v2.4.0.6

Liability for Unpaid Loss and LAE | 12 Months Ended
--- | ---
Dec. 31, 2011
Liability for Unpaid Loss and LAE | ## 9. Liability for Unpaid Loss and LAE The following table provides a reconciliation of the beginning and ending balances for unpaid losses and LAE, reported in the accompanying consolidated balance sheets as of December 31, 2011 and 2010:
(Amounts in Thousands) |  | 2011 |  | 2010 |  | 2009
Unpaid losses and LAE, gross of related reinsurance recoverables at beginning of year |  | $ | 1,263,537 |  |  | $ | 1,091,944 |  |  | $ | 1,014,059 |
Less: Reinsurance recoverables at beginning of year |  |  | 670,877 |  |  |  | 561,874 |  |  |  | 504,404 |
Net balance, beginning of year |  |  | 592,660 |  |  |  | 530,070 |  |  |  | 509,655 |
Incurred related to: |  |  |  |  |  |  |  |  |  |  |  |
Current year |  |  | 665,812 |  |  |  | 463,535 |  |  |  | 332,598 |
Prior year |  |  | 12,521 |  |  |  | 7,946 |  |  |  | (4,827 | )
Total incurred losses during the year |  |  | 678,333 |  |  |  | 471,481 |  |  |  | 327,771 |
Paid losses and LAE related to: |  |  |  |  |  |  |  |  |  |  |  |
Current year |  |  | (390,267 | ) |  |  | (222,593 | ) |  |  | (203,210 | )
Prior year |  |  | (179,721 | ) |  |  | (187,012 | ) |  |  | (109,872 | )
Total payments for losses and LAE |  |  | (569,988 | ) |  |  | (409,605 | ) |  |  | (313,082 | )
Commuted loss reserves |  |  | — |  |  |  | 1,350 |  |  |  | 4,612 |
Net balance, December 31 |  |  | 701,005 |  |  |  | 593,296 |  |  |  | 528,956 |
Acquired outstanding loss and loss adjustment reserve |  |  | 209,651 |  |  |  | — |  |  |  | — |
Effect of foreign exchange rates |  |  | (3,873 | ) |  |  | (636 | ) |  |  | 1,114 |
Plus reinsurance recoverables at end of year |  |  | 972,392 |  |  |  | 670,877 |  |  |  | 561,874 |
Unpaid losses and LAE, gross of related reinsurance recoverables at end of year |  | $ | 1,879,175 |  |  | $ | 1,263,537 |  |  | $ | 1,091,944 |
In 2011, the Company’s liabilities for unpaid losses and LAE attributable to prior years increased by $12,521 primarily as result of unfavorable loss development, in its Specialty Program segment due to higher actuarial estimates based on actual losses. In 2010, the Company’s liabilities for unpaid losses and LAE attributable to prior years increased by $7,946 primarily as result of unfavorable loss development, in its Specialty Program segment due to higher actuarial estimates based on actual losses. In 2009, the Company’s liabilities for unpaid losses and LAE attributable to prior years decreased by $4,827 primarily as result of favorable development in both the Small Commercial Business segment and Specialty Risk and Extended Warranty segment partially offset by unfavorable development in our Specialty Program Business segment as well as the Company’s involuntary participation in NCCI pools. In setting its reserves, the Company utilizes a combination of Company loss development factors and industry-wide loss development factors. In the event that the Company’s losses develop more favorably than the industry, as a whole, the Company’s liabilities for unpaid losses and LAE should decrease. Management believes that its use of both its historical experience and industry-wide loss development factors provide a reasonable basis for estimating future losses. As the Company has written more business and developed more credible data, the Company has assigned more weight to its historical experience than to industry-wide results. In either case, future events beyond the control of management, such as changes in law, judicial interpretations of law, and inflation may favorably or unfavorably impact the ultimate settlement of the Company’s loss and LAE. The anticipated effect of inflation is implicitly considered when estimating liabilities for losses and LAE. While anticipated changes in claim costs due to inflation are considered in estimating the ultimate claim costs, the increase in average severity of claims is caused by a number of factors that vary with the individual type of policy written. Future average severities are projected based on historical trends adjusted for implemented changes in underwriting standards, policy provisions, and general economic trends. Those anticipated trends are monitored based on actual development and are modified if necessary.

X
- Definition Disclosure of accounting policy for the various components of the reserve for future policy benefits and guaranteed minimum benefits, and for claims and claims adjustment expenses; the significant assumptions for estimating claims losses; causes of significant variances from prior periods (such as catastrophes, asbestos and environmental claims reserve losses); and reconciliations of beginning to ending reserve balances. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6482485&loc=d3e14764-158437 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6482852&loc=d3e14931-158439 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 7 -Section 03 -Paragraph 13 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6482485&loc=d3e14754-158437 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 60 -Paragraph 60 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 94-5 -Paragraph 11 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.7-03.13(a)(1),(b)) -URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910 + Details
Name: | us-gaap_LiabilityForFuturePolicyBenefitsAndUnpaidClaimsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration