Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2014

Insurance [Abstract]

Losses and Loss Adjustment Expenses

Note 8 — 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 claim development and losses incurred, but not reported.

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

	Three Months Ended March 31,
	2014			2013
Balance, beginning of period	$	43,686		$	41,168
Incurred related to:
Current period		18,914			16,931
Prior period		(349	)		(1,059	)
Total incurred		18,565			15,872
Paid related to:
Current period		(6,607	)		(3,732	)
Prior period		(12,047	)		(11,557	)
Total paid		(18,654	)		(15,289	)
Balance, end of period	$	43,597		$	41,751

The establishment of loss reserves is an inherently uncertain process and changes in loss reserve estimates are expected as such 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 adjustments are made. During the three months ended March 31, 2014, the Company experienced favorable development of approximately $349 with respect to its net unpaid losses and loss adjustment expenses established as of December 31, 2013.

The Company writes insurance in the state of Florida, which could be exposed to hurricanes or other natural catastrophes. Although the occurrence of a major catastrophe could have a significant effect on our monthly or quarterly results, the Company believes that such an event would not be so material as to disrupt the overall 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.