Liability for Unpaid Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2023

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 three months ended March 31, 2023 and 2022 on a GAAP basis:


	March 31,
	2023		2022
Balance at January 1	$	842,958	$	250,642
Less: reinsurance recoverable on unpaid losses	732,254		176,096
Net balance at January 1	$	110,704	$	74,546

Incurred related to:
Current year	22,238		35,582
Prior years	(3,165)		(3,064)
Total incurred	$	19,073	$	32,518
Paid related to:
Current year	13,303		17,236
Prior years	14,112		18,429
Total paid	$	27,415	$	35,665

Net balance at March 31	$	102,362	$	71,399
Plus: reinsurance recoverable on unpaid losses	646,003		168,174
Balance at March 31	$	748,365	$	239,573

Composition of reserve for unpaid losses and LAE:
Case reserves	$	284,679	$	119,969
IBNR reserves	463,686		119,604
Balance at March 31	$	748,365	$	239,573

Based upon our internal analysis and our review of the annual statement of actuarial opinion provided by our actuarial consultants at December 31, 2022, 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 favorable development in both 2023 and 2022 related to prior year losses. This favorable development came as a result of re-estimating ultimate losses in 2023 based on historical loss trends. The loss payments made by the Company during the three months ended March 31, 2023, were lower than the loss payments made during the three months ended March 31, 2022, due to the settling of claims related to non-tropical storm catastrophe events. Case and IBNR reserves and reinsurance recoverable on unpaid losses increased when compared to the prior period as a result of Hurricane Ian, which made landfall during the third quarter of 2022.