Liability for Unpaid Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2018

Short-Duration Insurance and Deposit Contracts

LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSE (LAE)

We determine the reserve for unpaid losses on an individual-case basis for all incidents reported. The liability also includes amounts for incurred but not reported (IBNR) claims as of the balance sheet date.

The table below shows the analysis of our reserve for unpaid losses for the three months ended March 31, 2018 and 2017 on a GAAP basis:



	March 31,
	2018			2017
Balance at January 1	$	482,232		$	140,855
Less: reinsurance recoverable on unpaid losses	305,673			18,724
Net balance at January 1	$	176,559		$	122,131

Incurred related to:
Current year	77,927			63,859
Prior years	(681		)	(526		)
Total incurred	$	77,246		$	63,333
Paid related to:
Current year	34,800			21,986
Prior years	74,570			42,528
Total paid	$	109,370		$	64,514

Net balance at March 31	$	144,435		$	120,950
Plus: reinsurance recoverable on unpaid losses	399,814			20,152
Balance at March 31	$	544,249		$	141,102

Composition of reserve for unpaid losses and LAE:
Case reserves	$	214,067		$	82,987
IBNR reserves	330,182			58,115
Balance at March 31	$	544,249		$	141,102

Based upon our internal analysis and our review of the statement of actuarial opinion provided by our actuarial consultants, we believe that the reserve for unpaid losses reasonably represents the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.

As reflected by our losses incurred related to prior years, the favorable development experienced in 2018 and 2017 was primarily the result of losses related to the 2017 and 2016 accident years coming in better than expected.