the third quarter ended September 30, 2022. Prior years’ development was $34.8 million in the nine months ended September 30, 2023 compared to $7.1 million in the nine months ended September 30, 2022. In 2023 prior year development was the result of increased costs to settle prior year claims compared to previous estimates particularly related to non-CAT events occurring in prior years. Prior years claims predate the most significant recent property insurance reform legislation enacted in late 2022 in Florida and therefore have not benefited significantly from the statutory changes. Paid claims related to prior years in the third quarter ended September 30, 2023 include the impact of a number of commutations, including the commutation with the FHCF.

Prior years’ development was $2.7 million during the three months ended September 30, 2022. The net prior years’ reserve development for the three months ended September 30, 2022 was principally due to Hurricane Irma. Prior years’ reserve development was $7.1 million during the nine months ended September 30, 2022. The net prior years’ reserve development for the nine months ended September 30, 2022 was principally due to Hurricane Irma development of $7.0 million in the period. Hurricane Matthew net losses increased $0.1 million. Additionally, the Company concluded a favorable commutation during the nine months ended September 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.