10.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,
	2016		2015			2014
Reserves for losses and LAE at beginning of year	$	553,977	$	482,012	$	455,014
Less receivable from reinsurers related to unpaid losses and LAE		(68,261)		(61,245)		(60,346)
Net reserves for losses and LAE at beginning of year		485,716		420,767		394,668
Incurred losses and LAE, related to:
Current year		538,881		642,882		513,734
Prior years		(45,448)		(30,313)		(37,368)
Total incurred losses and LAE		493,433		612,569		476,366
Paid losses and LAE related to:
Current year		328,046		415,256		316,979
Prior years		174,506		132,364		133,288
Total paid losses and LAE		502,552		547,620		450,267
Net reserves for losses and LAE at end of period		476,597		485,716		420,767
Plus receivable from reinsurers related to unpaid losses and LAE		83,724		68,261		61,245
Reserves for losses and LAE at end of period	$	560,321	$	553,977	$	482,012

At the end of each period, the reserves were re‑estimated for all prior accident years. The Company’s prior year reserves decreased by $45,448, $30,313, and $37,368 for the years ended 2016, 2015, and 2014, respectively, and resulted from re‑estimations of prior years’ ultimate loss and LAE liabilities. The decrease in prior year reserves during 2016 was primarily composed of reductions of $25,019 in the Company’s retained automobile and $11,648 in the Company’s retained homeowners reserves. The decrease in prior year reserves during 2015 was primarily composed of reductions of $18,644 in the Company’s retained automobile and $7,964 in the Company’s retained homeowners reserves. The decrease in prior year reserves during 2014 was primarily composed of reductions of $23,272 in the Company’s retained automobile and $8,804 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, 2016, 2015 and 2014 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, 2016, 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 or reserves and paid ultimate claims development for the years ended December 31, 2007 to 2015 is presented as unaudited supplementary information.


Private Passenger Automobile
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance												As of December 31, 2016
		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	2007	2008	2009	2010		2011	2012	2013	2014	2015	2016
	(Unaudited)
2007	$ 294,489	$ 289,704	$ 284,723	$ 278,633		$ 275,325	$ 273,637	$ 271,787	$ 270,545	$ 269,978	$ 269,785	$ 452	192,735
2008		286,394	278,148	271,319		265,634	262,316	258,705	256,806	256,574	255,248	546	186,654
2009			270,462	266,660		262,056	260,136	256,653	253,865	252,710	252,035	608	182,449
2010				270,882		271,021	268,620	266,574	262,580	261,089	259,531	1,595	183,182
2011						294,858	294,857	291,934	289,030	286,722	285,526	1,329	196,629
2012							283,638	283,101	279,249	274,058	270,406	1,441	176,903
2013								297,756	297,756	296,298	293,689	417	185,929
2014									310,726	310,726	309,208	(7,991)	187,685
2015										330,255	326,897	(9,447)	196,780
2016											322,440	(20,475)	169,056
										Total	$ 2,844,765

Private Passenger Automobile
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

		For the Years Ended December 31,
Accident Year	2007	2008	2009	2010		2011	2012	2013	2014	2015	2016
	(Unaudited)
2007	$ 172,883	$ 229,767	$ 248,726	$ 258,968		$ 264,471	$ 267,215	$ 268,418	$ 268,684	$ 268,701	$ 269,135
2008		171,445	218,935	236,531		244,427	250,785	253,410	254,436	254,558	254,585
2009			170,304	216,220		232,704	241,923	246,805	249,832	250,466	250,709
2010				175,356		225,179	239,275	249,852	254,256	256,527	257,184
2011						202,663	247,170	260,983	272,713	278,132	280,924
2012							186,234	233,570	248,468	256,655	261,016
2013								199,892	250,935	265,366	275,856
2014									209,883	262,848	279,361
2015										220,466	275,015
2016											212,392
										Total	$ 2,616,177
					All outstanding liabilities before 2007, net of reinsurance						755
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 229,343


Commercial Automobile
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance												As of December 31, 2016
		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	2007	2008	2009	2010	2011		2012	2013	2014	2015	2016
	(Unaudited)
2007	$ 38,425	$ 37,651	$ 37,553	$ 36,753	$ 36,250		$ 36,289	$ 35,578	$ 35,572	$ 35,568	$ 35,467	$ 23	19,013
2008		38,389	38,309	37,017	36,511		36,854	36,404	36,212	35,724	35,486	(47)	17,787
2009			34,078	32,744	32,320		31,949	31,851	31,655	31,545	31,442	362	16,348
2010				30,198	29,885		29,386	29,468	29,840	29,240	28,950	(102)	15,085
2011					35,169		35,449	35,191	35,147	34,601	33,843	1	16,446
2012							34,086	34,829	34,993	34,972	35,822	634	14,478
2013								42,841	43,108	41,675	40,044	1,703	18,076
2014									51,543	51,030	49,831	1,777	19,621
2015										55,594	55,197	(677)	22,606
2016											58,170	6,844	18,273
										Total	$ 404,252

