LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES Loss Development (Tables)

12 Months Ended

Dec. 31, 2017

Short-duration Insurance Contracts, Claims Development [Table Text Block]

The information in the tables below about incurred and paid claims development for the years ended December 31, 2008 to 2016, is presented as unaudited supplementary information.



Frequency - Health
	Incurred claims and allocated claim adjustment expenses, net of reinsurance																				December 31, 2017
	For the years ended December 31,																				Total IBNR plus expected development on reported claims
Accident year	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017
	(Unaudited - Supplementary Information)
	($ in thousands)
2008	$	10,593	$	11,677	$	11,432	$	11,361	$	12,150	$	11,249	$	11,249	$	11,247	$	11,279	$	11,247	$	—
2009	—		24,905		23,884		23,393		23,402		23,402		23,402		23,401		23,401		23,401		—
2010	—		—		36,066		35,968		49,492		36,120		36,120		36,107		36,107		36,107		—
2011	—		—		—		36,088		36,145		35,755		35,737		35,533		35,540		35,533		—
2012	—		—		—		—		10,494		9,781		9,723		9,621		9,621		9,621		—
2013	—		—		—		—		—		43,895		46,969		47,301		47,045		47,032		—
2014	—		—		—		—		—		—		32,845		30,154		29,455		29,042		—
2015	—		—		—		—		—		—		—		34,136		33,576		34,201		—
2016	—		—		—		—		—		—		—		—		37,726		41,305		1,456
2017	—		—		—		—		—		—		—		—		—		44,539		20,725
																	Total		$	312,028



Frequency - Health
	Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
	For the years ended December 31,
Accident year	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017
	(Unaudited - Supplementary Information)
	($ in thousands)
2008	$	4,199	$	10,890	$	11,294	$	11,277	$	11,415	$	11,249	$	11,249	$	11,247	$	11,247	$	11,247
2009	—		8,617		23,088		23,392		23,402		23,402		23,402		23,401		23,401		23,401
2010	—		—		17,771		35,609		41,477		36,120		36,120		36,107		36,107		36,107
2011	—		—		—		27,104		35,615		35,755		35,737		35,533		35,533		35,533
2012	—		—		—		—		9,342		9,670		9,723		9,621		9,621		9,621
2013	—		—		—		—		—		34,515		46,969		47,112		47,045		47,032
2014	—		—		—		—		—		—		19,040		28,486		29,159		29,042
2015	—		—		—		—		—		—		—		14,561		32,043		34,201
2016	—		—		—		—		—		—		—		—		20,601		39,850
2017	—		—		—		—		—		—		—		—		—		23,814
																	Total		289,848
							All outstanding liabilities before 2008, net of reinsurance												—
			Liabilities for claims and claims adjustment expenses, net of reinsurance (Health)																$	22,181



Frequency - Non-Health
	Incurred claims and allocated claim adjustment expenses, net of reinsurance																				December 31, 2017
	For the years ended December 31,																				Total IBNR plus expected development on reported claims
Accident year	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017
	(Unaudited - Supplementary Information)
	($ in thousands)
2008	$	38,126	$	34,675	$	35,893	$	38,669	$	40,523	$	40,518	$	41,620	$	42,078	$	41,707	$	41,785	$	33
2009	—		79,796		91,523		101,259		109,936		106,040		107,323		112,312		111,741		111,812		31
2010	—		—		130,449		144,489		162,112		161,414		165,504		173,764		176,608		176,594		392
2011	—		—		—		173,216		189,690		200,216		212,697		235,787		254,723		254,984		1,563
2012	—		—		—		—		268,511		271,334		270,409		287,025		286,548		287,482		2,192
2013	—		—		—		—		—		309,833		305,919		306,524		308,783		309,694		3,912
2014	—		—		—		—		—		—		178,117		178,247		181,753		183,986		11,151
2015	—		—		—		—		—		—		—		225,244		230,745		236,109		37,080
2016	—		—		—		—		—		—		—		—		291,180		304,962		82,755
2017	—		—		—		—		—		—		—		—		—		367,342		185,910
																	Total		$	2,274,750



