Loss and Loss Adjustment Expense Reserves

12 Months Ended

Dec. 31, 2025

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 LAE, as shown in the Company’s consolidated financial statements for the periods indicated.

	Year Ended December 31,
	2025		2024			2023
Reserves for losses and LAE at beginning of year	$	671,669	$	603,081	$	549,598
Less receivable from reinsurers related to unpaid losses and LAE		(130,792)		(112,623)		(93,394)
Net reserves for losses and LAE at beginning of year		540,877		490,458		456,204
Incurred losses and LAE, related to:
Current year		841,734		768,531		689,683
Prior years		(44,552)		(51,894)		(47,381)
Total incurred losses and LAE		797,182		716,637		642,302
Paid losses and LAE related to:
Current year		475,254		449,562		409,634
Prior years		250,507		216,656		198,414
Total paid losses and LAE		725,761		666,218		608,048
Net reserves for losses and LAE at end of period		612,298		540,877		490,458
Plus receivable from reinsurers related to unpaid losses and LAE		149,441		130,792		112,623
Reserves for losses and LAE at end of period	$	761,739	$	671,669	$	603,081

At the end of each period, the reserves were re-estimated for all prior accident years. The Company’s prior year reserves decreased by $44,552, $51,894, and $47,381, for the years ended December 31, 2025, 2024, and 2023, respectively, and resulted from re-estimations of prior years’ ultimate loss and LAE liabilities. The decrease in prior year reserves during 2025 was primarily composed of reductions of $13,732 in the Company’s retained automobile and $28,809 in the Company’s retained other than auto and homeowners reserves. The decrease in prior year reserves during 2024 was primarily composed of reductions of $12,742 in the Company’s retained automobile and $29,286 in the Company’s retained other than auto and homeowners reserves. The decrease in prior year reserves during 2023 was

primarily composed of reductions of $15,451 in the Company’s retained automobile and $29,782 in the Company’s retained other than auto and homeowners reserves.

As of June 30, 2024, the Company carried $11,802 of reserves for losses and LAE related to participation in the FAIR Plan, and a total net asset of $13,254 representing its estimated share of members’ equity based on the estimated profitability of the FAIR Plan. As an element of the FAIR Plan Restructuring, the Company recognized an underwriting gain of $10,057 for the year ended December 31, 2024, through the release of prior and current years loss reserves.

The Company’s private passenger automobile line of business prior year reserves decreased during the years ended December 31, 2025, 2024 and 2023 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, 2025, 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, 2016 to 2025 is presented as required supplementary information.

Private Passenger Automobile Liability
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2025
		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	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	$ 192,912	$ 192,318	$ 185,009	$ 180,486	$ 177,009	$ 176,600	$ 176,700	$ 176,509	$ 176,533	$ 176,504	$ -	49,386
2017		185,673	184,429	182,068	177,941	177,320	176,564	175,513	175,463	175,463	(66)	46,265
2018			176,411	175,222	170,447	168,185	166,046	166,164	166,769	167,067	(87)	43,104
2019				176,171	174,439	170,477	166,940	166,175	166,244	166,788	(928)	40,610
2020					130,335	125,888	120,060	117,985	118,255	118,505	(1,773)	26,259
2021						146,997	147,391	148,015	147,626	147,931	(4,283)	30,310
2022							157,921	152,752	154,269	157,689	(5,716)	30,613
2023								203,726	200,152	200,536	(17,173)	36,702
2024									258,638	260,839	(18,528)	43,339
2025										285,446	7,735	38,856
									Total	$ 1,856,768