Commercial Automobile
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

		For the Years Ended December 31,
Accident Year	2007	2008	2009	2010	2011		2012	2013	2014	2015	2016
	(Unaudited)
2007	$ 17,654	$ 25,876	$ 29,165	$ 32,598	$ 33,828		$ 34,887	$ 35,091	$ 35,170	$ 35,197	$ 35,401
2008		17,710	25,518	28,949	31,822		34,100	35,151	35,495	35,464	35,498
2009			16,518	22,958	25,275		27,241	29,038	30,624	31,022	31,060
2010				15,864	21,739		23,869	25,860	27,379	27,917	28,140
2011					18,312		25,382	28,899	30,843	31,996	32,966
2012							16,210	23,027	25,887	28,046	29,115
2013								21,167	30,457	32,739	34,203
2014									24,803	33,715	37,392
2015										28,968	40,610
2016											27,219
										Total	$ 331,604
						All outstanding liabilities before 2007, net of reinsurance					401
				Liabilities for claims and claim adjustment expenses, net of reinsurance							$ 73,049


Homeowners
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance												As of December 31, 2016
		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	2007	2008	2009	2010	2011		2012	2013	2014	2015	2016
	(Unaudited)
2007	$ 22,219	$ 21,903	$ 20,995	$ 19,585	$ 18,795		$ 18,528	$ 18,338	$ 18,330	$ 18,229	$ 18,040	$ 65	2,923
2008		29,643	28,702	27,854	26,951		26,319	26,264	25,842	25,750	25,567	184	4,540
2009			32,120	31,661	31,870		30,925	29,700	29,049	28,982	28,888	265	3,851
2010				50,933	49,972		48,443	45,756	44,639	43,756	43,236	425	6,902
2011					101,846		105,665	105,215	102,188	100,837	99,203	1,184	15,335
2012							57,865	57,425	54,906	50,844	48,401	2,016	6,240
2013								66,066	65,967	65,059	60,042	3,998	5,908
2014									70,654	71,707	69,489	5,652	6,339
2015										165,551	164,604	(13,963)	20,176
2016											77,710	3,076	5,348
										Total	$ 635,180

Homeowners
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

		For the Years Ended December 31,
Accident Year	2007	2008	2009	2010	2011		2012	2013	2014	2015	2016
	(Unaudited)
2007	$ 9,386	$ 14,056	$ 14,409	$ 17,238	$ 17,547		$ 17,787	$ 17,846	$ 17,848	$ 17,849	$ 17,849
2008		12,084	20,661	22,808	24,954		25,089	25,200	25,245	25,260	25,279
2009			16,682	23,717	27,904		28,324	28,518	28,608	28,621	28,620
2010				26,724	38,867		41,474	42,000	42,359	42,628	42,707
2011					71,767		91,711	95,643	96,798	96,941	96,869
2012							32,190	42,744	44,268	44,468	44,811
2013								39,188	50,793	52,782	53,105
2014									40,749	53,995	57,300
2015										112,991	148,656
2016											44,750
										Total	$ 559,946
						All outstanding liabilities before 2007, net of reinsurance					221
			Liabilities for claims and claim adjustment expenses, net of reinsurance								$ 75,455

The following is unaudited supplementary information about average historical claims duration as of December 31, 2016.


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	68.0%	18.0%	6.0%	4.0%	2.0%	1.0%	0.0%		0.0%		0.0%		0.0%


Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Unaudited)

Years	1	2	3	4	5	6	7		8		9		10
Commercial Automobile	51.0%	21.0%	8.0%	7.0%	5.0%	3.0%	1.0%		0.0%		0.0%		1.0%


Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Unaudited)

Years	1	2	3	4	5	6	7		8		9		10
Homeowners	64.0%	22.0%	5.0%	2.0%	1.0%	0.0%	0.0%		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, 2016
Net outstanding liabilities
Private Passenger Automobile			$ 229,343
Commercial Automobile			73,049
Homeowners			75,455
Other Short-Duration Insurance Lines			67,405
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance			445,252

Reinsurance recoverable on unpaid claims
Private Passenger Automobile			1,815
Commercial Automobile			60,852
Homeowners			10,379
Other Short-Duration Insurance Lines			10,678
Total reinsurance recoverable on unpaid claims			83,724

Unallocated claims adjustment expenses			31,345

Total gross liability for unpaid claims and claim adjustment expenses			$ 560,321

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.