Loss and Loss Adjustment Expense Reserves

12 Months Ended

Dec. 31, 2021

Loss and Loss Adjustment Expense Reserves

Loss and Loss Adjustment Expense Reserves

12. 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.

	Year Ended December 31,
	2021		2020			2019
Reserves for losses and LAE at beginning of year	$	567,581	$	610,566	$	584,719
Less receivable from reinsurers related to unpaid losses and LAE		(106,311)		(122,372)		(108,398)
Net reserves for losses and LAE at beginning of year		461,270		488,194		476,321
Incurred losses and LAE, related to:
Current year		515,400		459,400		551,895
Prior years		(53,673)		(54,844)		(42,049)
Total incurred losses and LAE		461,727		404,556		509,846
Paid losses and LAE related to:
Current year		310,116		277,754		333,377
Prior years		132,897		153,726		164,596
Total paid losses and LAE		443,013		431,480		497,973
Net reserves for losses and LAE at end of period		479,984		461,270		488,194
Plus receivable from reinsurers related to unpaid losses and LAE		90,667		106,311		122,372
Reserves for losses and LAE at end of period	$	570,651	$	567,581	$	610,566

At the end of each period, the reserves were re-estimated for all prior accident years. The Company’s prior year reserves decreased by $53,673, $54,844, and $42,049, for the years ended December 31, 2021, 2020, and 2019, respectively, and resulted from re-estimations of prior years’ ultimate loss and LAE liabilities. The decrease in prior year

reserves during 2021 was primarily composed of reductions of $22,313 in the Company’s retained automobile and $26,220 in the Company’s retained other than auto and homeowners reserves. The decrease in prior year reserves during 2020 was primarily composed of reductions of $26,902 in the Company’s retained automobile and $21,717 in the Company’s retained other than auto and homeowners reserves. The decrease in prior year reserves during 2019 was primarily composed of reductions of $25,623 in the Company’s retained automobile and $14,182 in the Company’s retained homeowners reserves.

The Company’s private passenger automobile line of business prior year reserves decreased during the years ended December 31, 2021, 2020 and 2019 primarily due to improved retained private passenger results. The improved retained private passenger results were 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.

The following is information about incurred and paid claims development as of December 31, 2021, net of reinsurance, as well as cumulative claim frequency and the total of incurred-but-not-reported liabilities plus expected development on reported claims included within the net incurred claims amounts for our three largest lines of business. The cumulative number of reported claims include claims closed with payment, claims closed without payment and all open claims. It does not include anticipated IBNR claims. For the Private Passenger Automobile and Commercial Automobile lines of business, claim count is defined on a claimant basis where several claim counts may arise from a single auto accident. For Homeowners and all other lines of business, claim count is defined on an accident basis.

The information about incurred claims and allocated claim adjustment expense, net of reserves and paid ultimate claims development for the years ended December 31, 2012 to 2020 is presented as required supplementary information.

Private Passenger Automobile Liability
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2021
		For the Years Ended December 31,									Total of Incurred-but-Not-Reported Liabilities Plus Expected Development of Reported Claims	Cumulative Number of Reported Claims
Accident Year	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 175,262	$ 175,189	$ 174,856	$ 170,379	$ 167,831	$ 166,008	$ 163,350	$ 162,448	$ 162,520	$ 162,364	$ -	53,273
2013		183,367	183,517	183,264	181,492	179,167	176,713	175,684	175,718	175,362	(134)	54,248
2014			187,305	187,104	186,798	183,119	181,312	179,251	179,267	179,268	(813)	52,787
2015				190,036	190,236	188,317	184,477	181,299	179,451	179,248	(417)	52,980
2016					192,912	192,318	185,009	180,486	177,009	176,600	(1,444)	49,383
2017						185,673	184,429	182,068	177,941	177,320	(2,620)	46,253
2018							176,411	175,222	170,447	168,185	(3,675)	43,069
2019								176,171	174,439	170,477	(7,039)	40,500
2020									130,335	125,888	(5,863)	26,040
2021										146,997	(8,397)	27,331
									Total	$ 1,661,709