Private Passenger Automobile Liability
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2016	2017	2018	2019		2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	$ 78,862	$ 137,917	$ 154,964	$ 167,458		$ 171,865	$ 174,410	$ 175,803	$ 176,242	$ 176,368	$ 176,504
2017		77,519	133,037	153,675		164,467	169,024	172,362	174,207	174,928	175,271
2018			72,895	126,456		143,656	154,169	159,066	164,000	165,800	166,664
2019				72,219		127,910	143,570	154,633	161,134	164,523	166,085
2020						52,962	88,037	102,601	112,143	115,776	117,925
2021							56,826	111,516	130,556	140,442	145,535
2022								61,227	118,918	139,922	151,500
2023									78,289	154,276	182,221
2024										95,621	193,622
2025											109,421
										Total	$ 1,584,748
					All outstanding liabilities before 2016, net of reinsurance						253
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 272,273

Private Passenger Automobile Physical Damage
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2025
		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	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	$ 129,528	$ 124,922	$ 122,116	$ 121,717	$ 121,543	$ 121,570	$ 121,615	$ 121,566	$ 121,584	$ 121,589	$ -	126,091
2017		128,340	126,304	124,128	123,715	123,777	123,779	123,775	123,904	123,896	(40)	124,029
2018			129,450	130,145	128,426	128,090	128,003	127,991	127,971	127,967	(2)	119,764
2019				128,698	126,648	124,332	123,858	123,781	123,834	123,832	(10)	117,041
2020					98,546	97,244	97,644	97,668	97,679	97,691	(15)	81,883
2021						122,943	122,549	121,619	121,581	121,561	(21)	89,667
2022							141,041	143,366	144,262	144,469	(60)	95,029
2023								180,863	175,980	175,550	(170)	106,624
2024									216,309	202,049	(322)	122,159
2025										222,163	(21,580)	118,506
									Total	$ 1,460,767

Private Passenger Automobile Physical Damage
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2016	2017	2018	2019		2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	$ 133,530	$ 124,298	$ 122,023	$ 121,795		$ 121,660	$ 121,634	$ 121,618	$ 121,597	$ 121,590	$ 121,590
2017		132,409	126,822	124,286		123,844	123,839	123,795	123,816	123,872	123,880
2018			138,036	132,591		128,624	128,154	128,054	128,005	127,987	127,969
2019				134,429		128,173	124,467	123,974	123,811	123,858	123,842
2020						102,764	98,819	98,083	97,755	97,707	97,694
2021							123,636	123,847	122,204	121,653	121,580
2022								142,004	146,130	144,879	144,524
2023									171,437	176,863	175,694
2024										202,584	201,826
2025											206,582
										Total	$ 1,445,181
					All outstanding liabilities before 2016, net of reinsurance						1
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 15,587

Commercial Automobile Liability
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2025
		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	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	$ 37,954	$ 39,416	$ 40,947	$ 40,916	$ 40,679	$ 40,996	$ 40,767	$ 40,487	$ 40,362	$ 40,344	$ 15	6,457
2017		42,865	41,373	41,055	39,369	39,232	38,185	37,874	37,645	37,420	33	6,136
2018			41,347	40,115	38,589	37,322	36,014	35,154	35,364	35,791	(114)	5,747
2019				51,679	49,163	48,783	46,964	45,363	44,541	43,911	(187)	5,691
2020					35,010	31,930	30,869	29,865	29,099	28,259	(321)	3,472
2021						41,814	39,564	38,634	37,655	37,645	227	4,315
2022							43,496	43,061	43,417	43,661	(2,938)	4,595
2023								46,690	45,832	45,611	(3,877)	4,462
2024									55,812	53,761	918	4,591
2025										67,311	17,886	3,976
									Total	$ 433,714

Commercial Automobile Liability
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2016	2017	2018	2019		2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	9,991	19,902	25,711	32,274		36,237	38,275	39,233	40,248	40,314	$ 40,324
2017		10,407	20,106	24,409		28,721	31,389	33,569	34,960	36,394	37,108
2018			9,704	18,499		23,544	26,774	29,336	32,996	34,108	35,520
2019				12,113		22,480	28,373	36,048	39,233	41,355	43,260
2020						7,025	13,166	16,268	19,635	22,295	25,257
2021							7,883	17,925	25,647	29,627	33,443
2022								10,941	22,702	28,791	36,586
2023									9,615	22,749	30,250
2024										10,870	25,076
2025											12,397
										Total	$ 319,221
					All outstanding liabilities before 2016, net of reinsurance						41
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 114,534

