Liability for Unpaid Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 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 six months ended June 30, 2023 and 2022 on a GAAP basis:


	June 30,
	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	45,643		47,288
Prior years	(8,316)		(6,941)
Total incurred	$	37,327	$	40,347
Paid related to:
Current year	27,217		30,666
Prior years	29,857		23,651
Total paid	$	57,074	$	54,317

Net balance at June 30	$	90,957	$	60,576
Plus: reinsurance recoverable on unpaid losses	443,719		163,509
Balance at June 30	$	534,676	$	224,085

Composition of reserve for unpaid losses and LAE:
Case reserves	$	182,196	$	116,428
IBNR reserves	352,480		107,657
Balance at June 30	$	534,676	$	224,085

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 six months ended June 30, 2023, were higher than the loss payments made during the six months ended June 30, 2022, due to the settling of claims related to Hurricane Ian, which made landfall during the third quarter of 2022. Case and IBNR reserves and reinsurance recoverable on unpaid losses also increased when compared to the prior period as a result of Hurricane Ian.