Private Passenger Automobile Liability
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2012	2013	2014	2015		2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 74,306	$ 126,553	$ 144,157	$ 152,991		$ 157,443	$ 160,416	$ 161,749	$ 162,014	$ 162,121	$ 162,119
2013		79,049	135,031	152,472		163,694	169,634	172,736	173,890	174,574	174,639
2014			79,151	136,434		156,693	166,815	173,163	176,616	177,360	177,968
2015				76,934		138,255	156,483	168,641	173,816	176,652	177,782
2016						78,862	137,917	154,964	167,458	171,865	174,410
2017							77,519	133,037	153,675	164,467	169,024
2018								72,895	126,456	143,656	154,169
2019									72,219	127,910	143,570
2020										52,962	88,037
2021											56,826
										Total	$ 1,478,544
					All outstanding liabilities before 2012, net of reinsurance						387
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 183,552

Private Passenger Automobile Physical Damage
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2021
		For the Years Ended December 31,									Total of Incurred-but-Not-Reported Liabilities Plus Expected Development of Reported Claims	Cumulative Number of Reported Claims
Accident Year	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 108,376	$ 107,912	$ 104,393	$ 103,679	$ 103,575	$ 103,547	$ 103,510	$ 103,491	$ 103,453	$ 103,434	$ -	123,639
2013		114,389	114,239	113,034	112,197	112,096	112,060	112,029	112,003	111,989	-	131,703
2014			123,421	123,622	122,410	122,327	122,341	122,213	122,188	122,182	(24)	135,006
2015				140,219	136,661	134,101	133,737	133,581	133,530	133,523	(52)	144,276
2016					129,528	124,922	122,116	121,717	121,543	121,570	(64)	126,086
2017						128,340	126,304	124,128	123,715	123,777	(90)	124,025
2018							129,450	130,145	128,426	128,090	(72)	119,758
2019								128,698	126,648	124,332	(220)	116,995
2020									98,546	97,244	(1,726)	81,782
2021										122,943	(24,257)	87,213
									Total	$ 1,189,084

Private Passenger Automobile Physical Damage
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2012	2013	2014	2015		2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 111,928	$ 107,017	$ 104,311	$ 103,664		$ 103,573	$ 103,537	$ 103,510	$ 103,491	$ 103,452	$ 103,434
2013		120,843	115,904	112,894		112,162	112,085	112,060	112,029	112,003	111,988
2014			130,732	126,414		122,668	122,402	122,350	122,251	122,216	122,189
2015				143,532		136,760	134,066	133,701	133,639	133,596	133,575
2016						133,530	124,298	122,023	121,795	121,660	121,634
2017							132,409	126,822	124,286	123,844	123,839
2018								138,036	132,591	128,624	128,154
2019									134,429	128,173	124,467
2020										102,764	98,819
2021											123,636
										Total	$ 1,191,735
					All outstanding liabilities before 2012, net of reinsurance						-
			Liabilities for claims and claim adjustment expenses, net of reinsurance								($ 2,651)

Commercial Automobile Liability
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2021
		For the Years Ended December 31,									Total of Incurred-but-Not-Reported Liabilities Plus Expected Development of Reported Claims	Cumulative Number of Reported Claims
Accident Year	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 23,704	$ 24,447	$ 24,662	$ 24,723	$ 24,572	$ 23,819	$ 22,859	$ 22,476	$ 22,292	$ 22,170	$ 13	4,566
2013		29,175	29,541	28,377	26,864	26,310	25,986	25,443	25,353	25,140	51	5,784
2014			34,117	34,105	34,376	33,914	32,948	32,438	32,200	32,052	69	6,086
2015				35,371	36,150	36,610	37,730	38,015	38,257	37,995	(68)	7,212
2016					37,954	39,416	40,947	40,916	40,679	40,996	13	6,455
2017						42,865	41,373	41,055	39,369	39,232	(48)	6,132
2018							41,347	40,115	38,589	37,322	712	5,743
2019								51,679	49,163	48,783	1,177	5,669
2020									35,010	31,930	4,501	3,443
2021										41,814	9,044	3,696
									Total	$ 357,434

