Liability for Unpaid Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2024

Liability for Unpaid Losses and Loss Adjustment Expenses

Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows:


	Quarters Ended March 31,
(Dollars in thousands)	2024		2023
Balance at beginning of period	$	850,599	$	832,404
Less: Ceded reinsurance receivables		72,829		73,021
Net balance at beginning of period		777,770		759,383
Incurred losses and loss adjustment expenses related to:
Current year		53,383		88,001
Prior years		1		—
Total incurred losses and loss adjustment expenses		53,384		88,001
Paid losses and loss adjustment expenses related to:
Current year		5,597		9,617
Prior years		43,769		53,912
Total paid losses and loss adjustment expenses		49,366		63,529
Net balance at end of period		781,788		783,855
Plus: Ceded reinsurance receivables		71,814		73,665
Balance at end of period	$	853,602	$	857,520

When analyzing loss reserves and prior year development, the Company considers many factors, including the frequency and severity of claims, loss trends, case reserve settlements that may have resulted in significant development, and any other additional or pertinent factors that may impact reserve estimates.

During the first quarter of 2024, the Company's adjustments to prior accident year loss reserves netted to $1 thousand. This consisted of a less than $0.1 million increase related to Penn-America and a less than $0.1 million decrease related to Non-Core Operations.

During the first quarter of 2023, the Company's adjustments to prior accident year loss reserves netted to zero. This consisted of a $2.2 million increase related to Penn-America and a $2.2 million decrease related to Non-Core Operations.

The $2.2 million increase in prior accident year loss reserves related to Penn-America primarily consisted of the following:

•

Property: A $0.6 million decrease primarily recognizes lower than expected claims severity in the 2021 accident year, partially offset by increases in the 2020 and 2022 accident years.

•

General Liability: A $2.8 million increase mainly reflects higher than expected claims severity in the 2013, 2015 through 2019, 2021 and 2022 accident years.

The $2.2 million decrease in prior accident year loss reserves related to Non-Core Operations primarily consisted of the following:

•

Property: A $0.8 million increase mainly recognizes higher than expected claims severity in the 2019, 2021 and 2022 accident years, partially offset by decreases in the 2016 and 2018 accident years.

•

General Liability: A $1.9 million decrease primarily recognizes lower than expected claims severity in the 2011, 2017, 2018, 2021 and 2022 accident years.

•

Reinsurance: A $1.1 million decrease in the property lines from one reinsurance treaty in the 2017 and 2020 accident years based on the reported information from the cedant.