Liability for Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 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 nine months ended September 30, 2018 and 2017 on a GAAP basis:



	September 30,
	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

Acquisition of AmCo reserves (net of reinsurance recoverables of $19,945)	—			40,583

Incurred related to:
Current year	290,600			296,217
Prior years	(4,207		)	(2,819		)
Total incurred	$	286,393		$	293,398
Paid related to:
Current year	163,589			160,952
Prior years	102,750			84,497
Total paid	$	266,339		$	245,449

Net balance at September 30	$	196,613		$	210,663
Plus: reinsurance recoverable on unpaid losses	332,229			471,498
Balance at September 30	$	528,842		$	682,161

Composition of reserve for unpaid losses and LAE:
Case reserves	$	259,678		$	289,938
IBNR reserves	269,164			392,223
Balance at September 30	$	528,842		$	682,161

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 at September 30, 2018 and 2017, respectively, was primarily the result of the incurrence of fewer losses than expected, as compared to those same periods in the 2017 and 2016 accident years, respectively.