Liability for Unpaid Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2020

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 three months ended March 31, 2020 and 2019 on a GAAP basis:



	March 31,
	2020			2019
Balance at January 1	$	760,357		$	661,203
Less: reinsurance recoverable on unpaid losses	482,315			477,870
Net balance at January 1	$	278,042		$	183,333

Incurred related to:
Current year	103,966			98,913
Prior years	(1,129		)	5,634
Total incurred	$	102,837		$	104,547
Paid related to:
Current year	30,935			31,215
Prior years	62,511			60,893
Total paid	$	93,446		$	92,108

Net balance at March 31	$	287,433		$	195,772
Plus: reinsurance recoverable on unpaid losses	423,609			434,196
Balance at March 31	$	711,042		$	629,968

Composition of reserve for unpaid losses and LAE:
Case reserves	$	294,679		$	258,550
IBNR reserves	416,363			371,418
Balance at March 31	$	711,042		$	629,968

Based upon our internal analysis and our review of the annual statement of actuarial opinion provided by our actuarial consultants at year end, 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 in the table above, we had favorable developments in 2020 related to prior year losses. These favorable developments come as a result of strengthening of our case reserves at the end of 2019 based on a review of historical loss trends. The incurred losses and LAE and payments made during the quarter ended March 31, 2020 were in line with our incurred losses and LAE and payments made during the quarter ended March 31, 2019.