Frequency - Non-Health
	Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
	For the years ended December 31,
Accident year	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017
	(Unaudited - Supplementary Information)
	($ in thousands)
2008	$	10,345	$	25,145	$	31,686	$	36,587	$	39,151	$	40,269	$	41,190	$	41,310	$	41,707	$	41,752
2009	—		26,518		62,220		81,055		94,851		99,832		103,833		105,493		111,741		111,781
2010	—		—		50,177		100,334		127,823		143,989		156,396		161,725		176,146		176,201
2011	—		—		—		78,846		134,140		168,209		185,591		203,255		252,684		253,421
2012	—		—		—		—		121,538		236,556		253,949		262,086		283,653		285,290
2013	—		—		—		—		—		145,593		264,730		291,231		301,772		305,782
2014	—		—		—		—		—		—		82,244		149,445		161,064		172,834
2015	—		—		—		—		—		—		—		109,376		179,725		199,029
2016	—		—		—		—		—		—		—		—		132,142		222,207
2017	—		—		—		—		—		—		—		—		—		181,431
																	Total		1,949,728
							All outstanding liabilities before 2008, net of reinsurance												—
			Liabilities for claims and claims adjustment expenses, net of reinsurance (Frequency)																$	325,021



Severity
	Incurred claims and allocated claim adjustment expenses, net of reinsurance																				December 31, 2017
	For the years ended December 31,																				Total IBNR plus expected development on reported claims
Accident year	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017
	(Unaudited - Supplementary Information)
	($ in thousands)
2008	$	16,466	$	19,329	$	18,026	$	18,028	$	17,469	$	19,583	$	19,582	$	17,843	$	20,212	$	20,212	$	4,810
2009	—		19,093		15,372		14,970		14,329		14,183		14,010		10,820		10,796		10,844		6,381
2010	—		—		4,522		5,147		14,079		14,042		14,291		14,194		14,507		14,358		2,570
2011	—		—		—		5,071		5,069		5,068		5,079		5,074		5,081		5,082		28
2012	—		—		—		—		15,000		—		—		—		—		—		—
2013	—		—		—		—		—		2,885		1,807		1,507		1,501		1,502		—
2014	—		—		—		—		—		—		4,749		4,750		4,624		4,745		1,772
2015	—		—		—		—		—		—		—		8,204		8,354		10,161		5,753
2016	—		—		—		—		—		—		—		—		17,265		20,108		16,005
2017	—		—		—		—		—		—		—		—		—		58,659		43,606
																	Total		$	145,671



Severity
	Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
	For the years ended December 31,
Accident year	2008		2009		2010		2011		2012		2013		2014		2015		2016		2017
	(Unaudited - Supplementary Information)
	($ in thousands)
2008	$	—	$	—	$	3,148	$	6,391	$	10,320	$	10,356	$	10,356	$	10,504	$	15,243	$	15,402
2009	—		276		2,582		3,364		3,753		3,902		3,952		4,172		4,194		4,463
2010	—		—		281		862		1,112		1,237		5,899		6,069		11,588		11,788
2011	—		—		—		24		5,033		5,038		5,044		5,047		5,048		5,054
2012	—		—		—		—		—		—		—		—		—		—
2013	—		—		—		—		—		94		729		1,224		1,491		1,502
2014	—		—		—		—		—		—		1,558		2,457		2,933		2,974
2015	—		—		—		—		—		—		—		473		1,306		4,408
2016	—		—		—		—		—		—		—		—		876		4,103
2017	—		—		—		—		—		—		—		—		—		15,053
																	Total		64,747
							All outstanding liabilities before 2008, net of reinsurance												2,486
			Liabilities for claims and claims adjustment expenses, net of reinsurance (Severity)																$	83,412

Claims Development [Line Items]

Schedule of Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Table Text Block]

