Liability for Unpaid Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2021

Liability for unpaid losses and loss adjustment expenses

LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSE (LAE)

We determine the reserve for unpaid losses on an individual case basis for all incidents reported. The liability also includes amounts for incurred but not reported (IBNR) claims as of the balance sheet date.

The table below shows the analysis of our reserve for unpaid losses for the six-months ended June 30, 2021 and 2020 on a GAAP basis:


	June 30,
	2021		2020
Balance at January 1	$	1,089,966	$	760,357
Less: reinsurance recoverable on unpaid losses	674,746		482,315
Net balance at January 1	$	415,220	$	278,042

Incurred related to:
Current year	204,448		206,482
Prior years	29,397		(1,952)
Total incurred	$	233,845	$	204,530
Paid related to:
Current year	83,188		96,282
Prior years	180,594		101,188
Total paid	$	263,782	$	197,470

Net balance at June 30	$	385,283	$	285,102
Plus: reinsurance recoverable on unpaid losses	751,092		398,369
Balance at June 30	$	1,136,375	$	683,471

Composition of reserve for unpaid losses and LAE:
Case reserves	$	417,163	$	307,425
IBNR reserves	719,212		376,046
Balance at June 30	$	1,136,375	$	683,471

Based upon our internal analysis and our review of the annual statement of actuarial opinion provided by our actuarial consultants at December 31, 2020, along with our assessment of litigation claim trends that developed during the first quarter of 2021, we believe that the reserve for unpaid losses reasonably represents the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.

As reflected in the table above, we had adverse development in 2021 related to prior year losses. This adverse development came as a result of the strengthening of our reserves based on increased litigation related to claims being filed in the state of Florida. The loss payments made by the Company during the six months ended June 30, 2021 were higher than the loss payments made during the six months ended June 30, 2020, due to the settling of claims related to the unprecedented catastrophe activity that took place in 2020. Case and IBNR reserves increased when compared to the prior period as a result of unprecedented catastrophe activity that took place in 2020 and litigation trends described above, as well as Winter Storm Uri in 2021.