Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2024

Note 12 -- Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses (“LAE”) is determined on an individual case basis for all claims reported. The liability also includes amounts for unallocated expenses, anticipated future claims development and losses incurred but not reported.

The Company primarily writes insurance in states which could be exposed to hurricanes or other natural catastrophes. The occurrence of a major catastrophe could have a significant effect on the Company’s quarterly results and cause a temporary disruption of the normal operations of the Company. However, the Company is unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.

Activity in the liability for losses and LAE is summarized as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
Net balance, beginning of period*	$	273,425		$	246,051		$	254,351		$	246,546
Incurred, net of reinsurance, related to:
Current period		73,506			60,968			153,428			117,666
Prior periods		4,818			922			4,818			4,789
Total incurred, net of reinsurance		78,324			61,890			158,246			122,455
Paid, net of reinsurance, related to:
Current period		(31,771	)		(27,105	)		(49,560	)		(38,215	)
Prior periods		(28,193	)		(37,250	)		(71,252	)		(87,200	)
Total paid, net of reinsurance		(59,964	)		(64,355	)		(120,812	)		(125,415	)
Net balance, end of period		291,785			243,586			291,785			243,586
Add: reinsurance recoverable before allowance for credit losses		279,861			505,369			279,861			505,369
Gross balance, end of period	$	571,646		$	748,955		$	571,646		$	748,955

* Net balance represents beginning-of-period liability for unpaid losses and LAE less beginning-of-period reinsurance recoverable for unpaid losses and LAE.

The establishment of loss and LAE reserves is an inherently uncertain process and changes in loss and LAE reserve estimates are expected as these estimates are subject to the outcome of future events. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such estimates are adjusted. During the three and six months ended June 30, 2024, the Company recognized losses related to prior periods of $4,818 in each period, primarily to increase reserves in response to litigation. Losses and LAE for the three and six months ended June 30, 2024 included net estimated losses of approximately $16,782 and $38,460, respectively, related to Citizens policies assumed. Excluding Citizens-related losses, lower losses and LAE for the three and six months ended June 30, 2024 primarily resulted from a decrease in claims and litigation related to Florida policies.