LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

9 Months Ended

Sep. 30, 2024

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

The Company’s loss and loss adjustment expense (“LAE”) reserves were composed of the following:


	September 30, 2024		December 31, 2023
Case reserves	$	216,200	$	189,050
IBNR	594,952		472,504
Total	$	811,152	$	661,554

Reserve Roll-forward

The following provides a summary of changes in outstanding loss and LAE reserves for all lines of business:


Consolidated	Nine months ended September 30
	2024		2023
Gross balance at January 1	$	661,554	$	555,468
Less: Losses recoverable	(25,687)		(13,239)
Net balance at January 1	635,867		542,229
Incurred losses related to:
Current year	305,467		273,570
Prior years	(943)		10,502
Total incurred	304,524		284,072
Paid losses related to:
Current year	(27,382)		(41,026)
Prior years	(176,210)		(154,374)
Total paid	(203,592)		(195,400)
Foreign currency revaluation	8,405		(858)
Net balance at September 30	745,205		630,043
Add: Losses recoverable (see Note 8)	65,947		28,191
Gross balance at September 30	$	811,152	$	658,234

Estimates for Significant Catastrophe Events

At September 30, 2024, the Company’s net reserves for losses and loss expenses include estimated amounts for several catastrophe and weather-related events (“CAT loss”). The magnitude and volume of losses arising from these events is inherently uncertain and, consequently, actual losses for these events may ultimately differ, potentially materially, from current estimates.

During the nine months ended September 30, 2024, the Company recognized total CAT loss, net of reinsurance, of $48.9 million. Current year CAT loss events were $39.9 million, driven mainly by the Baltimore Bridge collapse, Hurricane Helene, and U.S. tornados (including severe convective storms). Additionally, the Company incurred $9.0 million of net adverse prior year CAT loss development relating primarily to U.S. tornados (including severe convective storms) affecting U.S. homeowners’ property coverage (2021-2023 underwriting years).

During the nine months ended September 30, 2023, the Company recognized total CAT loss, net of reinsurance, of $20.2 million. Current year CAT loss events were $29.5 million, driven mainly by the Turkey earthquake, New Zealand Cyclone Gabrielle and U.S. tornados, coupled with $9.3 million net favorable prior year CAT loss development predominantly from various prior years’ property catastrophe events (mostly 2019, 2021 and 2022 underwriting years).

Prior Year Reserve Development

During the nine months ended September 30, 2024, the Company experienced $0.9 million in net favorable development on prior year loss and LAE reserves. This was comprised of $11.4 million of favorable loss development predominantly from mortgage contracts (various underwriting years), general liability treaties (mostly 2021-2022 underwriting years), multiline commercial (predominantly 2020 underwriting year) and other specialty business (mostly 2020-2023 underwriting years). This was partially offset by $10.5 million of reserve strengthening predominantly for prior years’ CAT loss events mentioned above.

During the nine months ended September 30, 2023, the Company experienced $10.5 million in net adverse development on prior year loss and LAE reserves. This was comprised of $31.3 million of reserve strengthening predominantly on legacy motor (mainly 2021 underwriting year) and workers’ compensation (2021 and prior underwriting years) due to current economic and social inflation trends, coupled with adverse CAT loss development on U.S. homeowners’ property business relating to Winter Storm Elliott (2022 underwriting year) and a final claim settlement on a professional liability contract (2008 underwriting year). This was partially offset by $20.8 million better than expected loss emergence predominantly from the above prior years’ CAT loss events, marine and energy (predominantly 2020 and 2022 underwriting years), group medical (2022 and prior underwriting years), and cyber contracts (predominantly 2021 underwriting year).