Commercial Automobile Liability
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2012	2013	2014	2015		2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 6,503	$ 12,474	$ 15,617	$ 17,804		$ 18,876	$ 20,601	$ 21,021	$ 22,086	$ 22,121	$ 22,154
2013		8,502	17,079	19,625		21,129	22,434	23,867	24,507	24,732	24,789
2014			9,426	17,853		21,968	25,253	27,886	30,420	31,298	31,451
2015				11,181		21,700	26,018	29,804	31,537	33,416	34,976
2016						9,991	19,902	25,711	32,274	36,237	38,275
2017							10,407	20,106	24,409	28,721	31,389
2018								9,704	18,499	23,544	26,774
2019									12,113	22,480	28,373
2020										7,025	13,166
2021											7,883
										Total	$ 259,230
					All outstanding liabilities before 2012, net of reinsurance						34
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 98,238

Commercial Automobile Physical Damage
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2021
		For the Years Ended December 31,									Total of Incurred-but-Not-Reported Liabilities Plus Expected Development of Reported Claims	Cumulative Number of Reported Claims
Accident Year	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 10,382	$ 10,382	$ 10,331	$ 10,249	$ 10,250	$ 10,208	$ 10,209	$ 10,226	$ 10,224	$ 10,224	$ -	9,913
2013		13,666	13,567	13,298	13,180	13,057	13,047	13,071	13,057	13,057	-	12,298
2014			17,426	16,925	15,455	15,419	15,353	15,381	15,373	15,376	-	13,545
2015				20,223	19,047	19,021	18,974	18,641	18,535	18,525	0	15,468
2016					20,216	18,506	17,909	17,808	17,725	17,713	1	13,593
2017						19,691	19,200	19,021	18,834	18,780	(6)	13,113
2018							21,230	19,937	19,270	19,210	2	12,907
2019								20,039	19,652	18,956	200	12,751
2020									16,507	16,334	(272)	9,608
2021										20,156	(1,141)	10,860
									Total	$ 168,331

Commercial Automobile Physical Damage
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2012	2013	2014	2015		2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 9,707	$ 10,553	$ 10,270	$ 10,242		$ 10,239	$ 10,235	$ 10,228	$ 10,226	$ 10,224	$ 10,224
2013		12,665	13,378	13,114		13,074	13,065	13,060	13,066	13,057	13,057
2014			15,377	15,862		15,424	15,388	15,381	15,376	15,373	15,376
2015				17,787		18,910	18,667	18,549	18,541	18,530	18,525
2016						17,228	18,143	17,763	17,712	17,709	17,712
2017							17,957	19,336	18,915	18,787	18,786
2018								18,842	19,842	19,236	19,208
2019									18,128	19,161	18,752
2020										15,550	16,596
2021											18,610
										Total	$ 166,846
					All outstanding liabilities before 2012, net of reinsurance						-
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 1,485

Homeowners Liability
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2021
		For the Years Ended December 31,									Total of Incurred-but-Not-Reported Liabilities Plus Expected Development of Reported Claims	Cumulative Number of Reported Claims
Accident Year	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 7,514	$ 7,514	$ 7,514	$ 6,464	$ 5,304	$ 4,331	$ 3,824	$ 3,889	$ 3,646	$ 3,646	$ -	249
2013		9,768	9,768	9,337	7,578	5,978	5,312	5,147	5,147	5,167	-	265
2014			11,494	11,494	9,738	7,388	7,120	6,984	6,984	6,818	81	261
2015				12,965	12,555	9,908	9,201	9,201	9,201	8,172	146	288
2016					10,594	10,594	10,594	9,847	9,491	9,491	249	277
2017						11,276	10,058	9,328	8,585	7,819	104	269
2018							9,951	9,951	9,951	9,768	274	253
2019								14,130	13,848	11,949	692	253
2020									14,664	13,708	3,024	210
2021										12,797	3,037	173
									Total	$ 89,335

Homeowners Liability
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2012	2013	2014	2015		2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 1,389	$ 2,063	$ 2,308	$ 2,731		$ 3,029	$ 3,600	$ 3,606	$ 3,646	$ 3,646	$ 3,646
2013		527	2,337	3,080		3,493	3,829	4,038	4,209	4,247	4,255
2014			340	1,834		3,212	4,200	4,828	6,315	6,368	6,419
2015				428		3,319	4,267	5,205	6,445	7,022	7,215
2016						647	2,669	4,257	5,387	6,300	7,128
2017							305	1,676	2,913	3,593	4,217
2018								551	2,039	3,972	4,597
2019									1,634	3,343	5,183
2020										220	3,254
2021											218
										Total	$ 46,132
					All outstanding liabilities before 2012, net of reinsurance						79
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 43,282