Commercial Automobile Physical Damage
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2025
		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	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	$ 20,216	$ 18,506	$ 17,909	$ 17,808	$ 17,725	$ 17,713	$ 17,721	$ 17,721	$ 17,735	$ 17,733	$ 1	13,593
2017		19,691	19,200	19,021	18,834	18,780	18,774	18,760	18,763	18,760	1	13,113
2018			21,230	19,937	19,270	19,210	19,196	19,149	19,118	19,121	2	12,908
2019				20,039	19,652	18,956	18,685	18,672	18,675	18,676	2	12,759
2020					16,507	16,334	16,606	16,434	16,368	16,315	2	9,625
2021						20,156	21,524	21,810	21,806	21,458	(3)	11,523
2022							27,459	28,007	27,884	27,521	(6)	12,800
2023								29,564	28,013	27,365	192	12,096
2024									27,641	27,108	202	12,260
2025										29,150	553	11,576
									Total	$ 223,207

Commercial Automobile Physical Damage
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2016	2017	2018	2019		2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	$ 17,228	$ 18,143	$ 17,763	$ 17,712		$ 17,709	$ 17,712	$ 17,721	$ 17,720	$ 17,734	$ 17,732
2017		17,957	19,336	18,915		18,787	18,786	18,772	18,758	18,761	18,759
2018			18,842	19,842		19,236	19,208	19,194	19,147	19,116	19,119
2019				18,128		19,161	18,752	18,681	18,672	18,673	18,674
2020						15,550	16,596	16,407	16,340	16,315	16,313
2021							18,610	21,620	21,533	21,531	21,461
2022								24,380	27,806	27,637	27,527
2023									25,889	27,508	27,174
2024										24,392	26,851
2025											25,016
										Total	$ 218,626
					All outstanding liabilities before 2016, net of reinsurance						-
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 4,581

Homeowners Liability
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2025
		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	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	$ 10,594	$ 10,594	$ 10,594	$ 9,847	$ 9,491	$ 9,491	$ 8,873	$ 8,572	$ 8,500	$ 8,167	$ -	277
2017		11,276	10,058	9,328	8,585	7,819	7,053	6,689	6,715	6,626	-	269
2018			9,951	9,951	9,951	9,768	8,616	8,245	8,061	7,786	81	257
2019				14,130	13,848	11,949	11,371	9,175	8,513	8,389	33	266
2020					14,664	13,708	11,025	9,686	8,982	8,456	310	225
2021						12,797	12,797	12,797	12,194	11,572	192	226
2022							12,973	11,770	9,491	7,255	509	214
2023								12,891	11,850	10,752	754	183
2024									14,736	13,636	2,145	202
2025										19,749	6,214	195
									Total	$ 102,388

Homeowners Liability
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2016	2017	2018	2019		2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	$ 647	$ 2,669	$ 4,257	$ 5,387		$ 6,300	$ 7,128	$ 7,628	$ 8,166	$ 8,167	$ 8,167
2017		305	1,676	2,913		3,593	4,217	4,765	4,902	5,159	5,922
2018			551	2,039		3,972	4,597	5,664	6,958	7,073	7,088
2019				1,634		3,343	5,183	6,038	7,218	7,835	8,031
2020						220	3,254	3,845	6,870	7,288	7,728
2021							218	3,388	6,573	8,678	9,555
2022								451	2,597	4,170	5,308
2023									287	2,010	3,882
2024										1,344	3,535
2025											996
										Total	$ 60,212
					All outstanding liabilities before 2016, net of reinsurance						31
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 42,207

