Loss and Loss Adjustment Expense Reserves

9 Months Ended

Sep. 30, 2020

Loss and Loss Adjustment Expense Reserves

Loss and Loss Adjustment Expense Reserves

7.  Loss and Loss Adjustment Expense Reserves

The following table sets forth a reconciliation of beginning and ending reserves for losses and loss adjustment expenses (“LAE”), as shown in the Company’s consolidated financial statements for the periods indicated.

	Nine Months Ended September 30,
	2020		2019
Reserves for losses and LAE at beginning of year	$	610,566	$	584,719
Less receivable from reinsurers related to unpaid losses and LAE		(122,372)		(108,398)
Net reserves for losses and LAE at beginning of year		488,194		476,321
Incurred losses and LAE, related to:
Current year		343,393		408,927
Prior years		(34,619)		(25,541)
Total incurred losses and LAE		308,774		383,386
Paid losses and LAE related to:
Current year		180,649		226,660
Prior years		137,613		149,472
Total paid losses and LAE		318,262		376,132
Net reserves for losses and LAE at end of period		478,706		483,575
Plus receivable from reinsurers related to unpaid losses and LAE		107,783		117,884
Reserves for losses and LAE at end of period	$	586,489	$	601,459

At the end of each period, the reserves were re-estimated for all prior accident years. The Company’s prior year reserves decreased by $34,619 and $25,541 for the nine months ended September 30, 2020 and 2019, respectively, and resulted from re-estimations of prior year’s ultimate loss and LAE liabilities. The decreases in prior years reserves during the nine months ended September 30, 2020 and 2019, are primarily composed of reductions in our retained automobile and retained homeowners lines reserves.

The Company's automobile lines of business reserves decreased for the nine months ended September 30, 2020 and 2019, primarily due to fewer incurred but not yet reported claims than previously estimated and better than previously estimated severity on the Company’s established bodily injury and property damage case reserves. Due to the nature of the risks that the Company underwrites and has historically underwritten, management does not believe that it has an exposure to asbestos or environmental pollution liabilities.