Liability for Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 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 nine-months ended September 30, 2021 and 2020 on a GAAP basis:


	September 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	305,270		429,347
Prior years	31,344		(6,165)
Total incurred	$	336,614	$	423,182
Paid related to:
Current year	152,415		195,728
Prior years	243,741		125,085
Total paid	$	396,156	$	320,813

Net balance at September 30	$	355,678	$	380,411
Plus: reinsurance recoverable on unpaid losses	1,153,799		701,715
Balance at September 30	$	1,509,477	$	1,082,126

Composition of reserve for unpaid losses and LAE:
Case reserves	$	499,311	$	361,672
IBNR reserves	1,010,166		720,454
Balance at September 30	$	1,509,477	$	1,082,126

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 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 nine months ended September 30, 2021 were higher than the loss payments made during the nine months ended September 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 Winter Storm Uri which occurred in the first quarter of 2021 and Hurricane Ida which made landfall in the third quarter of 2021.