Homeowners Property Damage
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance											As of December 31, 2025
		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	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	$ 67,116	$ 66,442	$ 64,208	$ 61,262	$ 60,019	$ 59,898	$ 59,857	$ 59,709	$ 59,457	$ 59,790	$ -	5,421
2017		80,736	76,560	70,689	68,737	67,530	67,388	67,130	66,864	66,953	-	6,012
2018			83,443	82,581	77,970	74,989	73,996	73,730	73,059	73,334	-	8,239
2019				77,976	73,697	68,769	65,624	64,950	64,468	64,592	-	5,453
2020					80,093	76,638	72,622	69,503	68,783	69,309	-	6,117
2021						75,696	75,011	74,140	72,947	73,569	(12)	6,355
2022							72,524	71,467	70,555	72,791	182	5,040
2023								113,941	107,202	108,300	(547)	6,595
2024									93,453	94,553	(13,157)	4,822
2025										112,998	(11,720)	4,434
									Total	$ 796,189

Homeowners Property Damage
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
		For the Years Ended December 31,
Accident Year	2016	2017	2018	2019		2020	2021	2022	2023	2024	2025
	(Unaudited)
2016	$ 44,103	$ 57,238	$ 59,155	$ 59,449		$ 59,403	$ 59,428	$ 59,493	$ 59,456	$ 59,457	$ 59,458
2017		46,366	64,401	66,181		66,892	66,765	66,826	66,865	66,863	66,860
2018			57,704	70,959		72,078	73,119	73,307	73,334	73,060	73,019
2019				49,121		61,905	63,536	64,427	64,412	64,468	64,463
2020						50,304	65,927	68,706	68,495	68,496	68,523
2021							51,390	67,998	70,118	70,655	70,543
2022								48,906	66,990	70,112	69,762
2023									68,479	94,600	96,962
2024										56,582	82,360
2025											62,024
										Total	$ 713,974
					All outstanding liabilities before 2016, net of reinsurance						1
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 82,216

The following is unaudited supplementary information about average historical claims duration as of December 31, 2025.

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	40.7%	34.7%	11.7%	6.8%	3.1%	2.0%	1.0%	0.4%	0.1%	0.1%
Private Passenger Automobile Physical Damage	101.8%	(1.7)%	(1.7)%	(0.3)%	(0.1)%	0.0%	0.0%	0.0%	0.0%	0.0%
Commercial Automobile Liability	23.3%	25.7%	14.5%	13.8%	8.4%	7.0%	3.4%	3.4%	1.0%	0.0%
Commercial Automobile Physical Damage	92.3%	8.2%	(1.6)%	(0.3)%	(0.1)%	(0.1)%	0.0%	0.0%	0.0%	0.0%
Homeowners Liability	6.5%	22.8%	20.0%	16.4%	10.0%	9.5%	3.1%	3.6%	5.2%	0.0%
Homeowners Property Damage	67.2%	23.3%	2.9%	0.6%	0.0%	0.1%	(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, 2025
Net outstanding liabilities
Private Passenger Automobile Liability	$	272,273
Private Passenger Automobile Physical Damage		15,587
Commercial Automobile Liability		114,534
Commercial Automobile Physical Damage		4,581
Homeowners Liability		42,207
Homeowners Property Damage		82,216
Other Short-Duration Insurance Lines		48,431
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance	$	579,829
Reinsurance recoverable on unpaid claims
Private Passenger Automobile Liability	$	120
Private Passenger Automobile Physical Damage		-
Commercial Automobile Liability		136,002
Commercial Automobile Physical Damage		5,563
Homeowners Liability		-
Homeowners Property Damage		2,517
Other Short-Duration Insurance Lines		5,239
Total reinsurance recoverable on unpaid claims	$	149,441
Unallocated claims adjustment expenses		32,469
Total gross liability for unpaid claims and claim adjustment expenses	$	761,739

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.