Homeowners Property Damage
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2021
		For the Years Ended December 31,									Total of Incurred-but-Not-Reported Liabilities Plus Expected Development of Reported Claims	Cumulative Number of Reported Claims
Accident Year	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 50,351	$ 49,911	$ 47,392	$ 44,380	$ 43,097	$ 42,382	$ 41,895	$ 41,887	$ 41,887	$ 41,887	$ 148	6,051
2013		56,298	56,199	55,722	52,464	51,077	49,973	49,463	49,456	49,455	126	5,698
2014			59,160	60,213	59,751	57,331	55,127	54,607	54,602	54,560	251	6,077
2015				152,586	152,049	162,377	162,788	162,722	162,354	162,244	365	20,076
2016					67,116	66,442	64,208	61,262	60,019	59,898	258	5,421
2017						80,736	76,560	70,689	68,737	67,530	346	6,011
2018							83,443	82,581	77,970	74,989	849	8,239
2019								77,976	73,697	68,769	1,526	5,444
2020									80,093	76,638	(5,464)	6,087
2021										75,696	(4,845)	6,112
									Total	$ 731,666

Homeowners Property Damage
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2012	2013	2014	2015		2016	2017	2018	2019	2020	2021
	(Unaudited)
2012	$ 30,801	$ 40,681	$ 41,960	$ 41,737		$ 41,782	$ 41,789	$ 41,736	$ 41,736	$ 41,737	$ 41,737
2013		38,661	48,456	49,702		49,612	49,653	49,620	49,328	49,327	49,327
2014			40,409	52,161		54,088	54,224	54,262	54,274	54,306	54,305
2015				112,563		145,337	160,572	161,745	161,773	161,850	161,783
2016						44,103	57,238	59,155	59,449	59,403	59,428
2017							46,366	64,401	66,181	66,892	66,765
2018								57,704	70,959	72,078	73,119
2019									49,121	61,905	63,536
2020										50,304	65,927
2021											51,390
										Total	$ 687,317
					All outstanding liabilities before 2012, net of reinsurance						884
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 45,233

The following is unaudited supplementary information about average historical claims duration as of December 31, 2021.

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Unaudited)
Years	1	2	3	4	5	6	7	8	9	10
Private Passenger Automobile Liability	43.4%	32.1%	10.4%	6.2%	2.9%	1.7%	0.6%	0.3%	0.1%	0.0%
Private Passenger Automobile Physical Damage	107.0%	(4.8)%	(2.5)%	(0.4)%	(0.1)%	0.0%	0.0%	0.0%	0.0%	0.0%
Commercial Automobile Liability	25.9%	24.8%	12.4%	10.6%	6.8%	6.1%	3.0%	1.8%	0.2%	0.1%
Commercial Automobile Physical Damage	96.1%	5.8%	(2.3)%	(0.4)%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%
Homeowners Liability	7.0%	21.5%	15.8%	10.2%	9.8%	11.0%	1.8%	0.8%	0.1%	0.0%
Homeowners Property Damage	71.3%	20.9%	4.5%	0.6%	0.0%	0.0%	(0.1)%	0.0%	0.0%	0.0%

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated balance sheets is as follows.

Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid claims and Claim Adjustment Expenses
		December 31, 2021
Net outstanding liabilities
Private Passenger Automobile Liability	$	183,552
Private Passenger Automobile Physical Damage		(2,651)
Commercial Automobile Liability		98,238
Commercial Automobile Physical Damage		1,485
Homeowners Liability		43,282
Homeowners Property Damage		45,233
Other Short-Duration Insurance Lines		74,701
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance	$	443,840
Reinsurance recoverable on unpaid claims
Private Passenger Automobile Liability	$	120
Private Passenger Automobile Physical Damage		-
Commercial Automobile Liability		87,221
Commercial Automobile Physical Damage		2,398
Homeowners Liability		-
Homeowners Property Damage		-
Other Short-Duration Insurance Lines		928
Total reinsurance recoverable on unpaid claims	$	90,667
Unallocated claims adjustment expenses		36,144
Total gross liability for unpaid claims and claim adjustment expenses	$	570,651

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.