Liability for Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 2025

Liability for unpaid losses and loss adjustment expenses

10)

LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSE (LAE)

The Company determines its 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 the Company's reserve for unpaid losses for the nine months ended September 30, 2025 and 2024 on a GAAP basis:


	2025			2024
Balance at January 1	$	322,087		$	347,738
Less: reinsurance recoverable on unpaid losses		249,276			271,736
Net balance at January 1		72,811			76,002

Incurred related to:
Current year		40,733			41,904
Prior years		(4,593	)		(2,379	)
Total incurred		36,140			39,525
Paid related to:
Current year		29,507			29,577
Prior years		28,373			26,499
Total paid		57,880			56,076

Net balance at September 30		51,071			59,451
Plus: reinsurance recoverable on unpaid losses		137,632			113,871
Balance at September 30		188,703			173,322

Composition of reserve for unpaid losses and LAE:
Case reserves		36,228			51,549
IBNR reserves		152,475			121,773
Balance at September 30	$	188,703		$	173,322

Based upon the Company's internal analysis and the Company's review of the annual statement of actuarial opinion provided by its actuarial consultants at December 31, 2024, the Company believes 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, the Company had favorable development in the first nine months of 2025 and 2024 related to prior year losses. This development came as a result of re-estimating ultimate losses in 2025 and 2024 based on historical loss trends. Current year and prior year loss payments made by the Company during the nine months ended September 30, 2025 and nine months ended September 30, 2024 were relatively flat. Case reserves on unpaid losses decreased when compared to the prior period as a result of the continued settlement of claims and re-estimating of reserves, offset by increases to IBNR reserves as a result of Hurricane Milton which made landfall in the fourth quarter of 2024 and has outstanding IBNR reserves of $58,830,000 as of September 30, 2025. Reinsurance recoverable on unpaid losses increased in line with this increase in IBNR.