For the year ended December 31, 2017, the net losses incurred included $36.2 million related to net adverse loss development on reserves relating to accident years prior to 2017. During the year ended December 31, 2017, the loss development on prior year contracts primarily related to the following:


•	$10.7 million of adverse loss development associated with various classes of professional liability exposure, driven by additional reporting on individual claims, as well as the Company’s assessment of industry wide loss ratio performance;


•	$4.3 million of adverse loss development associated with motor contracts based on re-projection of ultimate losses using client reporting patterns;


•	$4.1 million of adverse loss development relating to Florida homeowners’ insurance contracts, largely driven by “assignment of benefits” issues in the state whereby homeowners assign their rights for filing and settling claims to attorneys and public adjusters;


•	$3.7 million of adverse loss development associated with specialty health contracts arising from frequency of medical claims reported; and


•	$2.2 million of adverse loss development due to large claims reported on a surety contract.

The remaining $11.2 million of adverse development for the year ended December 31, 2017, was due to development across various other casualty and multi-line contracts. There were no other significant developments of prior period loss reserves during the year ended December 31, 2017.

For the year ended December 31, 2016, the net losses incurred included $35.5 million related to net adverse loss development on reserves relating to accident years prior to 2016. During the year ended December 31, 2016, the loss development on prior year contracts primarily related to the following:


●	$19.0 million of losses resulting from the loss portfolio transfer and subsequent novation of legacy construction defect liabilities;


●	$7.0 million of adverse loss development relating to our Florida homeowners’ insurance contracts as a result of deterioration of sinkhole claims and an increase in the practice of “assignment of benefits” whereby homeowners assign their rights for filing and settling claims to attorneys and public adjusters;


●	$6.7 million of adverse loss development relating to our private passenger motor contracts. While the loss indications are close to our expectations, the volume and frequency of unmerited suits served to the cedent by attorneys and medical clinics has resulted in an increase in loss adjustment expenses to defend such claims; and


●	$4.5 million of adverse loss development on an excess of loss contract relating to losses resulting from the U.S. sub-prime crisis.

There were no other significant developments of prior period loss reserves during the year ended December 31, 2016.

For the year ended December 31, 2015, the net losses incurred included $50.3 million related to net adverse loss development on reserves relating to accident years prior to 2015. During the year ended December 31, 2015, the loss development on prior year contracts primarily related to the following:

●

$36.9 million of adverse loss development relating to a general liability contract originally written from 2008 to 2011. This contract contains underlying construction defect liability coverage predominantly on single family homes. During the third quarter of 2015, we completed an in-depth analysis, with the assistance of a third party expert, of the construction defect claims reported and the potential for claims not yet reported on this contract. Based on this assessment, we revised the actuarial methodology used for reserving the construction defect claims on this contract, which resulted in an increase in incurred but not reported losses;

●

$14.7 million of adverse loss development relating to a general liability contract originally written in 2010. This contract contains underlying construction defect liability coverage. Based on updated data received from the insured, we conducted additional actuarial analysis and updated our actuarial input parameters based on consultation with external industry experts. As a result, the average estimated cost per claim was increased;


●	$9.3 million of adverse loss development relating to our Florida homeowners’ insurance contracts as a result of deterioration of sinkhole losses and higher than anticipated water damage claims from rainstorms and increase in the practice of assignment of benefits;


●	$2.4 million of net adverse loss development relating to our solicitors’ professional indemnity contracts as a result of multiple large claims reported during the period and an increase in incurred losses;


●	$5.1 million of favorable loss development relating to an excess of loss property contract resulting in the elimination of loss reserves based on updated loss information received from the insured during the period indicating that no losses will breach into our layer of coverage;


●	$4.5 million of favorable loss development relating to private passenger motor contracts during the period;


●	$2.3 million of favorable loss development relating to the employer medical stop-loss business as a result of better than expected claims frequency reported by the cedent; and


●	$1.3 million of loss reserves released upon commutation of a private passenger motor contract during the period.

There were no other significant developments of prior period loss reserves during the year ended December 31, 2015.