Liability for Unpaid Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2019

Liability for unpaid losses and loss adjustment expenses

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 six months ended June 30, 2019 and 2018 on a GAAP basis:



	June 30,
	2019		2018
Balance at January 1	$	661,203	$	482,232
Less: reinsurance recoverable on unpaid losses	477,870		305,673
Net balance at January 1	$	183,333	$	176,559

Incurred related to:
Current year	199,832		167,392
Prior years	20,967		(1,551		)
Total incurred	$	220,799	$	165,841
Paid related to:
Current year	108,042		83,297
Prior years	98,143		92,937
Total paid	$	206,185	$	176,234

Net balance at June 30	$	197,947	$	166,166
Plus: reinsurance recoverable on unpaid losses	379,402		266,265
Balance at June 30	$	577,349	$	432,431

Composition of reserve for unpaid losses and LAE:
Case reserves	$	257,873	$	230,926
IBNR reserves	319,476		201,505
Balance at June 30	$	577,349	$	432,431

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 unfavorable development experienced at June 30, 2019 was primarily the result of the incurrence of greater losses than expected, as compared to the same period in the 2018 accident year. The favorable development experienced at June 30, 2018, in contrast, was primarily the result of the incurrence of fewer losses than expected.